I’d like to tell you a secret: Everything we’ve been taught about saving money is wrong.
We’ve been taught to buy a home, set budgets, and live within our means.
But that’s all wrong.
You see, my wife and I have lived out of two backpacks and a suitcase since March 2014.
And we discovered that the fastest, easiest — and most pleasurable — way to save five or six figures a year is to be “homeless,” travel more, and live in multi-million dollar homes.
It sounds strange, I know. But this lifestyle isn’t expensive. Quite the opposite: It saved us over $100,200 in a single year.
And we got to live in places like this:
And this:
And enjoy office views like this:
How did we do it?
We followed three simple strategies:
- Stop paying rent and other monthly expenses.
- Stop paying for (or reduce) health insurance.
- Eliminate (or reduce) federal income tax.
Who can do this?
These three strategies work perfectly if you:
- Want to travel the world
- Can stay outside the US for 11 months in a year
- Work remotely
Note: You don’t need all three of the above to save big. If only one of the above works for you, great. If all three apply, however, you’ll get the most value from this article.
For example, my wife and I are business consultants, own our own websites (KeepInspiring.me and 10xToday.com), and work from anywhere in the world, so we benefit greatly from all three strategies. Let’s take a look at each strategy in detail.
These strategies aren’t just for jetsetters without kids. Each of the following three strategies work equally well for families, and people who, like us, prefer to travel slowly. Talon, from 1Dad1Kid.com, told us he’s been traveling with his son since May 2011.
Strategy 1: House-sitting
Two years ago, we discovered house-sitting as a way to see the world for next to nothing. If you're unfamiliar with house-sitting, it's a simple process.
Homeowners need someone (i.e. you) to look after their home and pets while they’re away. (They might be going on vacation, or extended assignment.) Because of this, you can stay in their home — for free.
Since we started house-sitting, we have lived in:
- England
- Morocco
- Vancouver, Canada
- Ashland, Oregon
- Denver, Colorado
- Sonoma, California
Here's a picture of our current “office” view in Asilah, Morocco:
House-sitting is a win-win: Homeowners have someone care for their home and pets while they’re away; house sitters get to travel, make new friends — and save a ton of money.
Where can you find house-sits? The most common locations are in:
- England
- Europe
- Canada
- United States
- Australia
- New Zealand
At any given time there are over well over 1,000 house-sits available worldwide on main house-sitting sites.
For example, here’s a map of current house-sits available on TrustedHousesitters.com:
When we started house-sitting, we would accept assignments between two weeks and three months. But we transitioned to long-term assignments — ranging from three to six months — because we found it easier to work while traveling less frequently.
Regardless of how long you travel, the savings are huge. When we lived in California, we paid about $2,500 for rent and monthly expenses like Wi-Fi, utilities, and garbage.
By comparison, house-sitting lets us travel the world, make new friends, and save roughly $30,000 a year.
Total savings: $30,000 a year.
Strategy 2: Get cheaper health insurance abroad (and avoid Obamacare penalties)
In the US, you’re required to pay health insurance.
If you decide against insurance, you must pay the Obamacare penalty, also known as the Individual Shared Responsibility Fee. (You gotta love that name, right?)
According to HealthCare.gov, the fee for not having insurance is:
- $325 per adult and $162.50 per child (up to $975 for a family); or
- 2.5% of your 2015 taxable income — whichever is greater.
To avoid the penalty last year, we spent $7,200 on health insurance — which we didn’t use.
But if you’re outside of the US for a year, you don't have to pay the Obamacare fee. Instead, you simply pay for travel insurance that covers emergency medical care.
To be honest, we didn't pay for health insurance this year. (Dumb, I know; we’re getting insurance now.)
If you do want insurance while traveling — which is a good idea — you can buy cheap travel insurance for $500–$2,000 a year, which is still a significant savings over health insurance in the US. Here’s a list of Frommer’s top eight travel insurance providers.
Total savings: $7,200 a year
Strategy 3: Save big on taxes with the Foreign Earned Income Exclusion
So far, we’ve covered two strategies that saved us $37,200 while traveling abroad. But I'm sure you’ll agree we saved the best for last: the Foreign Earned Income Exclusion.
The exclusion is a tax break for US citizens living abroad.
According to the IRS, if you’re looking to qualify, you must meet one of the following criteria:
- A US citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
- A US resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
- A US citizen or a US resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
That last item applies to my wife and me. Because we’re house sitting abroad, we spend the required 330 days — 11 months — outside the US. (Note: Your 330 days abroad needn’t be consecutive. For example, you will still qualify if you spend 180 days abroad, return to the US for 30 days, and then leave the US for at least another 155 days.)
For income earned in 2015, you can write off up to $100,800. Since we’re married, we can write off $201,600 — which translates to $63,000 in tax savings. (Note: The savings may be higher or lower in your case; check with your financial planner or CPA before you proceed with this.)
Total savings: $63,000
Total savings from these three strategies: $100,200
What’s even better?
You can use the money you saved to increase your income even more. Instead of investing it in real estate or the stock market, consider buying an online business, giving you the freedom to travel. The options are endless!
Remember, the way we’ve been taught to save money is wrong. Follow these simple strategies and save more money — while living your best life possible.
What’s stopping you?
Adam Costa is a business consultant, travel junkie, house-sitter, and writer. You can read more at KeepInspiring.me and 10xtoday.com.