Third World ERE - FI Achieved!

Where are you and where are you going?
Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Third World ERE - FI Achieved!

Post by Ian »

I'm the type of person who doesn't like to announce things until I've finished them. Making this thread is going outside my comfort zone, but I think/hope that will be a good thing in this case.

As you'd guess from the title, I'm in a very different situation than most of the people here. I'm aiming for the same ERE goal (maybe just ER in my case) but from Tanzania and its substantially lower income level. Limiting myself to one example, I know organizations with yearly operating budgets (including all employee salaries) of about 50k.

You'd think that expenses would likewise be lower, and you're right, but I'd like many of the benefits of first world expenses. To try to be brief, I'd like better access to medical care, police that do anything other than take bribes, and decent internet that costs less than $300/month. And don't believe the hype about Tanzania's stability: it's peaceful now, but I wouldn't bet on it remaining so long term.

Let's break up my rambling with my progress so far. Here are my numbers from recent history:
Age: 26
Debt: 0
2010 Income: $2376
2011 Income: $2576
2012 Income: $5964 (third year plus bonus)

This is a great salary by Tanzanian standards and I'm moderately frugal, so I managed to save 89%, 92%, and 97% for those years, respectively. My total saved during this period comes up to $10 514 (converted from TSH). That's a lot of money to me, but not very much at all by this forum's standards. I have a few more thousand from my college employment but won't get into that now.

Those savings rates also aren't sustainable. That period represents a three year contract with a development organization (conservation agriculture and skills training, for those interested). I got rent and internet as benefits, plus I was able to use personal connections to ameliorate many day to day costs. But my job was educating trainers (who will work at wages more affordable for the organization) and now they have enough competent people, so I'm done.

I'm also kind of burned out on development work. Giving back is nice in the abstract but it doesn't sustain me personally and I don't think I could take it long term. (One of my problems is that I'm picky about work. I could have gotten a [relatively] cushy government job out of university but rejected that path. I might be able to endure a full time job if I was making STEM money and could retire in a few years, but that isn't going to happen.)

So I'm leveraging one of my advantages: western higher education. That and my English got me into a teaching position in rural South Korea. Not third world anymore, but I'll keep the thread name. Both salary and expenses will be far higher than I'm used to, and I don't know how much my college experience will prepare me since that was a very different situation with many fixed costs. Another positive: the hours are less than half time (much less when you consider testing days and summer/winter break) so I have more time for other things.

September will be my first full month. I'm monitoring my expenses and bracing for sticker shock when my utility bills arrive. I'll report with more numbers once my first paycheck and bills arrive. Hopefully this thread will keep me disciplined with this much money (only around 2k, but consider relatively).

Unless things really don't work out here, I'd like to use this thread to track myself. It will probably be a long road, but now that I've written it all out in some strange way I'm committed.
Last edited by Ian on Sat Jan 04, 2020 11:53 am, edited 1 time in total.

almostthere
Posts: 285
Joined: Tue Jul 09, 2013 1:47 am

Re: Third World ERE

Post by almostthere »

Hi Ian. I have spent alot of time in the third world and Africa, so I find your story inspiring. I think you have hit on what worked for me, expat jobs to earn money and then a plan to return to lower cost of living countries (not that Africa always has a very low cost of living). Knowing what I know now and if I were from a developing country, I'd also consider learning to code. The online learning resources are amazing. The last place I lived in Africa had very few people that knew info tech, but those that did had a world of opportunity in front of them. Even those with outdated skills lived pretty well.

User avatar
Ego
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Joined: Wed Nov 23, 2011 12:42 am

Re: Third World ERE

Post by Ego »

I enjoyed reading that. You earned a PhD in Chaos Management and Minimal-Resource Coping, and you saved a pretty good nest egg while doing it. The skills you walk away with are no-doubt priceless. I will be watching to see how you apply Tanzanian lessons to South Korean life.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

Thanks, guys. That's encouraging.
almostthere wrote:Knowing what I know now and if I were from a developing country, I'd also consider learning to code. The online learning resources are amazing. The last place I lived in Africa had very few people that knew info tech, but those that did had a world of opportunity in front of them. Even those with outdated skills lived pretty well.
I've seriously considered it. I have very basic IT skills (providing tech support and the like) but I'm not sure I'm quite suited to it. Of course, I may be biased because most of my experience with coders is with Dar es Salaam freelancers, who tend to want a lot of cash for mediocre skills. The last several months they assigned me to manage the hospital databases - not because I know anything about SQL, but because my tinkering was faster than trying to get the freelancers to deliver. But there's a big difference between that kind of thing and trying it professionally.
Ego wrote:I enjoyed reading that. You earned a PhD in Chaos Management and Minimal-Resource Coping, and you saved a pretty good nest egg while doing it. The skills you walk away with are no-doubt priceless. I will be watching to see how you apply Tanzanian lessons to South Korean life.
You're a little more optimistic than I am, but I hope you're right. I can tell you now that one similarity between Tanzania and South Korea is that life is all about trading on social capital. I don't really know the rules here, but the system feels familiar in a way it doesn't to people from some cultures, judging from what I read on blogs.

almostthere
Posts: 285
Joined: Tue Jul 09, 2013 1:47 am

Re: Third World ERE

Post by almostthere »

Ian, what are your thoughts on your investment options in Tanzania to earn your passive income in the future? Most people I know in sub-sarahan africa choose real estate. I have known people to try taxi ownership but it seemed to be more trouble than it was worth. I did note that Tanzanian gov't bonds have had high interest rates in the past. Of course, they may also have very high inflation. (In the 1970's in the US early retirees could live off US long bonds -maybe you could live of Tanzanian one's) I also have no idea how a citizen can purchase them. I noted that some private banks in Ghana had very good interest rates for savings accounts, but the risk of the bank going under in ten years might also be high though. I have known of people to be hard money lenders (that is lending for real estate against real estate collateral) in latin america at very good interest rates. Not sure if your court system will back you in case of default though. You are going to have to develop some interesting investment skill sets that is for sure. The idea of becoming an investor is the same but tactics will be different.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

This is something I need to research more, and I'm nowhere near a professional in this field. However, my initial reaction is to agree with the idea of real estate being safest. Owning taxis or matatus does earn money, but it means becoming a major employer and dealing with the authorities a lot. Even less my sort of thing than real estate.

If I'd been faster on bonds, they might have been a reasonable investment. However, in Tanzania I think these would be considered a high risk part of the portfolio, not the stable part. Inflation has been stable recently, but I wouldn't want to bet long term on there not being another period of hyperinflation. Worth researching more.

While I'm moving this is tricky, but I do hope to begin research and get something concrete set up in time.

Detente
Posts: 49
Joined: Mon Dec 17, 2012 5:28 am

Re: Third World ERE

Post by Detente »

Looking forward to following your adventure and progress.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

September 2013

This month is mostly useless for predicting future trends. My income includes two one-time-only bonuses and most of the bills and expenses need a big asterisk next to them for various reasons. Regardless...

Gross Income: $4112.91
Withheld
Taxes: $179.36
Insurance: $73.68
Pension: $105.68
Rent: $363

Standard Expenses
Food: $175.83
Phone: $109
Gas: $20.11

Misc Expenses
Korean-style Indoor Shoes: $2.27

Total Saved: $3083.97
Savings Rate: 75%


Not great, but it could be worse. My savings rate is artificially inflated due to the bonuses (which only occur in 1st, 3rd, and 12th months). There will also be more bills and I'm bracing for more potential surprises (for example, there's a monthly required faculty meal and I could end up getting charged a lot for that).

Fine Print: All prices converted on the assumption that $1 = 1100 KRW. Assuming no major economic changes, this conservative estimate should account for the fees to transfer it overseas. Some bills (like electricity) were intercepted by the school because they mostly covered my predecessor's expenses. Gas bill is about half his usage, but I don't know how it compared to mine. The pension payment is theoretically matched by the provincial office of education and the sum is returned to me when I leave Korea, but I'm disregarding it for the time being.

Potential Savings
Rent: The apartment is non-negotiable without being seen as a troublemaker. However, it seems to include decent internet and unmetered water, and the location is within easy biking distance of all my normal destinations. From what I've read, I can't find much cheaper in this part of Korea. Roommates are not readily available since I am in a rural area, but I will keep an eye out.

Phone: This month includes my brand new cell phone. Most argue that a smart phone plan is cheaper than the PPS deal I set up, but I'm willing to bet they do more random calling than I do.

Food: This is the one that sticks out to me. I didn't buy any expensive foreign stuff, but even the cheapest market foods cost more than I'm used to. In time I'll figure things out, but I'm afraid I won't be able to bring this down much. It's lower than numbers I've seen on blogger budgets but high compared to ERE or MMM budgets. I'm open to ideas.

Question of the Moment
Will CostCo pay for itself?

The yearly membership is only about $30, but the nearest store is a ways away. Several hours by train, $12-15 round trip. Even though I want to buy in bulk, I'm skeptical that each trip will save me that amount. I think it would also shift my diet to more meat and dried fruit, which I suspect would be more expensive.

Locally I can buy rice and ramen in bulk, but that's all I've found. There could well be more, but my ability to read the language is pretty limited.

almostthere
Posts: 285
Joined: Tue Jul 09, 2013 1:47 am

Re: Third World ERE

Post by almostthere »

At Ian - One thing you can do is analyze the local food market. Every culture has bulk food but where and how it is bought and sold is different from culture to culture. You never know. Start observing what people do and make friends with locals that can explain how things work. For example, I can buy bulk whole wheat my current culture, but they have never heard of oats. In the country next door barley is readily available in bulk. Also what are the seasons for different foods.

almostthere
Posts: 285
Joined: Tue Jul 09, 2013 1:47 am

Re: Third World ERE

Post by almostthere »

The Prudent Homemaker as recommended by Jennypenny is in inspiration in the analyzing a food market. This woman knows her local food market incredibly well. In my next culture, if I could replicate 50% of what she knows I would consider it amazing.

http://theprudenthomemakerblog.blogspot.com/

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

Thanks for the suggestions. This may be slightly premature, but I get the sense that Korean culture at large doesn't value frugality (not so different from everywhere else). The trouble is that my main body of friends is teachers, who are in the top 20% of income here. I've managed to ask all the English-speaking teachers about food and none of them ever cook. From their view small restaurants are incredibly cheap ($3-5/meal) but we have different contexts.

This isn't anything different than what most people on this forum have to deal with. It's just that I'm slower to navigate it because I'm figuring out a new culture and there's a language barrier. We'll see how I can do.

(I've done some reading at your link and will try to look a little deeper for applications.)

JamesR
Posts: 919
Joined: Sun Apr 21, 2013 9:08 pm

Re: Third World ERE

Post by JamesR »

I don't know about Korea, but in Japan the grocery stores make fresh sushi & rice balls every day. If you buy during the hour before closing, the sushi is heavily discounted, and a fantastic deal for healthy & filling food. I wonder if Korea grocery stores have something similar?

Another thing in Japan was the "100 yen stores" (basically $1 dollar stores). They sold a lot of food as well. I was able to buy a big package of spaghetti for $1, a can of spaghetti sauce for $1, a can of tuna for $1. That was usually good for 2 meals, with the spaghetti package still half full.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

That's a good thought. I'm too predictable in my shopping - if there are any sales that don't happen right after work, I wouldn't have seen them. I'm told there are 1000 won stores, but I haven't found one conveniently close.

almostthere
Posts: 285
Joined: Tue Jul 09, 2013 1:47 am

Re: Third World ERE

Post by almostthere »

@ Ian. It takes time. At month six in your new culture you'll look back at month one and see how far you have come. At year one, you'll be like how could I have not seen all these things I now see? Keep working. You have the right attitude.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

I want to share a little of my thinking. Partially as a record of my history, partially because I'd like to demonstrate that pure third world ERE would be possible.

After being introduced to this concept last year, I created a spreadsheet based on hypothetical numbers. At the time I was in a development organization that gives low salaries to keep down overhead. I calculated how long it would take for an average person to reach western-level financial independence under these circumstances and came up with 24 years.

I think that's important. International development requires some relevant skills (and possibly a degree) but it's often considered volunteer work in the first world. It doesn't pay much, but it does count most standard categories as work expenses and provides pension and benefits - even assistance paying back loans and generous stipends for children. Almost any western person could work for "nothing" and still end up financially independent provided they could restrain themselves from spending their entire stipend on luxury goods. 24 years is a while, but it's still a lot better than the rat race of working longer to buy more things you don't use. Of course, it would require changing lifestyles and that's something that doesn't interest most people.

My second calculation was what would happen if I got into management in the same organization. Not my ideal job, but a lot more interesting than generic middle management in most companies since you're setting development agenda. Under the same conservative assumptions, that got me to financial independence in 16 years.

The difference of eight years for a modest increase in salary made me reconsider. I decided to leave international development for a while and pursue varying jobs that pay first world salaries. That means I can't make a neat spreadsheet of promotions and calculate SWR% dates easily, but I think it will be a more interesting path.

The path is very important to me. I can understand working a job you hate for a few years to become financially independent, but at my income level I'm looking at 10+ years. I don't want the pre-FI years to be something I look back on as a necessary evil, I'd rather they be one stage in the process. Hopefully I'll be able to string together jobs that let me live in a variety of countries and experience different kinds of work.

My contract in South Korea is one year and right now it's the most lucrative option I see. I predict I'll grow bored of teaching high school after several years. Shifting up to university level is a probable step to retain interest. Longer term, I can imagine another stint in international development. But who knows how it will all work out?

I'd encourage altruistically-inclined people to consider international development. If you have solid passive income streams but you're not quite there yet, these contracts can guarantee a few years where your principal can grow without you touching it (you'll probably send money home from pension and excess stipends). I hope to come back to it in that position someday.

JamesR
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Joined: Sun Apr 21, 2013 9:08 pm

Re: Third World ERE

Post by JamesR »

That's a pretty good idea, there's been a number of threads from people a couple of years away from FI/ERE but sick of their jobs. They could pursue the altruistic option.

Also, good point about avoiding the 'necessary evil' job trap in our pursuit of freedom/happiness.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

October 2013

This can be considered a "normal" month in most ways. However, there are some weird changes with withheld line items that will cross multiple months. It will be resolved in time, but it's confusing to report on a month by month basis, so I'm going to focus on net here.

Net Income: $1965.94
Standard Expenses
Food: $117.36
Transportation: $8.18
Phone: $9.09
Gas: $13.72
Electricity: $18.20

Misc Expenses
Winter Sheets: $10.91
Gifts: $5.14

Saved: $1783.34

What's notable is that the change in food expenses ($175 to $120) doesn't come from any decreased quality or shift in buying patterns (I'm still getting the bulk store situation worked out). That's just the difference made by basic intelligent shopping, since most of the lessons learned last month didn't show up until now.

I don't know how much the winter months will cost me in heating. I've started light and I hope to strike a balance between gas and bedding prices (weirdly expensive). But since I don't have a readable gas meter, I can't know how much I'm spending until the next bill.

The gifts entry might seem odd, but this is a gift-giving culture and reciprocation counts for a lot socially. I give simple gifts without an obvious value (it's the thought that counts) and so they respond with gifts they consider pretty minor - since they're used to spending more money, those gifts can add up fast. I'd say I've received about $80 this month in free meals and park fees. Not things I'd necessary spend my own money on, but it helps me get a broader experience of the country.

Assuming a conservative monthly average and disregarding severance/bonuses, I can expect to save 20k during my year-long contract here, which is 3-5 times what I'd be earning in Tanzania. While I'm always open to upgrades in income or work quality, I think this compensation is enough that I'll consider staying here a little while if possible.

Ian
Posts: 254
Joined: Sun Sep 22, 2013 2:54 am
Location: South Korea

Re: Third World ERE

Post by Ian »

I'd like some input on a problem. I knew the house was poorly insulated, but I didn't know just how inefficient the ondol (heated floors) system is. My gas bill is going to be ridiculous this month and winters will be very expensive unless I find an alternative. I've been trying to look up information online, but my DIY energy has been sapped by other issues this month so I'd like to take advantage of the expertise here instead of sorting through so much.

Does anyone have suggestions for simple ways to reduce this bill? I might try a space heater, but I should also deal with the insulation problem. Meanwhile, other info on the situation:
- I don't have a thermostat and you can't set the temperature, but I think I have everything on its lowest setting. It's fairly cool and I turn the heat off while I'm gone.
- The metal door to the (unheated) hallway leaks heat like a sieve.
- Two large, single pane windows on the north side.

JeffD
Posts: 32
Joined: Sun Jul 21, 2013 10:49 am

Re: Third World ERE

Post by JeffD »

I can totally relate to the third world problem as I am living in one. I like the setup you have right now and the goal in which you want to achieve.

I haven't lived in a country with winter season, but I have camped in the mountains going below 0 degrees celsius. And the only thing that would save you is a good jacket and a thick sleeping bag. It will still be cold, but its a way to toughen up the body right? I think its in the ERE book to.

George the original one
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Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Third World ERE

Post by George the original one »

Cover the metal door with a blanket. That thing is leaching your heat badly, just transfering it into the hallway.

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