The emails I get from other American expats here in Italy almost always focus on the same topic — how am I coping with the falling Dollar? Everytime the Dollar falls another cent or two, I grumble and groan and tell myself, “It can’t fall anymore than that!” I’ve been saying that since the Dollar was €0.83 and as of this morning, it looks like it’s about to sink below €0.65. Some American expats are even selling all and heading back home, waiting for easier times to return and try again.

But my solution was simple: I’ve just stopped worrying about it.

The realization that I’d be spending the same amount, if not more, living in New York or Los Angeles makes it a little easier to digest. It could even be rationalized as being a premium on living in a far away country and experiencing a new culture.

But that didn’t change the fact that I was still hemorrhaging money and needed to plug up my financial situation before I wound up a zingaro on the streets. Here’s a quick rundown of what I changed to help cope with the falling Dollar.

1. Dump the Greedy Banks

   Wells Fargo, in their fee-induced insanity, was charging me $5 per ATM withdrawal for the first two years that I was here. Every time I used my Wells Fargo credit card in Italy, I was charged a 1% foreign transaction fee no matter what I purchased. These fees added up over time to where I was spending in the neighborhood of $800 a year in nothing but fees. It was absurd!

   So I switched to a Capital One Rewards MMDA at the end of last year, and not only have I not paid a single penny in fees, they pay me to use the account (not to sound like a commercial). The interest rate on the account has fallen from 4.55% to under 3%, which is below the level of inflation, but far better than having my money sitting in a normal checking account losing a full 4% a year. It’s FDIC insured so there’s no risk and I even have a higher daily ATM limit than Wells Fargo would allow me, which means I no longer have to make two trips over two days to get enough money for rent. The only downside compared to a checking account is that I can only write 6 checks a month, but seeing as I’ve written only one check in the past three years, I think I’ll survive.

2. Pay Off the Credit Cards

   They say that paying off a $2,000 credit card balance at the monthly minimum at 16% interest will take around 14 years! If that doesn’t scare you into paying off those credit card balances ASAP, nothing will. From the money I’ve been saving by budgeting better, I’ve been making large monthly payments towards my sole credit card trying to knock that balance down to 0.

   What’s most surprising of all is not only is it easy to throw money at my credit card, I actually like doing it! Instead of feeling, “Oh no, there goes my new PS3!” I instead feel a sense of accomplishment watching my credit card balance drop like a rock and knowing that the faster I pay that off, the less of my money those bloodsuckers will get. And the money I save in interest payments will more than afford me the creature comforts I’ve been lusting over.

3. Make a Budget

   Not knowing where your money is going is the fastest way to end up completely broke. I couldn’t figure out where all my money was going every month or why I had very little to show for what I spent, and that’s a scary feeling. I began keeping all of my receipts and using Quicken to keep track of what money goes where. You can’t write a budget if you don’t know how much you’re spending.

   I then created a budget based on what I was currently spending and found ways to tighten up my outgoing budget. I’ve also begun setting aside a certain amount of money each month for the inevitable biannual insurance, heat payments, and annual events like Christmas. Instead of fretting the month before that money’s due, I slowly pay for it throughout the year by setting aside that money month by month. Paying those big biannual bills doesn’t seem so daunting anymore.

   Another advantage of keeping a close eye on my finances is that it helped me realize how much I was blowing on useless crap that I didn’t really need, which brings me to my next point.

   
   
4. Cancel Useless Subscriptions

   I brought a Vonage VOIP phone with me when I moved here that cost me $25 a month. The plan was that it would act as a cheap alternative to make and receive calls to the US once I had found a place to live and had DSL hooked up. The problem, however, was that I was stuck on dialup for the first 2 years that I was here, which made my shiny new VOIP phone completely useless. Even though I couldn’t use it, I didn’t cancel my Vonage subscription until after about 18 months of wishful thinking that DSL would arrive someday. By the time I decided to accept reality, I threw away $450 for something I never used once.

   To jab some salt to the wound, after I finally got DSL and called to reactivate my service with Vonage, they politely informed me that my equipment is so old that I’ll have to spend more money for new equipment before I could sign up again!

   Even the smaller subscriptions for various services that only cost a few Dollars a month add up over time. I reviewed everything that was sucking money out of my bank account on a recurring basis and canceled nearly everything, leaving only the bare necessities. And to be honest, I don’t miss any of it. If it’s not something you can’t live without, dump it. I gained an extra $100 a month doing this.

5. Telecom Italia Wants to Screw You Over

   I’ve gone from spending upwards of €600 every two months for phone and electricity to just under €90. One way I managed to do that was because I discovered that Telecom Italia offers the same products in a couple of different ways and will sell you, or automatically sign you up for the most expensive version if you don’t specify which one you want. For instance I was using pay-per-minute dialup for nearly 2 years, spending between €450-500 every billing cycle before I discovered that they offered an unadvertised dial-up service called Teleconomy that costs only €12 a month. I instantly started saving over €400 per billing cycle with a single phone call.

   To save on my electricity bill, I stopped running the electric heater when it gets a little too cold and instead learned to put on more clothes. I also try to run my laundry early in the morning or late at night during off-peak hours and have been a little more vigilant about turning off the lights when I leave a room. My most recent electricity bill for two months was only €56.31. My phone bill, a whopping €31.00.

6. Dave Ramsey is Smarter Than You

   I discovered Dave Ramsey through a well-known guy in a forum I frequent who described in detail how he got out of $40k in credit card debt in a little over two years after listening to Dave Ramsey’s CDs. Dave Ramsey is a financial guru who has a radio show on AM that I’d heard of, but never listened to. That testimonial changed all of that and I got my hands on his 14-CD Financial Peace University program and listened to it back to back over the course of a few days. The value of the knowledge I gained from the CDs is incalculable and listening to them was one of the best decisions I had made all year.

   He talks about budgeting, planning for financial emergencies, what types of investments are good, which ones you should avoid and all around strategies for not finding yourself on the corner begging for change. He shows how to budget if your monthly income fluctuates each month and solid planning tips for saving up for a new car or even a house. The CDs aren’t about how to make millions through shiesty scams, but instead talks about managing the money you have and discovering just how far you can stretch it. This is a highly recommended series to listen to and I wish I could’ve handed it out to everyone during Christmas. Listen to this man, he will save your sanity.

By doing those six things, I’ve become much more financially secure and the Dollar isn’t hitting nearly as hard as it could be. In fact, the pinch isn’t much harder than it was 3 years ago when I was fresh off the boat because I’ve found ways to stretch what I already have even further than I ever thought possible.

My last post about my banking situation got a little press. At the bottom of a Wall Street Journal article about ATM crime, there were a set of links to two blogs that they thought referred to that article — mine and someone else’s. Yikes!

That post ended up getting a lot of visitors from government IP blocks from around the world. Even the IRS and Wells Fargo paid that article a visit, the latter filling me with a sense of pure awesome.

My Capital One MMA is open and functional and I’ve already deposited some money into it from PayPal. I have to wait 10 days before accessing it, but I’m still just testing out their service.

PayPal also has an MMA account, but I never bothered to read into it since my money passes through them so fast it wouldn’t really make much difference. Curiosity got the best of me and I discovered that their MMA simply uses the balance that I have in my account and not some completely separate service. So when someone pays me with PayPal, the money collects 5.01% interest before I shift it into my Capital One MMA that collects 4.55% interest. From there I can withdraw it using my soon-to-arrive ATM card without a single damn fee.

So basically I’ve gone from paying hundreds of dollars in bank fees all the way down to paying $0 in fees and making money in the process. Hot damn!

You may ask, “Mr. Brian, why don’t you just keep your money with PayPal if their interest rate is so high?” Well there are a few reasons:

1. They are not FDIC insured. If they go out of business, my money would go with them.
2. They will lock down your entire account if a payer complains about sending you money for any reason with no recourse but to wait up to 180 days while it works through their system. It’s never happened to me, but it has happened to many honest users and is a risk of using their service. Even if they unlock the funds, you’ll have lost upwards of 6 months of interest.
3. When I receive money from a credit card, they take out 2.9% of the total + $0.30, so the 5.01% rate isn’t so amazingly high. Capital One offers a better rate and I don’t have to worry about downside #2.

So basically my whole 2008 financial plan is this:

1. Close all of my Wells Fargo accounts and leave a sack of burning poo on their doorstep.
2. Continue depositing money into my Capital One MMA a little at a time until I get my ATM card and can use it fully.
3. Get a Capital One credit card to use for going to restaurants, buying clothes, etc. By sticking with the same company, I can pay off my monthly balance each month directly from my MMA using their website. Yea for convenience.

By using the credit card for my purchases instead of cash, I can leave more money in my MMA for longer periods of time, which means my money will build more interest because the interest is calculated based on the daily balance. As long as the balance is paid off each month, it costs me nothing. It’s far more advantageous than a check card that withdraws directly from the account.

Wish I had researched this two years ago!

I’ve been thinking a lot lately about banking. In fact, my current bedtime reading is an excellent book called Medici Money, a really fascinating and hilarious look at the history of Italy and the Church during the Renaissance when the Medici were at their peak of banking power. It’s a very entertaining read.

Way back when I first moved here, I could take out money from an ATM at that day’s exchange rate and not pay a single penny to anyone. Within a few months, Wells Fargo, along with every other major bank in the US, discovered how much money they could be shaking out of foreign travelers’ pockets and started charging enormous fees just for getting our own money. The ATM transaction fees range from 1% to an enormous 4% per transaction, which is equivalent to $12 per $300. Wells Fargo sticks me for $5 per ATM withdrawal, whether I take out $20 or the maximum $300. The equivalent of a 1.67% – 25% transaction fee.

In the last three months alone, I’ve spent $80 on ATM fees and considering that I’ve been here for over two years, that means I’ve fluttered away somewhere in the neighborhood of $650 just for the pleasure of physically touching my own money. If I add in the $10/month I pay to keep my business account open, that’s another $240 for those two years.

Luckily a pack of rabid lawyers noticed the collusion between the banks and filed a lawsuit. Wells Fargo, to my discontent, wasn’t named in the lawsuit, but it appears to include anyone who has used Visa branded check cards and that does cover me. They’ve settled and are now taking claims from anyone who was charged foreign access fees from 1996 to 2006. I still need to read the legalese fine print to make sure I’m not signing my soul away, but the thought of getting a partial refund [read: $10] and being able to stick it to the man all at the same time sounds like a fun Saturday afternoon.

Leaving Wells Fargo’s fee machine is a given, and in an effort to get my finances in order when the dollar is at new record lows, I’ve been researching what other options are available for yours truly.

At first I researched all banks that have branches in Austin, but not a single one had a decent rate aside from Wachovia, who charges a relatively low 2% for ATM withdrawals and 1% for check card purchases. Bank of America was the absolute worst choice, crushing Wells Fargo’s fee table in ways that would make a 1st century money changer wince.

On second thought, do I really need a traditional bank account at all? Here’s an alternative idea: A money market account.

The best choice around for someone like me living in a foreign country appears to be Capital One. They have a money market account that currently pays 4.66% (beating inflation) and charges absolutely no fees. They provide an $500/day ATM card and even eat the 1% Visa/MC currency conversion fee. There is no minimum balance required and I get monthly miles based on my balance that I can eventually use towards tickets when I go back to the US. Hell, even a free upgrade from cattle car class to business class would be stellar.

Typically MMAs allow only a set number of withdrawals a month, which would have killed this idea from the get-go, but Capital One claims that you can make unlimited monthly withdrawals using the included ATM card. So not only do I save a fortune on fees and get miles for doing nothing, I get paid to use the account and it offers me every service I currently use, and pay a fortune for, at my current bank — an ATM card.

I read through the fine print to find the catch and the only downside I’ve found so far is that for the first 30 days, all deposits are held 10 days before being accessible. After 30 days, deposits will still be held 5 days before being released. I have a feeling that will come back to bite me later on, but we shall see. Since there is no minimum balance required, I’ll start out with a few bucks and give it a test run.

The only unanswered question is if I’ll have trouble withdrawing money from my PayPal account to the MMA. The only way to know for sure is by trying it out.

Does anyone know of any tax consequences of having an MMA or anything that I may have overlooked?

CafePress.com has been around nearly as long as the internet itself, but I’ve never focused on it as a serious stream of income. If you’re unaware of what CafePress.com is, it’s a company that allows you to upload your custom logo or design and using their store, they will one-off any number of items from coffee mugs to t-shirts to large framed pictures. They tell you how much each item costs and you markup your price to make a profit.

I’ve taken a closer look recently as my sister has been seeing some success on CafePress. She has a graphic design business and just opened a new store using CafePress and offered her paintings and graphic designs for sale. Within a few days she’s already sold half a dozen items, which points to a very active marketplace — far more than I had expected.

The basis of her success is that she’s an extremely talented artist and has some great designs available for sell, with these two as my favorites:

  

I already have a huge Ganesh tapestry hanging on my wall (bought because my living room needed a jolt of color), so these would go really well in my living room. I really wish she’d offer up some of her other paintings, but perhaps they’ll be coming later. I’ve gotten to like CafePress because it offers a marketplace for artists that was never available before where selling prints and framed reproductions don’t require large investments in inventory. They also ship internationally, so I have means to cover up the sparse white walls at my house.

The only downside is that their affiliate scheme blows. If a sale is made from an affiliate link, 20% is taken out of the artist’s cut. Then 15% is paid to the affiliate with the remaining 5% going to Commission Junction to pay for the affiliate program transaction fees. Whatever marketing executive thought that one up needs his head examined.

I’ve been with Site5 for 3 or 4 years, and as someone who has literally jumped from web host to web host like a flea at a dog show, can say without a doubt that they are by far the best hosting company I’ve ever used. Support is super quick and always polite and their billing system is flawless. They offer a 60 day money back guarantee and actually live up to it. No kidding, don’t die of shock!

They host all of my websites, my brother’s site, my sister’s site, friends’ sites, and many clients that I’ve sent their way. Finally, within these last few months they came out with an affiliate program to send some love back to the people who send them a lot of business. There’s nothing better than referring someone to a company that you really like and getting paid for it in the process.

What You’ll Get

For your initial account referrals, you will recieve $20.00 each.

If you refer 10 or more accounts in a month, you will recieve $30.00 for every referral (including your first 10).

If you refer 20 or more accounts in a month, you will recieve $40.00 for every referral (including your first 20).

Minimum payout amount is $50.00.

As a web developer that sets up hosting for people on a regular basis, you can see the allure of such a program. The money can either be credited back to your hosting account so that you basically get free hosting, or they can send it to you through PayPal after you’ve hit the $50 barrier.

They’ve created a very easy to use affiliate manager where you can view your statistics and current balance. They have a whole slew of banners that you can use, or if you prefer text links, they have those too.

Downsides

The only major downside to Site5‘s program is that all earnings have a 60 day maturation period because of their 60 day money back guarantee. It’s admittedly a little lengthy, but it’s easy to understand the reasoning behind that decision.

On the other hand, if you keep a steady stream of new customers going to Site5, you shouldn’t even notice the lag time. Only those that refer one or two people a month would get too worked up over it.

Bottom Line

This affiliate program is only open to current customers, and if you’re not already, you should be. I’ve been saying that for years even without affiliate kickbacks. It’s one of the most lucrative affiliate make money online programs I’ve come across and a definite money maker that helps to pad my monthly sit-on-my-butt income.