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.

If I were to think of a single word to describe me, “scholar” wouldn’t be it. Throughout my school years, studying mathematics or writing a long thesis would require a level of focus that, at the time, I never believed I possessed. Lectures would waff in through one ear and rocket out of the other like oxygen being sucked out through a hole in the space station. My classroom notes contained more drawings than words and I had so many zeros in the grade books that it was presumed that I was partially comatose.

Somehow, I managed to graduate.

I wasn’t completely brain dead, though. By the age of 15 I had discovered that subjects such as architecture, astronomy, computers, and business lit a fire inside of me. I started a web design business at 15, a software company at 18, and now do web development full time, which allowed me to move over here. I finished a book on LLC/Corporate law in a day and it was one of the best reads I’d had in a while. Who knew lawyers could be funny? I just had to find what interested me and go after it.

But nothing has prepared me for the level of hell I’ve stumbled into now. What could be another canto in the Divine Comedy if it hadn’t given Dante such nightmares that it couldn’t be scribbled to paper is now my vacation spot within the inferno. You guessed it, I’m studying for my Italian driver’s license.

DUM DUM DUUUUUUUUUM

Not since sitting in Ol’ Lauderdale’s Algebra II class on exam day have I felt like such a moron. A foolish assumption that after having driven for a decade that learning the road laws over here would be a piece of cake, but I have been proven wrong. Compared to the US equivalent, the driving test here reads more like an entrance exam for MIT.

Allow me to elaborate with some examples of the more choice questions:

1) What might a sign mean? Not what does it mean, there is a huge difference.
2) What sign might be accompanied with another sign?
3) Does one sign appear before or after another sign? For instance, does a yield sign appear before or after a railroad crossing sign at a track crossing?

And then there are the infamous intersection questions:

Who goes first?

What’s on second?

I don’t know’s on third.

Pray for me.

Note: This was a post from September of 2006 that I just found in a random text file. I can’t remember if I ever published it, but if not, here it is.

Driving through Tuscany gave me an almost deja-vu feeling as the rolling hills and tall cyprus trees have become so familiar from the countless movies and books about Italy that I’d felt I’d been there many times before. It’s a 2½ hour drive from Casina to San Gimignano and our Bed & Breakfast was just outside of town, down a dirt road lined with other Bed & Breakfasts. Simo had only hear the name of the town a few times and it was completely new to me, so we were both a little surprised to find it as touristy as Firenze or Siena. In fact, one of the few touristy cities I’d been to that had more Americans than Brits or other Europeans. Maybe Americans only start showing up in September.

Before checking into our B&B, we took a little time to see San Gimignano and passed through the large gate of the city’s surrounding protective wall — original wooden doors still in place. The town has a long history with its inception dating around the 3rd century BCE and laster became a major trading post on an ancient highway stretching from Canterbury to Rome. The wealthy, like in many towns in Italy, built towers to display their wealth and position and would always try to out-do the others.

Most towers have disappeared with time, but many of San Gimignano’s have remained and is one of the main lures of the town. The town, once more prosperous and bustling than Florence, died out in the 14th century when the Plague swept through Italy and, aside from the numerous Bed & Breakfasts and tourist shops, it seems hardly changed.

We spent Saturday driving through wine country and stopping at the small villages in between. From Colle Val d’Elsa to Monteriggioni,
Buonconvento, San Quirico d’Orcia and Pienza, we spent an hour or two in each wandering through the streets and visiting the historic sites. Colle Val d’Elsa was my favorite town as we seemed to be the only two tourists there, but was just as beautiful as San Gimignano in my opinion.

Simona’s favorite was Monteriggioni, a small village completely sealed in by an imposing 30’ wall around the town. We do agree that the courtyard that you walk into as soon as you pass the gates in Monteriggioni has a certain indescribable allure that isn’t found often, even in the numerous beautiful villages in Italy.

We stopped in an alimentari along the way and bought bread with various types of salame and cheese from the area with the idea of finding a nice place to have a picnic.

We began towards our next planned stop, but eventually tossed the map down and turned down whichever road seemed the most interesting. We passed vineyard after vineyard, as this region is famous for the many types of wine that it produces, in search of a good place to sit and eat. Time passed and the smell of the salame was tempting my hunger pangs and told me to just stop by the side of the road and we’ll eat in the car, but we pressed on. Eventually, we ended up in the small town of Pontignano where a picnic table was sitting under the shade next to a high rock wall and an old church in the distance. Our picnic consisted only of salame sandwiches and Fanta, but to me was the most enjoyable meal of the weekend. I’d later have some stuffed rabbit that I might rank up in my top 10 list of greatest meals ever, but the whole experience of picnic with Simo made it all the more memorable.

After eating, we headed down a path marked as an archaeological site, and had a series of stones stacked upon one another, but nothing to describe what they were. After turning back, we went to see what was on the otherside of the wall next to where we ate and discovered that our quiet little village was actually one of the satellite campuses of the University of Siena. The school looked like it had taken the place of an old monastery with two square courtyards sandwiched together burying everything but the steeple of an old church in the middle. We did our best to look like students wandering around the hallways, but they had more cameras than a bank and we just wanted to check out what was inside.
 

On Sunday, we checked out of our room and drove into Siena where we’d spend the remainder of the day. The weather was sunny and hot and the city was overflowing with tourists bustling through the streets. We visited the Duomo and its “crypt”, which they tell you after they’ve taken your money and pushed you inside that it’s not really a crypt, then wandered through the streets marveling at the architecture of the ancient town. The plan was only to stay a few hours as a side trip on the way back, so we made our way to the car and headed off for the 2½ hour drive back home.

Good to see that politicians are smarmy the world ‘round, and not just limited to any geographical area. I saw this news report from Austin today about how Texas legislators vote in the House.

I also learned that Italian politicians do the same thing, except here they have a name: “pianists.”

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!