Tuesday, February 24, 2009

Make friends by saving money on books

One of my favorite hobbies is reading. Even when I was little, I preferred to have my nose in a book rather than pressed up against a television. For the last few years, I haven't been able to indulge this hobby as much as I otherwise would have wanted to; my heavy course load and busy study-job schedule kept me from reading much more than the occasional quick read or a daily to weekly check of Google Reader.

For the first time in my life, I actually have enough time to read for leisure. The only downside, of course, is that for the first time in my life I am living in a place where most people do not speak English natively. Although the experience is wonderful overall, there are of course downfalls: one big one is the cost of books.

If you live in a non-English speaking country, you know exactly what I mean. New books are expensive. New books written in a foreign language can easily cost three times more.

With that in mind, I've found that one of the best ways to get new books is to trade them with other people. My friends and I are always exchanging books we loved, hated, or anything in between. Scarcity of cheap books has also meant that I step outside the genre boundaries I would normally tend to prefer. I've discovered new authors and styles that I never would have without book swaps.

If you're new to an area, or don't know people who like to read, try looking on social networking sites for book exchanges. Some great resources are couchsurfing and meetup. You could also try facebook or any other website that you feel comfortable with. Another great place to look at is local hostels - where there are bound to be a few travelers who would like trade books. If you can't find any, think about starting your own!

Book exchanges are great. They're really a way of killing three birds with one stone: get books, save money, make friends.

Photo by Faeryan

Saturday, February 21, 2009

Money overcharges: criminal actions

Besides the two obvious types of credit card overcharges -- when you notice it right away, or when you don't notice until much later -- there is a third type of overcharge that is equally important to know about, think about, and plan about before and while you live in a new area. This is particularly prevalent in Turkey - though I've read recent stories about its rise in more developed areas. Note, of course, that this advice is particular only to Turkey, where violent crime is relatively rare and the chance that a situation like this will become actually dangerous is quite small.

Situation Three: Criminal actions
A guy I know came to visit Istanbul for a short period of time. A common scam in tourist areas is for a local guy to come up to a foreigner and start a conversation. Eventually, they go to a bar that the local guy suggests. A few drinks later when the foreigner goes to leave, the bill comes - for a few thousand lira. It sounds too outrageous to be true, but I have met a number of people who fell for this - and I am sure there are even more who are ashamed to come forth with their woeful tales. Unlike typical overcharges, where my other friends did not realize they were being charged too much until after the transaction had been completed, the overcharge is readily apparent; so too is the fact that unless payment is received, the foreigner is going to be hurt.

What happens if you find yourself in a situation like this - or any other - where you are afraid? It's not enough, like so many blogs, to merely say 'Avoid that type of situation!' Whether it's becoming the victim of a crime or of an elaborate scheme like the one described above, many times, people were targeted by savvy con artists who make their living determining how to trick smart people.

So what can you do in such a situation? What my friend did - paying the several thousand lira, is one way to get out and get out fast. This is a particularly important route if you are confronted with extreme danger: guns, knives, etc. He resolved danger, but in a costly way. If he had been here longer, he might have heard about the way the scam usually played out and realized that the "I will take you to a bar" trick is not actually a very dangerous situation, and there are ways to get away without paying as much.

Aside, then, from paying the exorbitant fee, what else could he have done? There are two main solutions that have worked for people I know:

First: if told they had to pay a ridiculous amount of money, they got to an ATM in any was possible. They said they needed a PIN, or their bank only accepted ATM withdrawals - whatever they thought would get them outside. They even had people accompany them to the ATM. After that, they either showed they had no money in their accounts, or they made a scene and don't stop until people noticed. These scams are most popular in Turkey in a very crowded area - called Taksim - where there are countless people walking in the streets. Never underestimate the power of a public scene.

Second: barter the amount down. Not shockingly, most people, when confronted with a bill for a few thousand lira for a few glasses of beer, will refuse to pay. Does the bar really want that thousand lira? Sure - but they'll settle for a few hundred. It's not a perfect solution, but it certainly minimizes the risk. They said whatever they had to to reduce this amount - that transactions over a few hundred of dollars required a call to the bank by someone else, that their card just didn't accept amounts that high, that they were near their credit limit. As with all bargaining, they were firm and stuck to their goal of minimizing the cost.

When it's all done, file a police report! It may come to nothing, but at least you will have evidence of a crime. Note, however, that most credit card companies will not waive the charges, even if they were made under duress. Crazy but true. I called several companies - MasterCard and Visa - and learned that their policy is that no matter the situation, if the cardholder 'approved' the charges, they were stuck with the amount billed. Because of that, your best bet is to minimize as much as possible before paying.

Photo by Ned Kelly

Wednesday, February 18, 2009

Travel credit charge and cash overcharges - the public forum remedy

Photo by Andres Rueda

Three years ago, several of my friends and I visited another friend in Istanbul, Turkey. We came during the summer at the beginning of the huge tourist-season rush. We knew that we would be charged more for tourist type items than locals would have, but what we had not realized was how important it was to scrutinize every single transaction - particularly when using a credit card.

I'm not talking about nickles and dimes here: I'm referencing those outrageous overcharges that can really affect your travel or financial situation. No amount of planning with a personal finance budgeting in mind can truly prevent this, but it is the sort of thing that can break your budget.

Situation One: The overcharge is noticed right away
One day, while we were walking around Istanbul looking at a beautiful mosque, two young Turkish men came up to talk to my friends and I. Hoping for romance, they settled for a laborious but engrossing conversation at a tea shop. As we left and paid, we gave cash to our friend who was using a check card. To our surprise, when we received the credit card receipt, the original had been charged with one too many zeros to the end of it. That small mistake meant the price of our teas was off by a hundred lira, a huge impact on a broke, traveling college student's budget.

Situation Two: The overcharge is not discovered until later
Another overcharge happened to one of my good friends who lived in Israel for the summer of 2008. His trip was pretty uneventful in terms of money, in large part due to his extensive financial planning. However, he was overcharged at a major hotel to the tune of over US $300. He didn't notice the overcharge until he checked his statement online the following week. Upon calling the hotel, he was consistently told that no one - save the hotel's accountant - could resolve the issue; inconveniently, the accountant was apparently on a permanent vacation.

What did these two individuals do? Because the situations were different, they required drastically different solutions.

In situation one, we were able to have our new Turkish friends express extreme outrage at the overcharge, which was corrected right away. Even if we had not had native speakers with us, it would have been fairly easy for us to communicate the problem with the bill. Of course, the transaction cancelation took a few days to process, but it did go through.

In situation two, my friend was presented with a very different set of facts. He was no longer at the hotel and had lost the ability to immediately make a public scene. This, along with the (albeit short) passage of time dramatically diminished his power in talking to the hotel. He finally resolved it in a rather dramatic fashion - but it worked. He told the hotel that if they did not return the overcharge, he was going to write about his difficult experience with the hotel and submit it to every travel blog and review website possible.

What does this mean?

Particularly in tourist areas, do not underestimate the power of making a public scene.
It's easiest to correct a problem at the scene, immediately after the overcharge occurs. Waiting can necessitate more drastic, more frustrating, interactions with the store, company, or service that overcharged you. But, if you don't discover the overcharge until later and can't come to a resolution, the internet does allow for a vast public forum.
If you don't keep track of your spending - at least a little - you will never know when an overcharge has occurred; likewise, if you don't check receipts after you pay, you may not realize an overcharge has ocurred.

Monday, February 16, 2009

Relative costs to cut costs

Before I moved to Turkey, one of my friends told me the thing she would miss most when she left was cheap food.

How cheap is it?

There's no one answer. Some people only eat out - for them, living in Turkey is about as expensive as anywhere else in absolute terms.

Take an average meal at a restaurant here. You could go to a middling restaurant and get a meal for 8 lira. With water and a small tip, your meal would run between 8-10 lira. Add alcohol, an expensive product in Turkey, or a soda, and the meal will run to about 15 lira. You can find cheaper, you can definately find more expensive, but consistently getting a 10-15 lira meal with a drink would be a pretty good deal.

In the US, a dinner or lunch would be comparatively priced. You may find cheaper, you may find more expensive, but getting a full meal, with tips and a drink for $15 would be a pretty good deal.

So, the food price seems the same, right? It does seem like that - until you look at relative costs. As with many countries or areas with lower standards of living, the cost of eating out is actually much, much, higher than the relative cost of groceries for a week. Why is that? The answer lies somewhere in the differences of restaurant cultures and demand - here, if people are eating out, they can afford to. Even in other countries with lower costs of living than Turkey, and cheaper restaurant tabs, it's clear that eating at home is significantly less costly relative to eating out.

It's a lot easier for me to reign in spending when I think about costs this way. For instance, for groceries last week I bought 8 tomatoes, 2 zucchinis, a bag of carrots, a bag of potatoes, a loaf of bread, 2 bags of pasta, a thing of yogurt, a thing of Nutella, a thing of cream cheese, a small container of milk, a Toblerone chocolate bar, 6 red peppers, 6 green peppers, 10 small green peppers, 3 pears, 3 bananas, a head of red cabbage, a thing of juice and a 1 litre of coke - for 27 lira. 27!

If you can't tell from the food I buy, I'm not living on a pauper's diet. I'm eating well - but eating frugally. In the US, I would have spent between 50-100 dollars a week on a similar shopping cart full of food. Looking at the relative cost - both time and money - of eating out versus cooking a meal in the US, it was only a little more expensive to eat out. Here, it is an entirely different story. That doesn't mean I never eat out. It does mean I put my spending into perspective.

I don't advocate cutting everything out of your life that's not dirt cheap. There are some things I love, and are worth it to me to pay more for. But try looking at your costs in a relational sense to figure out whether you really want those costs to stay the same. Make sure to pick a product that's in the same field - whether it's transportation, food, entertainment, drinks, coffee, or anything else so you can actually compare what their utility, costs, and value are to you.

Money Matters: Before (or while) you go

Photo by Piazza del Popolo

I cannot overstate the importance of notifying your bank of your travels abroad and having multiple ways to access money.

Three stories:

I have a friend who came to Turkey with her credit card. Turns out, her credit card company stopped accepting charges from Turkey a month into her three month stay. She didn’t bring another card and didn’t have access to another account. She ended up having to pay exorbitant fees to get money wired to her and was incredibly lucky she had all the documentation required to access the transferred funds.

My second friend had her card here in Istanbul, and after using it for a year discovered that her charges were suddenly being denied. Neglecting to tell the bank she was abroad, they allowed the charges go through until she bought a large-ticket item from abroad.

I have another friend who brought his card to Barcelona but attempted to enter the PIN too many times. The third try, the card locked up and there was no way to resolve the issue without him presenting the card to the bank. It turned out the machine he was entering the PIN into was reading the card as a credit card – so his entering the unnecessary PIN ended up putting the ancient machine on the fritz and blocked his card. His bank could have mailed a new card to him, which is useful while in the States – not so useful when abroad.

What is the theme of these three?

All situations could have been better, or were better, by planning ahead. The first could have brought multiple credit cards, opened an account domestically, or have brought enough cash with her to cover her costs. While it feels risky – at least to me – to carry huge sums of cash, if she had brought multiple credit cards, she could have stored them in different locations. This goes for anyone, regardless of time spent in a country. It’s better to be overprepared than caught in a terrible situation. It’s also a hassle, but well worth it, to set up a savings account if staying in a country for any period of time. Local laws will differ in their requirements for a bank account: in Turkey, all that is required is a Passport and a Turkish tax card which may be obtained with a US Passport (though many banks will tell you different requirements, if you persist, that is all that’s needed). Also, make sure to check with your bank before you go to ensure you can use your ATM card or credit card abroad – there are a surprising number of countries that have restricted use policies; some block all use.

My second friend’s experience highlights an incredibly important thing to do before – or while – you go abroad. Notify your bank! It is amazing how many people fail to notify their bank and come to find, after a week or two of use, that their card has been blocked. Notice alone may not be enough: though I notified my bank, sure enough, a week after I got here, I had a message on my cell phone requesting that I call the bank regarding ‘suspicious activity’ on my card. An emailed message to them requesting they review my travel notifications cleared that up and took less than 30 second of my time. My friend had to spend nearly 30 minutes on the phone to clear something up that would have taken only a few minutes had she done it herself. What is scarier, though, is that the bank didn’t put a stop on her account after the first few charges in a foreign country. For all she knew, the card was being used by another person. An explicit notice to the bank of your travel plans will help to stop any unauthorized use; my friend was lucky, though I know others who have had worse luck.

The third was prudent – he brought multiple forms of payment. With a spare credit card and adequate cash, he continued to have access to money as he needed it and had no problem continuing his trip. He was also able to use a credit card and ATM card whenever he needed (or wanted) to. He did still have to deal with the locked card when he went home – but it never interfered with his trip.

What's lessons can be taken from their stories?
• Check with your bank before you go to any country to make sure your card will be accepted at all parts of the trip.
• If you have not done so already, notify your bank you will be travelling, including which countries and which dates.
• Bring multiple forms of payment! Try to at least bring a credit card and an ATM card, and bring them from different banks, if possible. Store them in separate locations.
• Bring other forms of payments that you feel comfortable with - cash is accepted pretty much anywere (apparently, not Russia, but pretty much anywhere else).
• If you are going to be in a country for any length of time - say, over a few weeks - see what it takes to set up an account there before you go. When you get there, set one up and deposit your cash or transfer funds from the US. Dealing with pretty much any problem involving frozen cards or accounts is going to be easier from within the country.

Friday, February 13, 2009

Foreign financial crises - job loss abroad

There was an interesting international news article in the New York Times yesterday about the droves of foreign workers leaving Dubai, which, like many other countries, is in the midst of an economic depression. Abandoning their cars and mortgaged houses, these unemployed or underemployed workers have been fleeing the country to escape from their massive, criminal debt that they have no way to pay off.

First, as a caveat and bit of a personal story: this article highlights how lucky I feel to have stable employment. In my last semester at law school when I was planning to practice in Michigan, I started applying to hundreds of jobs. Each job, hundreds of other highly qualified candidates would apply as well (I am not exaggerating these numbers - after a while, the whole process became too defeating to continue). I soon realized that with many law students and seasoned attorneys in the same predicament, I would be better off looking in a jurisdictions where my skills would be a unique asset. I applied for a job in Istanbul and here I am, while many of my classmates struggle, nine months after graduation, to find a job. In a way, my flight was from Michigan, where my being a native English, US-trained, jobless just-graduated-law-student would never set me apart from the hundreds of others vying for the same job.

But this article raises unique questions and challenges that I have little experience with for the expatriate employee. How deep are your ties to a country? How deep is your debt? It also highlights one of the benefits (and more unethical aspects) of expatriate living: sometimes, it’s easier to just cut and run and go back home, or somewhere else, than dealing with the impacts of your financial woes. This is obviously not to advocate that, but is certainly how many have reacted to the deepening global financial crisis.

If you are thinking of taking on debt in a foreign country, do you know the debtors’ laws? In Dubai, for instance, failure to pay bills is punishable by jail. I’m not planning on acquiring any large debt like a mortgage or house payment any time soon, but this really does highlight the need to speak to a qualified, educated individual before taking on any sort of major debt in the country. I would never have guessed not paying bills could land me in jail, and I would hate to have to face the book-it or be-booked dilemma that many in Dubai are now facing.

Finally, it also, of course, highlights the need to have an adequate financial cushion to help ride out the bad times. This is something that I myself am still working on, thinking that problems like this will never happen to me. It’s easy for me to think my job is secure; I could go anywhere. And, though the people in this story were in the wrong place at the wrong time, hopefully other workers, foreign or domestic, can learn from their unfortunate stories. I've always planned to build up a safety net sometime in the 'future', but articles like this drive home that future should be now.

Wednesday, February 11, 2009

International Banking - Get online

If you live abroad, or are planning on living abroad, one major financial hurdle to clear is how to deal with banks across international lines.

One of the most important tools that I have used to effectively bank is using the full potential of their online services. By doing that, I am able to handle the vast majority of my banking, investing, and payment of student loans and credit cards using only the power of the interet.

By learning how to adequately utilize my bank's online resources, I've saved time, money, and a ton of effort.

Three different ways to use online banking
Bulletin Board Messaging: My credit union allows me to leave messages on the message board and they’ll complete the transactions. It sounds like a such a small thing, but the impact was clear when my sister entered the wrong PIN number for my ATM card too many times and it locked. I was able to leave a message, have a new card with the PIN that I requested sent to her address, all within the span of a few days, just by leaving a message.
Instant Message Communication: I also have an IRA that I just activated to automatically withdraw money every month. Unfortunately, the IRA was set to deposit into 2009’s account – I wanted 2008. A few quick words with the helpful Fidelity Investments representative, and the money was transferred - no problem. What's even better is they let me know that though I can't change the settings to avoid contacting them in the future, I don't have to ask them every month to change it over; though they can't change the setting, they can just transfer it all in April.
Online money transfers: I also routinely transfer money between my accounts. By using online banking, I can do many things myself, including transfer to my credit card, put money into a CD, and set up automatic bill payments. Those that I can’t do, I can ask to be done for me via instant messaging or online board messaging.

Of course, these represent a small fraction of what you could do with online banking - I just haven't found a need for much more in my life.

If you need a good summary of what online banking is, or feel lost in the process, try looking through this website. The best way to figure out what to do, though, is to jump in and just start doing it. If you haven’t signed up for the service at your bank, I recommend doing so today.

Tuesday, February 10, 2009

Personal finance for foreigners - Opening day!

Hello reading world,

After years of enjoying some truly wonderful personal finance blogs, I have decided to start my own. This blog will be devoted to personal finance from an international perspective.

As an expatriate for the last several months and for at least the next two years, I have found there is just not enough readily available information applicable to my banking, my finances, and my life. There isn’t the kind of information that I want and need all wrapped up in a single site.

This blog will explore topics that are particularly important to those living abroad but still financing, in some way, at home. I will explore strategies for dealing with student loans, credit cards, money transfers, 401(k) management, IRAs, savings, spending, and more, all while living away from (at least some of ) your banking tools.

My hope is that although this blog will be relevant to those who find themselves banking cross-nationally, there will be discussions that are germane for those who are not. I hope that these tips, strategies, and discussions can help anyone, expatriate or not, with their finances.

Many thanks, and I hope to post my first ‘real’ post soon!