Give Yourself Your Own Damn Raise!

A couple of weeks ago I was talking to a colleague, who is a moderate smoker, about how we spend money. He said: "If I could just quit smoking, it would be like having a 60-euro raise each month." Now, to Americans that may not seem like a lot of money, but here in Italy, raises are pretty hard to come by (the negative trade-off to having the security of such things as lifetime contracts, I suppose). It is still 720 euros more in your pocket per year.

It got me to thinking about the concept of giving yourself a raise. Why wait for your boss to notice you? Do it yourself. Better yet, reduce your expenses so much that after a few years you won't even have to work that much to cover them! Now that is empowerment, people!

If you're not sure how you can give yourself a raise, I have listed some of the items that we DON'T spend money on at my house. The shock is how much it adds up to! It made me think about how easy it is for my friends who make much more money than I do to live from paycheck to paycheck even though they are high earners.

Note: the Give Yourself A Raise concept is not for everyone.

Especially if you say to yourself, "I work so hard, I DESERVE to spend money on __________" or "Saving money is cool, but I want to have a LIFE..."

Rather, a compatible mindset would say "I work so hard, it's a pity to throw money away on ________  when what I really want to do is _____________."

Pick and choose what works for you. Here are some of the expenses that my friends and colleagues spend money on that I choose not to.

1. A second car.
Gas alone: 150

2. Apperitivi with friends during the week.
Savings: 80

3. Coffee and brioche at the bar (weekday breakfast).
Savings: 80

4. Lunch out or in the mensa.
Savings: 240

5. Yoga at the gym.
Savings: 40

6. Newspaper/magazines.
Savings: 40

7. Cigarettes.
Savings: 100

8. Massages.
Savings: 100

9. Meat.
Savings: 100

10. Manicures
Savings: 100

11. Estetista (hair removal, I believe-- these places are a mystery to me)
Savings: 100

12. Hairdresser (I may go once a year, otherwise I cut my own):
Savings: 100

13. Cable tv
Savings: 45

Total Savings: 1175

There are probably other things you may be spending your money on, too. If they are important to you, keep them. If not, simplify and live richer. It's the Triestine way.

Living the Triestine Dream: Let's quit work forever!!

This week I am obsessed with finances. Every once in a while I get this bug. I love reading the frugal blogs and trying to figure out how I can live free and clear without working (of course I will work anyway because I love working, but I just don't want all the PRESSURE to have to pay bills and things. I want them to pay themselves.)

Every time I bring this up, my husband has the same Italian reaction: "Retire early? That's not possible. We don't make enough money. We don't know anyone who has ever done that! Maybe in America, but no, sirree, not here in Italy! Not Possible!" End of Story.

But my Uncle?

Well, your Uncle made a lot more money than we do. He's rich. Maybe if we were rich... but we are not.

Well, how much do we have to have to be rich?!

Um. I don't know. A million?

And that's how these conversations go. Being able to "get there" is something that only "rich people" somewhere out in rich land can do. Not us. No. It is our destiny to work for an hourly wage that goes down every year (because we are in Italy) and accept our lot in life.

But I don't give up so easily. I pick up my journal again and again and again and I work out the numbers and try to work out how I can successfully replace my income with passive income (lower taxes and less work). Then I realized that I was coming at it from the wrong direction.

I realized I don't need to replace my income. I only need to cover my expenses. And my expenses are a completely different number than what I actually make on average because I do the one thing that ensures effective wealth building: I spend less than I make.

So I put together our fixed costs and came up with an insanely small amount that we actually spend per month then I added a good cushion to cover things like eating out (but once a month instead of once a week) and other "fun" spending. Once I did this, I started looking at what would be left over and how long it would take me to pay off my house, then buy another apartment for rental income (Italians are risk-averse, so property is an easier sell at my house).

Basically, the cheapskate blogs say it takes 7 years of living off of 30% of your income to retire (which does not mean "collect unemployment" it just means not have to work because your expenses are covered by passive income). When I did the math I found that I could pay off my house in 4 years (instead of 15) and then take another two and a half years to save up for another apartment to cover what is left of my expenses after my house gets paid off and including the small income I get from an apartment I already have. That means NOT SEVEN YEARS, but LESS!

Of course it means I would have to eat out less (which makes me hungry) but I think it would be worth it.

Then I realized that the money I get back each year from doing home improvements on my house over the next ten years gives us exactly the same amount of money that a rental would.

Incredible.

You just have to do the numbers. And live on the ultra cheap. More information on what that actually means as well.

Doing Work on Your House Pays You Back

If you happen to be doing work on your house, you can get a lot of money back if you do the correct paperwork. This is part of a government plan to cut down on tax evasion. Basically, the government is encouraging you to work with companies and individuals that invoice their work (much to the chagrin of workers and artisans who have been working in a cash-only economy since the beginning of time). They do this by refunding you 50-65% of what you paid to do work and/or make your house more energy efficient and/or furnish your home, over a ten-.year period.

Over the last year, we redid the plumbing and heating system on our house (65% back), got new doors and windows (65% back), knocked down a wall and two doors (0% spent, hubby did it himself), put in new flooring (50% back for materials and labor), redid the kitchen (50% back) and two bathrooms (50% back on materials and labor) and furnished the rest of the house (50% back and this includes things you buy at IKEA!).

For us this comes to roughly 4000 euros back each summer for the next ten years. Just to put it into perspective, if we add this money back to our 15-year mortgage, we can pay off our house five years sooner. We would have done this work anyway but we get this added extra bonus.

If you live in Italy, do your homework before you do work on your house. The paperwork can be tricky but it is definitely worth it!

We love Trieste on the Cheap!!

Did you lose a duck this weekend?

If you did, let me know. When this little sweetie showed up in my driveway yesterday we let him rest for a bit and then called ENPA to see what to do. A couple of hours later they came and took him and told us to spread the word because he is a domestic duck and is someone's pet. He had eaten yesterday (proof of that was in my driveway until we cleaned it up) so he probably wasn't far from home. I asked if we should keep him until we could find the owner but they said the danger is that he would take flight again and end up in the street as these types don't fly too far and he could be in danger if he did.

So, if you know anyone who is looking for a duck in the San Giuseppe area, please called ENPA or get in touch with me.

Quack.

UPDATE ON THE DUCK: Last we heard (last Tuesday), no one had claimed the duck and two more were found!! One was not far from where we found the duck in the picture, and another was in the middle of Via Flavia. Poor duckies!! Now they are in the safe and loving care of ENPA, but keep your feelers out for anyone who could be missing their pets.

Italian Taxes if American and Self-Employed

I don't know about you, but when I left the states in 2003 I expected to kiss my retirement goodbye. I had no idea that there was such thing as international pacts between countries and totalization agreements so that you can still retire even if you live in another country. I found out last year by accident and now I am doing my best to get my ducks in a row so that I, too, can someday enjoy my golden years...

First thing to know about living and working in Italy: If you work for an Italian company, you will pay your social security, which is called INPS, here in Italy. This means that for most people there is no issue. You should still do your American taxes each year but you will probably be exempted from having to pay anything there because you can't be taxed twice and you will have paid more here than you would have paid there anyway.

Everything changes, however, if you are self-employed. Once you open a VAT number (Partita IVA), you need to check out the table below. Here is the link.  

Note: This is an agreement between Italy and the US. Each country has its own agreement, so take a look at the Social Security website to get your info if you are living abroad but in another country. The rules are probably different.

What I want to highlight here is that if you are a US citizen, you should pay into the Social Security system in America, and NOT IN ITALY if you are self-employed. You need to get yourself a certificate of coverage BEFORE you start working as a self-employed person, otherwise you will have big problems, like I am having now after paying into the wrong system for 6 years. OUCH! If you do pay into the wrong system, like I did, you need to start paying into Social Security and send a copy of your tax documents to Social Security so that they can then issue your certificate of coverage and you can use that to ask INPS for reimbursement (you can only go back seven years).

If you are a dual citizen (American & Italian), you can choose to contribute to either the US or Italian system. I would encourage you to contribute to the American system for three reasons.

1. You only need to make 10 years of contributions as opposed to 20 years in Italy to ensure a minimum pension. You have to wait until retirement age to collect, of course, but everything you pay over the minimum is good news for you.

2. If you are married to an Italian or any other person who has never paid into the American Social Security system, they have a right to a pension of their own, which is calculated as 50% of your pension. This means that if I receive 1000 dollars per month, my husband has a right to a pension of 500 per month in addition to my pension.

3. The American system pays more, especially if you decide to work PAST retirement age. I know you are full of energy, so this may apply to you. If you are doing well and retiring early on the other hand, more power to you, that is my goal too!!

Another thing to consider. It is better to collect social security from one country or the other, not both. Once the countries know that you are collecting from another country (and they know because countries talk to each other), they reduce your benefits by up to 50% on both sides. Just so you know.

Let me know if you have any other issues about social security you want me to address here and I will do my best to find out how things work for you. Otherwise, I will update you on my progress of getting my situation in order.

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Summary Of Agreement Rules

The following table shows whether your work is covered under the U.S. or Italian Social Security system. If you are covered under U.S. Social Security, you and your employer (if you are an employee) must pay U.S. Social Security taxes. If you are covered under the Italian system, you and your employer (if you are an employee) must pay Italian Social Security taxes. "Certificate Of Coverage" section explains how to get a form from the country where you are covered that will prove you are exempt in the other country.

Your work status	Coverage and taxes
You are a U.S. National working in Italy:
For a U.S. employer	U.S.
For an Italian (or other non-U.S.) employer	Italy
As a self-employed person	U.S.
You are a U.S. national working in the U.S.:
For an Italian employer	U.S.
As a self-employed person	U.S.
You are an Italian national working in the U.S.:
For an Italian employer (or Italian-controlled business)	You may elect either U.S. or Italian coverage (see "Election Of Coverage" section)
For a U.S. (or other non-Italian) employer	U.S.
As a self-employed person and you are a resident of the United States	U.S
You are an Italian national working in Italy:
For Italian employer	Italy
For a U.S. employer or as a self-employed person and you are a resident of the United States	You may elect either U.S. or  Italian coverage (see "Election Of Coverage" section)
You are a dual U.S./Italian national working in Italy:
In employment or self-employment covered under both systems	You may elect either U.S. or  Italian coverage (see "Election Of Coverage" section)
You are a dual U.S./Italian national working in the U.S.:
In employment covered under both systems	You may elect either U.S. or  Italian coverage (see "Election Of Coverage" section)
As a self-employed person	U.S
You are a third country national regardless of the employer:
Working in the U.S.	U.S.
Working in Italy	Italy

Don't Forget Saint Nick

Just a quick reminder for those of you celebrating the holidays in Trieste. Saint Nick comes here. He's due on December 6. He doesn't just fill up your shoe with candies, either. He brings you REAL PRESENTS. They say this goes back to the Austrian tradition.

Kids are into Saint Nick, so make sure you leave your door open so he and his donkey can come in. He doesn't do chimneys even though he is skinny, so he could fit easily.

If you go to Viale XX September  you will see the Fiera di San Nicolò. That is another reminder for you not to forget St. Nick's day.

My sweetie hasn't forgotten. She has already written a letter saying that she wants a cat. A 3-YEAR-old cat. Not a 3-MONTH-old cat, mind you. It's a tall order, but Saint Nick is magic and he has two days to get it together. We'll see what the jolly old guy comes up with.

Also, don't go to school or to work on Friday. It's the day of the Immaculata.

Enjoy your short week!

Whatever happened to measure twice cut once??

In America everything has a process but we don't handle exceptions well.
In Italy there are only exceptions and no processes.

Everything you do here has to have an imprevisto.

Today's example is from the KITCHEN.

I bought a kitchen. It took months to arrive.

Installation day 1.

The day the workers came to install the kitchen, there were a couple of issues. First, the counter top had not been made yet because the proper stone was not available. That meant that cabinets could be installed but the appliances couldn't go in until the counter was in. That translated to two weeks which (of course) became three weeks with major appliances in my living room and no working kitchen.

Installation day 2

Finally, the workers came again to "finish the job." They noticed that the cabinet door for the dishwasher was just wrong and had to be replaced and the hardware for the cabinet that houses the fridge didn't attach to the fridge correctly. The front panel on the oven was damaged, and one whole side of the wooden table was completely unfinished as if it were going against a wall (which it is not). The cabinet with the extractor hood (I can't remember what we call those things) inside had a shelf with no hole in it to feed through the tube through.

Installation day 3

Fast forward three weeks, the guys come AGAIN. This time, they tried the oven but it didn't work (it blew out the electrical system for the house) and the counter was varnished but half of the counter is done in one style (rustic) and the other half is completely different (modern and flat).

Let's do the math. That's three visits and I still have no kitchen. I would like to say that this is an isolated event, but it's not.

Almost every job we had done in our house had such similar circumstances. In fact, we lived in our house for one month with only one electrical outlet for the entire house, even though the electrical work had actually been done for months. For some reason, those darn outlets just never got ordered. And then when they got here, half of them were wrong for one reason or another and other bits were missing. The holes cut in the ceiling for the lights were too big for the lights that arrived.

I mean, it's one imprevisto after another around here!

Please, give me a process!! Give me some quality control!!

But alas, it is not to be, because Life In Trieste offers bigger lessons in life:

You can't have what you want when you want it.

If it's worth having, it's worth waiting for.