What are we doing in Costa Rica?

One of the ways the Internet is changing the world is that it enables working, communicating, and conducting business transactions across great distances. One of the things I’m experimenting with here in Costa Rica is a little economic sleight of hand. The reason we can stay here for an extended period is not because we have a large savings (haha, that’s a good one), but that thanks to the Internet, I can continue to work for my U.S. clients and draw funds from my U.S. bank. It is something of a juggling act, but here’s how it works:

1. I do some work. Once I have made some useful software, the resulting code is transmitted over the network to one of my university clients.

2. They send me a check. It would be a lot easier if they paid me electronically (like with PayPal), but these are large bureaucratic institutions and they do things the way they do them. I use a mail handling service called Earth Class Mail which receives my mail and scans it, so I can see any checks or business letters on the web.

3. I deposit the funds electronically. I pay a monthly fee to use the same electronic funds transfer network that your gas company or your credit card company uses to automatically withdraw an amount from your checking account. I use the scanned image of the paper check to get the account number and bank routing number to initiate the transaction.

4. I transfer funds from my business bank to my personal bank. I can do this quickly and easily from my bank’s website.

I wasn’t sure this would all work until a couple of days ago, when I completed my first payment. From the moment my client puts a check in the mail to the moment I can go to the ATM and turn my hard work into ice cream and rum, it takes sixteen days to go through my Rube Goldberg system.

The upshot of all this is that I am warping some old, reliable rules of economics: that the income you earn and your cost-of-living are both tied to your location. In a country where the minimum wage is $2 an hour, I still draw a U.S. salary. And by the way, the demand for my software skills here in Puerto Viejo is absolutely zero!

We’re not exactly cleaning up financially; We’re still paying our mortgage and all the bills back in Texas. But I now know the model works, and it’s giving us a very memorable summer abroad.

This entry was posted on Wednesday, June 11th, 2008 at 11:50 am and is filed under Gear, Philosophy.You can follow any responses to this entry through the RSS 2.0 feed.You can skip to the end and leave a response. Pinging is currently not allowed.