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A Financial Hello from a long time member...
Old 09-11-2014, 07:47 AM   #1
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A Financial Hello from a long time member...

Hello everyone. I joined in 2004 and have been a periodic, if infrequent poster. You might remember me as the "reaching ravioli" guy. Do a search. I thought I'd post a financial "Hi I am..." because I had never done that.

I am 59 and my wife is 62; no children -- but great aunt/uncle to our many nieces/nephews. We decided in 1992, in our 7th year of marriage, (30 years next year!) that our high stress and time-demanding jobs were keeping us from our favorite activity: being with each other. So, we made a serious plan and joint commitment for early retirement with a no-nonsense budget and kept to it ever since. She stopped working for money a long while back. Now we are ready to push the button for ending my j*b -- in fact I have submitted my resignation letter with a July 18, 2015 effective date, so that my organization has sufficient time to find a suitable replacement. Just 310 days from now, but who is counting!

We have lived by "the plan" through thick and thin but still managed to have a life these last 22 years. We have traveled (always on a budget), collected some art (my one indulgence) and have enjoyed the company of our friends in social occasions. We have not bought designer clothes, expensive toys, or fancy homes. We moved to Switzerland for my last j*b five years ago - partly because the opportunity was exciting but mostly to fulfill a dream of living in Europe.

We refer to Switzerland as the Beverly Hills of Europe. Very expensive. Very. Each year it is either #1 or #2 most expensive in the world (we rotate with Norway). In fact, how two uber-savers ended up here is a mystery. Nonetheless, we now are hooked and want to stay, assuming the very strict Swiss immigration folks agree. We live in the Italian speaking canton of Ticino, which has a warm, mediterranean climate with palm trees locally and snow capped mountains in the distance. Wonderful, warm people as well.

Our town of Lugano has about 50,000 residents (perhaps 150,000 in the region), and its own beautiful alpine lake. We think it is our own piece of paradise. Our Italian improves each day/month/year and we are relishing the multiple challenges of a new language, new culture, new geography. We're just near the border of Italy. It is very easy to travel from here to all the places in Europe we love either by train or air.

Financially like this (retirement assets/income as of next July 2015):

Taxable Stock Account: $1.65M, produces $80,000 annual dividend income
Traditional/Roth Iras: $225,000 (long term hold; no income at present)
US W*rk Pension (non-cola): $47,000 annually (essentially a 6.3% annuity on a corpus of about $750,000 which I treat as a bond asset)
Swiss W*rk Pension (cola): $9,000 annually starting next July
Social Security Spouse: $8,500 annually
Total Annual Income USD: $144,500 USD
This is equivalent to Total Annual Income CHF: 130,000 CHF (Swiss Francs)

Health care insurance in Switzerland is mandatory and offered by private nonprofits (sort of like the old Blue Cross/Blue Shield). It is not linked to your job or paid by your employer. You pay it and you pay it all of your life; there is no single payer, national option. The canton will help you pay later in life if your funds get depleted. No one in Switzerland goes without health care, even if they cannot pay for it themselves. We like that. We pay together about 15,000 CHF (with a low deductible); but the policy is gold plated, no BS or games from our insurance company, which pays promptly for health services. Also, virtually no forms! You go to the doctor, they submit a bill and it gets paid. It includes doctor visits/hospitalizations all medications, even spa treatment for physical ailments and stress/burnout. Well, this is Europe after all. We have yet to try that benefit. There is plenty of hiking and outdoor sports to help keep us fit as well. Although the Italian food here works against that a bit!

We rent for 2,800 CHF/month -- our apartment would cost at least 1.5M CHF if we wanted to buy it and it isn't particularly special as it would be in the US for that price; but it is on Lake Lugano so we have the million dollar view. This small (1100 square foot), two-bedroom apartment would be the first to go if we had to pull in our belts, with a move to a less central/convenient location not on the lake for 750-1000 less/month. That's our plan B. We don't own a car here (haven't most of our lives except for 10 years in a rural state in the US where it was crucial -- even then we kept it for 10 years and even sold it when we left for Europe) and have purchased public transit passes and half-price train cards good for three years at at time at great savings.

So, in July 2015 we will have a gross annual income of 130,000 Swiss Francs, less about 30,000 in BOTH US and Swiss taxes (yes, have to pay both; but get some foreign tax credits to offset the pain). So, net about 100,000 CHF.

Our expenses come to about 14,000 less than our net income, so we can save a bit and travel. Our stock portfolio is filled with high quality, blue-chip dividend growers, so we don't worry much about price volatility or selling shares. It pays about 4.5% overall and most dividends are raised annually around an average of 6-8%. Our plan is that at retirement next summer, we will have about 50,000 CHF in emergency cash and another 65,000 in operational funds, which we will use to fund 6-months of living expenses, replenishing then during the 6 months from our various income streams. Rinsing/repeating twice a year. BTW: we don't have any debt whatsover.

Up ahead there is still my own Social Security plus a small Swiss social security benefit when I'm 66 or so.

I think we are looking okay. If over the years things got too pricey here (especially with the Dollar/Franc exhange rate), we could always move back to the US, where we would get an approximately 30% bump up just in exchange rate differential and lower cost of living. A small pizza out is about 16-19 CHF here ($17.60-$21.00). So, as you might imagine we eat in a lot and take the train to Italy (about 20 minutes away) for lower cost meals out and grocery shopping on occasion. It's fun to decide on a Saturday morning to "go to Italy for lunch" :-)

We have have mostly w*rked for nonprofits our entire lives and started our marriage with very little. Aside from a small inheritance our success so far is due to LBYM (in a very big way). gains from re-selling homes (always condo apartments--I cut my last blade of grass when I left home for university!), and some astute stock purchases during downturns when everyone else was panicking. But I was never a trader; too complicated for me. I focused on buying into good businesses which would pay me for my trouble.

Tell me what you think. I cannot wait to begin "Release 2.0" of our joint life together -- we have many projects in mind plus a lot of travel and just being in the same room together doing whatever. This site and the many good voices on it has been a welcome and constant companion this last decade. There were many dark days when reading the forum was the best medicine, even if I wasn't taking part actively. Thanks to all!!

-Bryan Barnfellow

* Wow, I was holding a lot in these last 10 years :-) Sorry for the length of this. Promise brevity in the future.
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Old 09-11-2014, 08:40 AM   #2
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What a great report and an interesting read. I went to school for a year just outside of Geneva (but in France) so the winters were a little dark and depressing. Sounds like your location has much better weather, and the proximity to Italy is a plus. You have a lot to be proud of and thankful for.

Kindest regards.
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Old 09-11-2014, 08:46 AM   #3
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Thanks, Spncity. I don't know the French part of Switzerland well or France just over the border; but I want to visit more and learn. You are right about a lot to be thankful for -- every single day I am reminded.

All the best,
BB.
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Old 09-11-2014, 09:11 AM   #4
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So, as you might imagine we eat in a lot and take the train to Italy (about 20 minutes away) for lower cost meals out and grocery shopping on occasion. It's fun to decide on a Saturday morning to "go to Italy for lunch" :-)
Hi, Bryan. Thanks for the update. It sounds as if you've found your dream retirement location, if only you can afford it. Your remark about the big difference in prices between Switzerland and Italy makes me wonder if you've investigated moving across the border to Italy as part of your plan B, if Switzerland should prove too expensive. My family spent some time in the Lake Como area during our vacation this year and loved it. I took a quick look at the realty listings while we were there and thought that the home prices were fairly affordable (although without actually looking at any properties to see what we would be getting for the money). All in all, I thought Lake Como was the best of the places we saw in Italy to buy a vacation home. But your post indicates that you'll probably do just fine staying in Switzerland, so hopefully you won't need a plan B.
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Old 09-11-2014, 09:18 AM   #5
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Thanks, Karluk. We do have a plan B -- either Italy or France if we have to leave Switzerland. For now, we love it here -- everything works, taxes aren't too high, and did I mention that everything works? Like a Swiss watch. We adore Italy -- not sure if we could live there. Many Italians are moving north to Ticino. Like Italy, France is cheaper in many respects until you get to taxes. 55% is what I calculate we would pay :-(

Re: Como. Yes, a great spot! That's often where we have lunch when we "go to Italy for lunch."

-BB
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Old 09-11-2014, 09:23 AM   #6
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Sounds like you have a pretty solid financial plan in place with some reliable income sources and potential for growth in your portfolio. And a nice buffer where your income comfortably exceeds your expenses.

Those costs are pretty crazy given you're living in a small town. I'm thinking of small town America and the difference in prices is huge! Of course I bet you have some nice man-made scenery and natural beauty there. Sounds ideal!
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Old 09-11-2014, 09:39 AM   #7
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Fuego, the salaries in Switzerland generally are adjusted for the higher cost of living -- a secretary or admin. assistant can easily make 60,000 CHF (about $66,000) so that makes the prices seem a bit more sane within the insane bubble. I am enjoying a nice salary; but it goes away in 10 months and my wife and I are left to fend for ourselves with our savings/investments. One reason it is so expensive is that a lot of people want to live here and they tend to have a lot of money. The Swiss do restrict immigration quite severely but the demand is still high especially for real estate in popular destinations (Zurich, Geneva, even here in Lugano). Russians, Brazilians, and many others are all clamoring to get in the door.

Second, there is very little internal competition -- by design. The Swiss are good at protecting their economy. So, naturally, the leveling effect of multiple competitors is less pronounced here. You can order online and have things shipped here; however, there is a significant import tax on such things which when added to shipping costs makes it all less worthwhile.

So,why do I live here? I've been bitten by the bug I guess. It's a quality of life that I have never experienced anywhere else. And, my wife doesn't want to move at this point. We're able to pay for it now and hope we can going forward. I look at Realtor.com listings for US places I'd like to live in and am amazed at the price differential.

-BB
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Old 09-11-2014, 09:40 AM   #8
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Hello everyone. I joined in 2004 and have been a periodic, if infrequent poster. You might remember me as the "reaching ravioli" guy. Do a search. I thought I'd post a financial "Hi I am..." because I had never done that.

I am 59 and my wife is 62; no children -- but great aunt/uncle to our many nieces/nephews. We decided in 1992, in our 7th year of marriage, (30 years next year!) that our high stress and time-demanding jobs were keeping us from our favorite activity: being with each other. So, we made a serious plan and joint commitment for early retirement with a no-nonsense budget and kept to it ever since. She stopped working for money a long while back. Now we are ready to push the button for ending my j*b -- in fact I have submitted my resignation letter with a July 18, 2015 effective date, so that my organization has sufficient time to find a suitable replacement. Just 310 days from now, but who is counting!

We have lived by "the plan" through thick and thin but still managed to have a life these last 22 years. We have traveled (always on a budget), collected some art (my one indulgence) and have enjoyed the company of our friends in social occasions. We have not bought designer clothes, expensive toys, or fancy homes. We moved to Switzerland for my last j*b five years ago - partly because the opportunity was exciting but mostly to fulfill a dream of living in Europe.

We refer to Switzerland as the Beverly Hills of Europe. Very expensive. Very. Each year it is either #1 or #2 most expensive in the world (we rotate with Norway). In fact, how two uber-savers ended up here is a mystery. Nonetheless, we now are hooked and want to stay, assuming the very strict Swiss immigration folks agree. We live in the Italian speaking canton of Ticino, which has a warm, mediterranean climate with palm trees locally and snow capped mountains in the distance. Wonderful, warm people as well.

Our town of Lugano has about 50,000 residents (perhaps 150,000 in the region), and its own beautiful alpine lake. We think it is our own piece of paradise. Our Italian improves each day/month/year and we are relishing the multiple challenges of a new language, new culture, new geography. We're just near the border of Italy. It is very easy to travel from here to all the places in Europe we love either by train or air.

Financially like this (retirement assets/income as of next July 2015):

Taxable Stock Account: $1.65M, produces $80,000 annual dividend income
Traditional/Roth Iras: $225,000 (long term hold; no income at present)
US W*rk Pension (non-cola): $47,000 annually (essentially a 6.3% annuity on a corpus of about $750,000 which I treat as a bond asset)
Swiss W*rk Pension (cola): $9,000 annually starting next July
Social Security Spouse: $8,500 annually
Total Annual Income USD: $144,500 USD
This is equivalent to Total Annual Income CHF: 130,000 CHF (Swiss Francs)

Health care insurance in Switzerland is mandatory and offered by private nonprofits (sort of like the old Blue Cross/Blue Shield). It is not linked to your job or paid by your employer. You pay it and you pay it all of your life; there is no single payer, national option. The canton will help you pay later in life if your funds get depleted. No one in Switzerland goes without health care, even if they cannot pay for it themselves. We like that. We pay together about 15,000 CHF (with a low deductible); but the policy is gold plated, no BS or games from our insurance company, which pays promptly for health services. Also, virtually no forms! You go to the doctor, they submit a bill and it gets paid. It includes doctor visits/hospitalizations all medications, even spa treatment for physical ailments and stress/burnout. Well, this is Europe after all. We have yet to try that benefit. There is plenty of hiking and outdoor sports to help keep us fit as well. Although the Italian food here works against that a bit!

We rent for 2,800 CHF/month -- our apartment would cost at least 1.5M CHF if we wanted to buy it and it isn't particularly special as it would be in the US for that price; but it is on Lake Lugano so we have the million dollar view. This small (1100 square foot), two-bedroom apartment would be the first to go if we had to pull in our belts, with a move to a less central/convenient location not on the lake for 750-1000 less/month. That's our plan B. We don't own a car here (haven't most of our lives except for 10 years in a rural state in the US where it was crucial -- even then we kept it for 10 years and even sold it when we left for Europe) and have purchased public transit passes and half-price train cards good for three years at at time at great savings.

So, in July 2015 we will have a gross annual income of 130,000 Swiss Francs, less about 30,000 in BOTH US and Swiss taxes (yes, have to pay both; but get some foreign tax credits to offset the pain). So, net about 100,000 CHF.

Our expenses come to about 14,000 less than our net income, so we can save a bit and travel. Our stock portfolio is filled with high quality, blue-chip dividend growers, so we don't worry much about price volatility or selling shares. It pays about 4.5% overall and most dividends are raised annually around an average of 6-8%. Our plan is that at retirement next summer, we will have about 50,000 CHF in emergency cash and another 65,000 in operational funds, which we will use to fund 6-months of living expenses, replenishing then during the 6 months from our various income streams. Rinsing/repeating twice a year. BTW: we don't have any debt whatsover.

Up ahead there is still my own Social Security plus a small Swiss social security benefit when I'm 66 or so.

I think we are looking okay. If over the years things got too pricey here (especially with the Dollar/Franc exhange rate), we could always move back to the US, where we would get an approximately 30% bump up just in exchange rate differential and lower cost of living. A small pizza out is about 16-19 CHF here ($17.60-$21.00). So, as you might imagine we eat in a lot and take the train to Italy (about 20 minutes away) for lower cost meals out and grocery shopping on occasion. It's fun to decide on a Saturday morning to "go to Italy for lunch" :-)

We have have mostly w*rked for nonprofits our entire lives and started our marriage with very little. Aside from a small inheritance our success so far is due to LBYM (in a very big way). gains from re-selling homes (always condo apartments--I cut my last blade of grass when I left home for university!), and some astute stock purchases during downturns when everyone else was panicking. But I was never a trader; too complicated for me. I focused on buying into good businesses which would pay me for my trouble.

Tell me what you think. I cannot wait to begin "Release 2.0" of our joint life together -- we have many projects in mind plus a lot of travel and just being in the same room together doing whatever. This site and the many good voices on it has been a welcome and constant companion this last decade. There were many dark days when reading the forum was the best medicine, even if I wasn't taking part actively. Thanks to all!!

-Bryan Barnfellow

* Wow, I was holding a lot in these last 10 years :-) Sorry for the length of this. Promise brevity in the future.
Looks good and congrats on living the dream!
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Old 09-11-2014, 09:57 AM   #9
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Fuego, the salaries in Switzerland generally are adjusted for the higher cost of living -- a secretary or admin. assistant can easily make 60,000 CHF (about $66,000) so that makes the prices seem a bit more sane within the insane bubble. I am enjoying a nice salary; but it goes away in 10 months and my wife and I are left to fend for ourselves with our savings/investments. One reason it is so expensive is that a lot of people want to live here and they tend to have a lot of money. The Swiss do restrict immigration quite severely but the demand is still high especially for real estate in popular destinations (Zurich, Geneva, even here in Lugano). Russians, Brazilians, and many others are all clamoring to get in the door.

Second, there is very little internal competition -- by design. The Swiss are good at protecting their economy. So, naturally, the leveling effect of multiple competitors is less pronounced here. You can order online and have things shipped here; however, there is a significant import tax on such things which when added to shipping costs makes it all less worthwhile.

So,why do I live here? I've been bitten by the bug I guess. It's a quality of life that I have never experienced anywhere else. And, my wife doesn't want to move at this point. We're able to pay for it now and hope we can going forward. I look at Realtor.com listings for US places I'd like to live in and am amazed at the price differential.

-BB
Ha ha, my wife works for a Swiss company and makes about what that secretary makes. At least they get the Swiss benefits package here in the US for the most part (3 months paid maternity, lots of vacation time, paid sabbatical, etc).

Switzerland looks beautiful from the pics I've seen. Hopefully we can make it there some day. I don't blame you for sticking around if you can afford it!
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Old 09-11-2014, 10:05 AM   #10
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Check out these photo galleries of Lugano, in particular the panoramic, city, and lake views:

Photo gallery | Lugano Tourism

BB
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Old 09-11-2014, 10:11 AM   #11
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Buongiorno. Come sta? Bello posto. Il vostra programma molto interessante.
(I'm taking Italian 101 at the community college as my first post-retirement endeavor.)

It sounds like a great plan. Some practical questions, though...

Banking - I've heard with FACTA that Swiss banks are closing accounts of American citizens. Have you run into any issue with this? (I've read it on expat message boards.)

Visas. I assume you have a plan for this. I know it can be challenging to get a permanent residency visa there.

Buona fortuna!
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Old 09-11-2014, 10:13 AM   #12
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Check out these photo galleries of Lugano, in particular the panoramic, city, and lake views:

Photo gallery | Lugano Tourism

BB
From afar it looks a bit like Lake Atitlan in Guatemala.



And some of the vegetation and landscape reminds me of highland central Mexico. Very beautiful!
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Old 09-11-2014, 10:45 AM   #13
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From afar it looks a bit like Lake Atitlan in Guatemala.



And some of the vegetation and landscape reminds me of highland central Mexico. Very beautiful!
Must be equivalent then.
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Old 09-11-2014, 10:49 AM   #14
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Thanks for the insight into the Swiss medical insurance system.
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Old 09-11-2014, 11:17 AM   #15
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Must be equivalent then.
I was counting on you to highlight that the two are different. Very different. And not just due to costs.
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Old 09-11-2014, 02:57 PM   #16
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Best of luck with the Swiss authorities - sounds like a wonderful place to retire.
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Old 09-11-2014, 04:35 PM   #17
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Thanks for the interesting post. It's always interesting to hear about living in a different part of the world. Glad you're making it work for you and your wife.
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Old 09-11-2014, 07:27 PM   #18
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A very interesting post. We have been in Lugano on vacation and found it very beautiful. In fact, we took a long hike along the Riva Vincenzo Vela, past the Casino, through the park, and out to the Museo delle Culture along the water. We must have passed right by your place. I would never have imagined that there were palm trees in Switzerland.
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Old 09-11-2014, 07:57 PM   #19
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I grew up just outside of Geneva and own a condo in that area. So I am familiar with the high cost of living, but I could totally see myself retire there.

I think that you are in good shape financially. A net income of 100,000 CHF is nothing to sneer at. My one concern would be related to exchange rate if most of your assets are US-based. You have to be prepared to weather a drop in CHF income at some point. I know of a couple of American retirees who retired in neighboring France in the early 2000s only to be sent packing by the weak dollar a few years later. But it looks like you have some backup plan in place. So enjoy!
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Old 09-12-2014, 03:54 AM   #20
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Buongiorno. Come sta? Bello posto. Il vostra programma molto interessante.
(I'm taking Italian 101 at the community college as my first post-retirement endeavor.)

It sounds like a great plan. Some practical questions, though...

Banking - I've heard with FACTA that Swiss banks are closing accounts of American citizens. Have you run into any issue with this? (I've read it on expat message boards.)

Visas. I assume you have a plan for this. I know it can be challenging to get a permanent residency visa there.

Buona fortuna!
Gracie Mille, Rodi. Re: Banking. Yes, FATCA is a problem; but some banks (UBS for example) have created walled-in mini-banks within their organizations which only deal with Americans. This insulates the rest of the bank. Also, we use the bank associated with the Swiss Post (post office) and their charter prevents them from discriminating against any potential customers. FATCA was designed by the US IRS to catch the Fat Cats who are hiding funds in Switzerland. I get that. But it is causing real headaches and horrible costs for the vast majority of the 5-7M US expats around the globe who are innocent of these crimes. We did get "thrown out" of our first bank, one month after arrival and setting up our accounts. They were very apologetic; but with only about 400 American accounts out of many tens of thousands, they said it was the best business decision. Otherwise, they would have had to spend millions of francs changing all their information systems to track and report out what the IRS is demanding from every bank, even if they have only one American account. Some people with mortgages with these banks had their LOANS CALLED! They had to either pay the loan balance in its entirety or scramble to find a new bank, any bank, to take them on as customers or lose their homes.

As Americans living abroad we are unrepresented in Washington and most in the US congress have no idea of the impact. To catch a few criminals and collect a hundred or two million in fines and taxes, the IRS is causing something like $3 Trillion in new costs to banks around the world! And, to add insult to injury, each year we have to report the account numbers and highest balance on all non-US accounts. Fair enough, but we do it online at a site called "Financial Crimes Enforcement Office." :-(

Re: visa. We have "B" permits currently which are tied tightly to a j*b. We hope to get our "C" permits next spring. These are permanent residency permits (like green cards in the US). Fingers crossed that the immigration gods look down favorably on us :-)

Best of luck with your Italian class! Looks like you are making good progress.

-BB
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