FIRE in Israel, or getting out of here

[MyFutureIL]

Hi fellows.

I was born in Israel, and unfortunate (to me) I'm not able to relocate from here to the US.
There are number of reasons that make life in here harder for me, but financially is the main one.

I make a decent amount of $40K after taxes, saving most of it when I can. should be making at least twice in other places.
But the COL is so high in here. If you accumulate all the different taxes, it gets to around 70% of your salary.
There's a 100% tax on cars and gas and public transportation is not an option (doesn't function and isn't available at all at some parts of the week), housing prices are unbelievable and groceries are extremely overpriced (you can get some local products from here for a better price abroad).

I'm 33, and I've saved through the years around $125K in liquid cash, not including other savings.
plenty of our savings from work are tied to a structure managed by insurance companies (there's no IRA equality) which take an enormous percent for each deposit and each year, lose the money sometimes and it's not something that you can get around (unless you'll pay full tax and ignore your employer matching). the situation isn't getting better, and it seems like they keep deducting from younger people pensions to pay the promised amounts to current retirees.

Although I make more than twice the median, and I've never been in debt, I'm not sure how to take care of my financial future. I don't think it's wise to buy an apartment right now with those prices, and the market is unstable which can go down any second. most of all, I wish to move to the states, and although this is a far possibility that I haven't found a way for yet, I'm afraid of spending money here that I'll miss in relocating.

I try to order what I can from amazon, as sometimes even with the high taxes and absurd shipment prices, it's cheaper.

Does anyone have any solid advice on how I can manage life in here? or better yet, get out?


* There is one famous Israeli blog about FI/RE, but I don't think it's a valid example. the author made the majority of her money in London and lives a strict life, focused on not having any social life.

[mozar]

Well you can be frugal and still socialize.
Do you live in Tel Aviv? I am empathetic to your situation, and I agree you shouldn't buy an apartment.

It's hard for anyone to immigrate to the USA unless you already have family here. Have you thought about moving to Canada? Germany?

[MyFutureIL]

Thanks.

I'm frugal as I can be. socializing is expensive, I'm not taking it to that blogger's extremes, but I don't indulge in expensive restaurants and alcohol either. my problem is the cost of my basic needs.

I used to live in Tel Aviv, but once me and my gf split up, I moved back with my parents to their huge and nearly empty house (could afford staying, but seemed ridiculous to pay $3000 a month by myself for a rotting apartment). haven't found a better solution yet, and I'm still here as I plan to travel to Florida soon, just to feel better. so I haven't moved out yet.

I've looked at Canada and Germany, although they don't shine for me culturally. it's not as easy to get there either. I know plenty of people who got to move to Germany, but every single one of them did so on the account of some family citizenship.

[mozar]

Well, my only idea is to go to grad school in Germany for free, and retrain for a highly needed profession. Then get a job and a work visa. I also know people who have immigrated to the USA this way. But they had to pay for school. They were Chinese citizens who went to George Washington University with me. GWU is 35k for their graduate accounting program, which is cheap for where I live. I forget the name of the work visa they got. HB something.

If you like public transportation Germany is the place to be. There are other countries that want people too. Maybe New Zealand or Australia?

[MyFutureIL]

I have a profession (highly paying one), but not a degree.

Maybe school is the way to go... but at my 30+ age seems more difficult.

NZ or Aus are relatively expensive to live, and have their own restrictions.

[mozar]

Maybe school is the way to go... but at my 30+ age seems more difficult.

How bad do you want it? :-)

[MyFutureIL]

76?

The thing is, there I'll need to use all my savings for tuition and living (no student loans, can't work while studying) and there is no guarantee I'll get to stay once I'm done.

[Paul der Krake]

You speak of cultural appeal- what are your criteria?

There are very nice countries where English is not the primary language but can be used almost anywhere: Sweden, The Netherlands, etc.

[MyFutureIL]

Entertainment in English is my main point, and that's rare and hard to build on in places other than London, NY and LA.

I feel like I know the American culture, I live it daily, although from afar. I don't feel belong to Germany, Sweden or the Netherlands.

[mozar]

So you want to move from an extremely high hcol area to another extremely high hcol area for entertainment? And you don't want to pay for it or sacrifice for it? And you want it now? I would chill out at your parents until you FIRE then move where you want to.

[MyFutureIL]

COL is higher in here.
If I'll know an option to get results, I'm willing to sacrifice and building myself in Texas is also a valid option right now.
It's not that I can pay $100K and get it - guaranteed moving requires millions.

I need to move out for my own sanity, and they will be selling the huge apartment soon (I'm saving costs, while they save by using my car and other stuff).
FIRE is not an option, even if I'll continue working in here for 20 more years, I won't get to retire until I'll be 70. the economics are wrong in here and the government steals your pension and investments to finance a very thin and corrupted group.

[AliEli]

COL in Australia varies depending on where you choose to settle.  If you want to live on your own in a major city it will be expensive (maybe not so much in Hobart and Adelaide), but there are lots of ways to cut down costs if you are willing to compromise.  But, migration to Australia is difficult unless you meet the skills requirements... which takes you back to the education pathway :)

[screwit]

I'm in Berlin and a native English speaker. In this city you can get by without German (although I personally think one should learn it) and there is a very large expat community. You are still dealing with German culture in the larger scheme of things, but it is very possible to live in an English bubble here. There are cinemas and comedy clubs and theatre in English.
Other cities aren't like this really. I wouldn't want to live in any other German city (and I have lived in 5).

Studying is a good option although you must learn german and probably won't be able to work while doing so. A friend from South America moved here on a visa with the plan to study but first had to do the German language qualifications. After 18 months he got a visa allowing him to work as well (to a limited income I think).
I moved here to study as well but as a grad student and I then recurved a stipend from the university.
COL here is pretty low. Rents are rising rapidly though,  and its getting harder to find apartments. A room in a shared apartment will cost you probably 400-500€. A single room apartment 600€ etc. Wanting to live in the trendier areas will probably cost you more.
I feed a family of four on 400€ a month. A main meal in a restaurant is about 10€, a beer 2.50€ and a cocktail usually around 9€. Transport is amazing and a monthly ticket is about 80€.

If you are from a Russian Jewish family that was forced out of germany in the last few centuries you can get german citizenship. If you can find an employer who will sponser,  you can get a visa.  If you apply to study you may get a student visa. I'm sure there is information around from other Israelis who have come here,  you could also check out the ToyTownGermany forums.

Germany isn't a bad place to live.  Occasionally they drive you bananas, but having now spent half my life as an expat I can tell you that once you leave your own country EVERYWHERE will drive you bananas at times.

[MyFutureIL]

I know about 5 couples who moved to Berlin (but we are not friends). all on a spouse visa.

Studying is a great option in your 20s, I'm not sure about me.

I know those rules, but I'm the exception of them. and I wasn't able to find a proper sponsor. I've been looking out for a long time and I can't be granted with a citizenship simply like others (it's mostly luck and who you were born to).

Germany seems better than here, but it will be hard building myself the way I want to and investing in becoming German when this isn't my life intention.

[Rylito]

I sympathize with you because I know how tough it is in Israel for ordinary people to make a living.  Have you thought about FIREing in a non-first world country, some place a little cheaper where you might be able to bring enough capital to be granted a resident permit and start a small business to support yourself?  Are there any places you might have traveled after you got out of the army that appealed to you? 

I haven't looked into specifics but I'm thinking places like Thailand, Costa Rica, etc. would have enough Israelis passing through that you could start a cafe, falafel stand, backpacker hostel, you name it, that would cater to them.  One of my Israeli cousins started an organic grocery in Bulgaria after he got out of the army and lived there for several years.

[MyFutureIL]

Thank you.

I did think about that. I don't think I'll enjoy being in a less development place. I tried to consult a friend and he told me that's crazy coming from out of town and building a business I know nothing of.
Unlike most Israelis, I've only been to Europe and the US. I didn't find appeal in tracking and outdoor sleeping, I had enough of this in the army. I want to shower every day.

I've done research (even found a partner for a pub in Cambodia), but a friend who knows his stuff told me to forget about it. Enough Israelis are passing... I won't necessarily be their main point, nor I want to.

He might have the proper citizenship to do so, I've been thinking about real estate in Bulgaria, but until I'll be part of the EU, I can't do much.

[Gimesalot]

Unlike most Israelis, I've only been to Europe and the US. I didn't find appeal in tracking and outdoor sleeping, I had enough of this in the army. I want to shower every day.

uhhhh......  They have houses and showers in countries other than the US, Canada, Australia, and European ones.  I've even seen them with my own eyes.

You seem to want to  have a posh life in a handful of expensive countries, yet you have no skills with which to do that, you have no connections, and you don't want to sacrifice to get there.  Good luck.

[Rylito]

Another option that occurred to me is teaching Hebrew at a Jewish day school.  I think the pay would not be that good but if you get permanent residency after a couple of years you can also obtain a teaching credential and look for public schools in a LCOL area.  In the US, it helps if you have a math background or know Spanish--many school districts have extreme shortages of teachers with those backgrounds.  They are even recruiting teachers from Spain and Mexico to teach in the US.  (Unfortunately there is not much demand for native Hebrew speakers in US public schools :) )

[TheEngineer]

Okay, so...

I'm also Israeli and 33 yo.
And I also contemplate relocating to a different country from time to time. Sometimes for the money and opportunity, sometimes because of the adventure, sometimes to get away from it all. Oh, and the possibility also crossed my mind when I ran down the stairs to the bomb shelter, carrying my baby daughter, sirens wailing and Iron Dome interceptions lighting the night sky. Damn. But that was like two years ago. Ancient history, eh?

Anyways,
I went back and checked my 2015 bank and IRS statements just for you:
Me: gross 108 K$/yr, net 75 k$. (side note: I'm an Engineer and that's a 10th percentile salary in Israel.)
DW nets 10-20 K$/yr, it fluctuates.
We saved about 23 K$ out of after-tax income. (27%)
I have the same mandatory 5.5% with 12% employer match contributions as everyone.
I also have the 2.5% with 7.5% match "Study Fund" thing going.
So - overall around 55% saving rate.

Side note for non - Israelis: every salaried worker contributes a mandatory 5.5% (you can increase it up to 7%) to his retirement fund accessible at age 60 (with tax breaks and limits etc.). Employer match is a mandatory 6% to the retirement fund, and another mandatory 6% (can be increased to 8.33%) to a severance fund, which is pretty much the same, but is accessible when you're fired (and also when you quit).
There's also a "Study fund" which is voluntary (your employer doesn't have to offer it), where you contribute an extra 2.5% with 7.5% match. This has all the tax breaks etc. but becomes accessible after 6 years of contributions. Delicious.

This is with a toddler in private day care, and another one on the way.
While renting in uptown Tel Aviv and owning a car.

I'm on track to FI around 40 yo, with the help of above market rate returns (stock picker, guilty as charged) and a windfall expected to come in this year from DW's family. without those I guess I could still be FI before 50.

Before the punches, kudos to you for not buying real estate with a 3.2% gross return (bubble?). Stay strong!
Also, there's a positive ending, so stay tuned.

So, facepunch time:
Taxes: Taxes in Israel are high, but come on. My Overall Income Tax rate is 16.5%. Marginal Tax rate: 34%. It's true that i got a 27% after-ta savings rate. It doesn't mean a 73% tax rate.
Transportation: True, public transportation isn't great, and doesn't work on Saturdays and holidays. Still. We enjoy great biking weather. I bike to work, and drop off DD at the daycare. Try it. You can own a cheap car for weekends / long trips / heavy hauling.
Retirement funds management: There's a ton of providers, and you can switch between them whenever you wish. I work for BigCorp, so we got good terms (1% fee on deposits, 0.2% on the balance for a "pension fund"). I just got offered something like 0% and 0%, and I'm gonna switch. Work the phone and don't pay extra. Also, The ministry of finance just declared there's going to be a tender (is that the word?) to select cheap management companies as default providers for new employees. You will be able to join them soon, i think this September.
link (Hebrew): http://mof.gov.il/hon/Pension/pension/Pages/DefaultFunds.aspx
Retirement funds: If you're worried about fees, see above. If you're worried about Actuary re-balance (youngsters paying for old people) - you can switch to a "Gemel fund" and your money is yours (higher fees, around 0.5% of the balance). If you have a retirement insurance policy - transfer the balance to a pension fund, like yesterday.
Rent and COL: Center of Tel Aviv = Very HCOL. The rest of it is HCOL to MCOL, depending on location. There's a decently priced apartment in biking distance from every job in the city. Wanna live in the city? Get a roommate. Or a cheapo apartment. And bicycles. Also, there's jobs and lives outside of Tel Aviv. most people live there. I myself am moving to a different town with my job next year.
Attitude: Seems a bit fatalist to me. I suspect you read way too much Ynet / Calcalist. I would suggest the Low Information Diet...

Tips:
Relocation: You don't have to do it through your workplace. You can either marry a local or find a (required) job at your destination. People do it all the time. Look for jobs online, interview over skype, and fly over if necessary. If your field is not "hot" enough to grant you a work permit, start learning some skills. I suggest programming if you have any technical inclination.
Lowering your tax burden : If you invest your money and pay dividend / monetary gains tax, you can save a lot by registering as a business owner and opening a BO Study Fund. PM me for details.
"Study fund": If your employer offers it, go for it. If not, ask for it, and consider switching jobs over this. It's a 7.5% bump, tax free and pretty liquid. These also have IRAs.
Retirement abroad: Totally legit. There's a big ex-Israeli retirement community in Costa Rica. Also in Thailand. Save here, in an almost-first-world-country, and retire there to live like a king!

The post turned out quite long... I guess I have a lot to say on the matter :)
Feel free to PM me for further details.

[MyFutureIL]

uhhhh......  They have houses and showers

I was saying I didn't travel over there - you're more likely to shower while doing a trip through Europe. In India, you'll sleep a few days in the mud first. I had friends who were looking just for that. I didn't.

- Yet you have no skills with which to do that
- you don't want to sacrifice to get there.  Good luck.

I have skills, but the world is changing, and nationality is predicament to work locally for most jobs

What sacrifices are you talking about? What actions can be done that can guarantee a life and not a short visit?

[MyFutureIL]

Another option that occurred to me is teaching Hebrew at a Jewish day school.

Thanks. From my knowledge (knowing people who did just that), they would gladly accept Jewish/former Israelis who have a citizenship and live there to come and be part of the school. They won't help you with any permanent citizenship or even a work visa.

[MyFutureIL]

Okay, so...

Great to have an Israeli perspective, thank you for joining.

I think the biggest difference between us is that you have a life in here (family, friends, future), while I barely do. My social life is ultimately better anywhere else.
I'm still puzzled on why there are no missiles right now. Maybe we should wait another week?

Your numbers seem higher than the average, but I guess it depends on your field.
Seems like my net is $45k (after deducting all the savings/funds + taxes). Living costs (which I currently avoid), will be at minimum $16K a year.

I don't trust the local funds and their management. There is no alternative (we don't have a real IRA as the government strongly opposes, you need to pay a yearly percent and a percent on each deposit, depends on how connected you are).

I'll need to live somewhere. I'm holding myself, but eventually, I might need to buy a place.

Taxes: My taxes calculations (70%) were adding up income, health, social security, rates tax, VAT (17%), cars, gas... and adjusting currency (I'm not the first one to refer to that number). We pay a lot of taxes that yield a return to someone else.

Transportation: It's hard not to break a sweat when walking, how can you bike in this weather? I was using Tel Ofan (CitiBike) while lending my car to my parents, and it was a nightmare. Others got their bikes stolen. A friend I had who used the now hated electric bike couldn't stand them anymore, and came drenched in sweat when he drove, even at night to the nearest cinema. Owning a car isn't cheap, the initial buy is a burden and for one guy to keep it is problematic.

Retirement funds management: You can't work the phone, people rarely have leverage here. I have good terms for some of them and probably worse for others.
Retirement funds: Will have to look that up. I have gemels and pension. no insurance.
Rent and COL: Most of my jobs required a car and driving to an outer city. Being single in Rishon is not like living in Tel Aviv and it seems like the prices are rising. I used to live in Tel Aviv, had a lifetime of circling for parking.
Attitude: Maybe, but other than savings in my bank (which aren't insured in Israel), I don't really have something positive going on. I haven't read any Israeli "news source" for the last 5 years, I'm on Ynet maybe once a year when a co-worker sends a link.

Some good tips, some of them I've considered and got covered, I wish it was that simple. I'll pm you.

Thanks for the long and caring post.
You present a brighter situation, but I think your situation is different on some accounts than most who live here. I'm glad things are working for you while presenting a healthier outlook than Hasolidit.

[TheEngineer]

I can't sleep. Dunno if it's this post trying to come out or something else. I'll give it a try.

Look, basically you got it right - life is hard, it's harder here, and HaSolidit is a bit too strict. Or whacky. Or lacking soft skills.

You feel trapped in a box, or wandering aimlessly across a plateau. Your personal life bum you and the finances aren't great.
 BUT
1. Objectively, you got it good. It's corny but true. Go to the Negev desert and see the beduins living in tin huts eating sand. Go camping in the golan heights and watch the orange glow of Syrian villages burning on the horizon. Go to the bad parts of Tel Aviv and see 10 illegal immigrants sharing a truely rotting apartment. Or just realise that most of your peers would think your NW is unattainable.
2. Some people got it better than you. I may be one of them. Don't let it get you down. It doesn't say anything negative about you.
3. Get to work on improving your situation:
3a. Review your personal life. If living with your parents sucks, start planning to move out. If you feel isolated, get in touch with a friend or two. Or organize an Israeli mustachian meetup (yay!). I'll get beers.
3b. Review your finances and do a case study if necessary. Get a realistic (your retirement funds and social security will pay out. Libertarianism is overrated) FI date. It'll make feel better.
3c. Review your job and income situation. Where are now? Where would you like to be? Where's the gap? (need more skills? Experience? Networking? Need to step up and ask for a raise or switch jobs?).
3d. Review your relocation options. Focus on 1-2 countries. I don't know for sure, but I think your best (only?) way to go is to come work on a skilled worker visa and apply for citizenship after a couple of years. Like the job step above, analize your skill set and the target country skilled worker criteria. Look for qualifing jobs and analize the gap. Try to think how your personal life will look, and estimate the impact on your finances.

After all this you'll be informed and in charge. Now you can choose your path and work on improving your situation. Tou can move out, or bicycle more (decent pair please, no Tel Ofan. Buy used and get a 100$ lock.) or ask for a raise or look for a relocation option.

Not everything will work out exactly like you want it to, but the effort to improve your life will affect you in many positive ways.

Best of luck,
TheEngineer

P.S.
You wrote something about liquid cash assets. If you're not investing your money, add it to your to-do list. You have a 10K$/yr earning potential sitting right there.

[jlajr]

Thank you, TheEngineer, for writing exactly what went through my mind while reading MyFutureIL's posts.

I made aliyah from the US about 20 years ago. Seeing many friends and other olim leave over that time, I'm convinced that anyone who includes financial or economic factors in the decision to make aliyah (immigrate) or yeridah (emigrate) will almost certainly not make aliyah in the first place nor remain in Israel.

I thought about leaving once, and came quite close to redeeming a friend's frequent flyer miles to do so. And, not surprisingly, I only considered it because I doubted my short-, medium-, and long-term employment prospects in any profession in which I could reasonably expect to find work.

Allow me to offer encouragement, as well: When I was recently looking for an apartment (to rent, of course), I decided that my expected saving rate and living closer to where my current job is - albeit in a higher cost of living area - was more important than holding on to 16-year-old furniture and a refrigerator that I had moved about six or seven times. It was not an easy decision, but it came down to priorities.

Priorities was also the answer I gave to people who asked me how I could afford to pay for a membership at the Caesarea Golf Club (which I had for one year, and purchased before I came across MMM and other online FIRE resources, and began to accelerate my saving).

When others conclude that I can live the way I do and save at such a high rate only because I'm single, I've never been married, and I don't have any children, my first response is: If having a family and achieving complete financial independence are both important to you, than it is even more important to take a good, hard look at how to increase saving and how you spend money. My next sentence is: I also haven't shared housing, transportation, and other living expenses with another income-earner.

I know making these decisions are difficult, but if you are honest with yourself when you make them, I'm confident that you will be happy with what you decide.

I am one of the founders of the Achieving Financial Independence in Israel Facebook group. (Of course, unless you have an anonymous Facebook account, posts wouldn't be anonymous, as they are on this forum.) We sort of split off from the Living Financially Smarter in Israel group, from which I unsubscribed when I decided I no longer wanted to see posts announcing purchases of property presumably using most or all of a family's liquid assets, and with a high-percentage, long-term mortgage - and the dozens of congratulatory comments.

Finally, instead of a MMM journal, I now write a blog (jlajr.wordpress.com) on which I report my saving and expenses. I don't delude myself into thinking that many people might choose to live their lives as I do. On the other hand, ever since I discovered MMM and the other online FIRE resources, and began thinking about the possibilities, I can't even begin to describe how happy I've been. The philosophy, the lifestyle - it permeates every aspect of my life, in unique ways that flow naturally from me.

I wish you the best of luck, and invite you to contact me privately or join our group.