BUYING A HOUSE IN ITALY - DEALING WITH THE EXCHANGE RATE

Because we're American I'll use the term dollars when talking about the exchange rate, but of course if you're coming from the UK, Australia, Canada or anywhere else in the world that isn't on the euro, remember that your currency may compare differently. I'm sure most of you are well aware of the volatility of the money markets, and in the five years that we've lived in Italy we've been on a roller coaster ride!

Whether you're considering a permanent move to Italy or would just like a second home here, the exchange rate will affect you in many ways. Your first and largest exchange of dollars for euro may be during the purchase of your new home, or it may be a continuing exchange if you're building or restoring. Don't worry about consulting the experts, because there are no experts! When we first found our house nearly six years ago, one euro cost about 95¢...maybe even a little less. The euro was still new, and the 'experts' were predicting that the euro and the dollar would eventually settle to about a one-to-one exchange rate. As we would later discover, these so-called experts didn't know their euro from their a$$!

We knew from the start that our lives would be simpler in Italy, and not just because that was the norm, but because we'd be retired and living on a fixed income. Because we hadn't saved as much as we should have, we knew we'd have to take out a small mortgage, but we figured with careful planning and controlled spending we'd be fine. I'm a saver and a bargain hunter anyway, so given everything we'd learned about living in Italy and given the 'experts' predictions for the euro, we took the plunge!

Unfortunately for us, as soon as we took the plunge the dollar took the plunge too....and kept sinking, lower....and lower.....and even lower! We were never in danger of being 'forced' to move back to the states, but we were forced to give up our plans of travelling throughout Italy and Europe....but since we loved our town and Umbria in general, it really wasn't too painful. Should we have been better prepared? Could we have been better prepared? The answer to both these questions is yes, but.....if we'd been so afraid of the decline of the dollar we might never have made the move, so in retrospect....NO REGRETS!

Perhaps you'll need a bigger comfort zone than we had. Perhaps the ever-changing rates will drive you crazy. But maybe you can learn a few lessons from our experience and be better prepared for the good as well as the bad. Here are my suggestions:

We were lucky in that Art's retirement pensions were fixed amounts, not tied to investments. No matter how much the stock market goes up or down, his Civil Service, SEIU and Social Security payments remain the same with no worries about depleting the principle. If it's possible for you to retire with something similiar and to let your investments continue to grow (or in our case, grow/shrink/grow/shrink/etc), you'll be better off. Try to determine just what your monthly living expenses will be, and don't short yourself...you know that things always cost more than you think and that there are always those unexpected costs along the way. Budget high, knowing that if you do end up with too much money at the end of the month, that's a good thing!

Once again I'll hype of merits of living in a small town like we do. Owning a luxurious villa might seem like a great idea - room for family and friends to visit, perhaps your own olive oil or wine in the fall - but in the end you may find that the upkeep of the house and the land costs more than you bargained for. Do you want to spend the time after your guests have left cleaning up, washing the linens, cleaning the bathrooms? Do you really want to be the one climbing in the olive trees each spring to prune? Do you have enough experience to tend the grapevines? Do you want to buy a tractor for tilling? If you answered "no" to any of these questions, then remember to budget for someone else to do these chores for you.

If, on the other hand, you buy a house in a village - a house like ours, for example! - all you have to do is lock the door behind you when you go, knowing that the house and the garden will take care of themselves until you return. Once you do arrive the markets will be here, just a few steps away so that you can fill the fridge and restock the pantry.

Okay, back to the money stuff. Over these past six years we've seen the euro go from 95¢ to $1.60+...and now back down to $1.20something , which seems like such a treat! Obviously no one knows what the future will bring, so in considering how much to budget I'd recommend trying to estimate your monthly costs....gas, water, electricity, property taxes, garbage taxes, cost to own a car, including the taxes and insurance, food costs, including restaurants. Will you have satellite TV? Internet connections? Think of everything you possibly can, then ask questions! if you'll be here full-time and have legal residency your property taxes (ICI) will be much lower than if you don't have residency. Some utility costs will also be lower if you're a legal resident.

After you've gotten all your estimates together do a conversion using the current exchange rate....then add in an additional 10%, or 20%, or whatever percentage makes you feel comfortable. For us the decline of the dollar took away our 'fun' money, but never endangered our daily living. Decide for yourself: what are you willing to give up? If the dollar took a nosedive could you be happy in your own home here in Italy, or would you miss not being able to travel...would you mind eating out less often? Would you miss not being able to add to your ceramics collection on a regular basis, or those trips to the designer outlets?

Although I'm sometimes labelled a pessimist, I don't agree with that assesment at all; in fact I don't like the word pessimist OR it's connotation. I prefer to call myself a realist. I think it's practical and prudent to prepare for the worst, but that doesn't mean I expect the worst will happen...I just want to be ready if it does! And if it doesn't, well, it's a pleasant surprise, and, when it comes to budgets, it can also mean an unexpected treat!
Bottom line:

• Save Save Save! Maximize your 401Ks, take advantage of matching funds from your employer, put up with an older car, whatever it takes!
• Plan wisely. This means asking questions, visiting expat message boards, exploring the areas where you're thinking of buying. Educate yourself.
• Make a realistic budget, and include a cushion for unexpected costs as well as a dip in the exchange rate.
• Don't buy a larger house than you really need. That villa with friends and family might be nice for a few weeks vacation, but do you really need - or want - a huge property to maintain year round?

Obviously we all have our "must haves". Some of us couldn't live without the trendiest clothes or the coolest new cellphone. For others having a great car is more important than home furnishings. Some would rather surround themselves with great works of art or a beautiful piece of furniture. For most of us though, life is a series of compromises, so we somehow struggle by with that older car in order to afford something else that's a little higher on the priority list.
If living in Italy is high on your list of priorities then start figuring out what it is you need to know and do to make it a reality. Budget in some flexibility to deal with the exchange rate, but don't scare yourself out of your dream. As I said before, we have NO regrets about making the move! If we can do it with limited funds and declining dollars then I'm confident almost anyone else can do it too!  I hope our experiences will help make your decision to buy a house in Italy just a little easier!

BUYING A HOUSE IN ITALY - LEAVING FRIENDS AND FAMILY BEHIND

If you're thinking about buying our house in Italy...or buying any property abroad, then leaving family and friends behind is certainly a big consideration. Leaving your safety net of familiar surroundings, familiar faces and a familiar language can be scary. Aging parents and/or grandparents and grandchildren are usually at the top of everyone's worry list, and rightly so. What if there's an emergency? How will I stay close to my family and friends? Will I become a stranger to my grandkids?

The first thing most expats-to-be have to face is the reaction of friends and family to the decision to move far away. After the initial surprise/shock wears off, you'll find that most people fall into four categories:

1. First there will be those who truly 'get it'. They'll be excited for you, and excited by the idea that they'll now have an excuse to visit Italy and maybe even a place to stay! To them you'll be a hero. the ones brave enough to take the chance and live the dream.
2. The second group will be those who truly do NOT 'get it'. These people will ask why you want to leave your home country, and many will even suggest that it's downright UNpatriotic. They see your decision to live in a foreign country as a rejection of your homeland and all it's traditions. These people might even be angry and confrontational.
3. The third group of people are people who also don't 'get it', but they'll just be so confused about the whole concept of a foreign country that they really don't have much to say. These people have probably never traveled outside their home country, and really don't know why anyone would want or need to do such a thing. One comment often heard from people in this group: "But there's so much to see in the United States!"
4. The fourth category will consist of close friends and family who definitely support your decision to move whether they understand it or not. They offer their unconditional love and support and just want you to be happy.

Needless to say, the move will be easier if most of your friends and family fall into the first and fourth categories. There's no way to make the people in the second and third categories understand....ever. It's like trying to explain why you fell in love with someone - you can list all their wonderful qualities, but in the end we all know it's that special something, the chemistry or special spark that's just impossible to describe. Art's tried over and over and over to get people to come to Italy so they'll finally get it...but in the end, most of them have no interest in making the trip, and those who have still don't get it.
Try as we might, we've never been able to adequately describe just why we moved to Italy. We just knew. We knew it was the right thing to do and the right time to do it. We also knew it would be hard to leave friends and family, but somehow the pull of Italy was stronger than any other pull.
When my mom's friends found out we were moving to Italy, one of them said, "What are you going to DO?!" My mom just looked at her and said "Nothing. she's 50 years old; I can't ground her or forbid her to go! Sure I'll miss her, but it's what she want to do and I'm happy for her." Unfortunately my mom died before we made the move, but just knowing that I had her unconditional support meant a lot.

My daughter on the other hand, although not surprised when we made the announcement, had quite a different reaction. Actually she had lots of reactions, most of them negative. Yes, I understand that kids are supposed to move away from parents, but parents aren't supposed to move away from their kids! In a sense I'm sure she felt as if I was abandoning her, but all of her reactions were based on HER feelings. Never once did she say she was excited or happy for us. Never once did she say she hoped we'd have fun on our new adventure. Although I DO understand her sadness at our leaving, I was definitely hurt and disappointed that she didn't seem to care that we were really happy and excited!
My son, the real reason we ended up in Italy definitely got it. He'd lived in Italy for two years and he and his wife did their best to really get to know their Italian neighbors, to explore the country and to take advantage of all life in Italy had to offer.

When friends asked if we wouldn't miss our kids and grandkids our answer was "Of course we will, but we can't stay here just because of them!" Given my son's situation in the military, it's doubtful he'll ever return to Louisville, even when he retires. In fact, there's every possibility that he and his family will end up in Europe one day. We told our friends that with so many grandparents now living long distances from their grandchildren, we didn't see much difference between our grandchildren flying to see us in Italy or flying to see us if we'd retired to Florida!

Because neither of us have any living parents or grandparents, that's one concern we didn't have to address, but for many it's a fact of life. As parents and grandparents age and become more dependent on others to drive, or cook, or oversee their financial affairs, making sure you, as well as your family, are comfortable with the arrangements is a must. Although these discussion can be difficult, I'd recommend having a frank talk with your parents and siblings to discuss how future changes will be handled. Knowing that your parents are safe will help you to enjoy your new life.

In the end, we've been lucky that we've been able to go back to the states twice each year. Yes, some friends have drifted away, but new ones have taken their place. We've actually connected with new people in Louisville via the internet who share our love of Italy! Had we stayed in Louisville we probably never would have made these connections. We've also made so many new friends in Italy, a real international group of friends who expand our world and brighten our lives.

After five years people now seem to 'accept' the fact that we live in Italy, but those who didn't understand then still don't understand now. We know now, more than ever, that yes, we made the right decision for us. We keep in touch via email, via this blog, and via our regular visits. In the end, overcoming feelings of guilt or questions of responsibility might be difficult, but once you give yourself permission to live your own life and to follow your heart, everything else just falls into place.

BUYING A HOUSE IN ITALY - DECIDING WHERE

It wasn't easy for us to verbalize what we wanted when we first decided to live in Italy. It's easy to say "I want to live in Italy!", but a little harder to decide where. The big city will offer different options than country living. Life in southern Italy might be a little cheaper than life in northern Italy, but what are the trade-offs? And for new retirees like us, what would we do to fill our days? Art worked two jobs for more than thirty years, and never had the time to develop any hobbies. Although I only worked part-time, I didn't really have any special hobbies either, so we were at loose ends.

During our first trip to Italy we'd really fallen in love with Umbria, and it seemed much more affordable than Tuscany. Additionally Umbria is halfway between Rome and Florence, two of our favorite cities, with Orvieto, another favorite, at the edge of Umbria near the Tuscan border. the location seemed to be right in the heart of everything we loved about Italy.

Because travel has always been what we enjoy most, we decided that Umbria would be a great fit. We were within an hour's drive of so many fantastic places: Assisi, Perugia, Todi, Bevagna, Orvieto, Cortona, Lago Tresimeno, and on and on. We could be in Rome in about two hours, and Florence in a little over two hours. We could explore Umbria, Le Marche and Tuscany by train or by car....take day trips or spend a night or two for a more in depth visit. Once the Perugia airport started service with RyanAir we could easily (and cheaply!) visit London...and beyond, or Barcelona. The ocean was about two hours away in either direction. We could arrive in Italy at Fiumicino airport in Rome and be home in just a few hours.

Although the whole of Italy offers history, tradition and a variety of options, we knew that Umbria was the perfect fit for us...and we'd like to suggest that it might be a perfect fit for you too! You can read through our blog to see what we've been doing over the past five years...to learn about our town and the people we've come to know and love. Umbria is called "the green heart of Italy", but for us it's where our hearts are.