COVID19 Economic Security and A Way Forward Part I

Affordable Mallorca’s purpose has always been helping people access economic resources that support a viable standard of living now and in the foreseeable future. The goal is to offer ideas and businesses that support stable communities. COVID-19 brings our mission into sharp focus. Many are confused by how to move forward after the quarantine lifts. Small businesses will have fewer customers. Magazines like ours will have fewer advertisers because the businesses that do survive will have little money for marketing.

In this series, we’ll explore options and alternatives to our traditional economy for the basics: food (and water), shelter and clothing. We will provide multiple options that fit different lifestyles. As we illustrate ideas, our hope is that you will take them, make them your own and share your solutions with us and others. #strongertogether

Time is Money #

Benjamin Franklin, American philosopher and inventor of the 1700s, said in Advice to a Young Tradesman, ‘Remember that time is money…” to show the monetary price of laziness. For centuries now, industry has been designed to save time for businesses in manufacturing, servicing and distribution. Costs to consumers have risen, not from an intrinsic value appreciation of the “thing” but because financial instruments have been used to artificially inflate the value of a good or service.

As an example, except for an innovative, newly-delivered technology developed by a company that needs to recoup its capital investment, a house is worth no more than the cost of materials and building services used to construct or renovate. Yes, location drives price but even that changes over time as market dynamics shift. However, each supplier creates a value based on costs plus profit. Then, add the taxes on the transfer of the title for the property and you have a much higher price than initially planned for.

I remember a few decades ago, here on Mallorca. We didn’t have a variety of materials. Renovating a house was much less expensive than today because people traded for supplies and services. Friends exchanged services for a place to camp or to live. Websites for agricultural workers on local agro-tourism properties connect them to housing opportunities. Carers for pets exchange services for housing. Senior carers are often willing to exchange for room and board. These types of exchanges will be more plentiful.

Sharer Economy #

First, we strongly recommend finding ways to tap into the sharer economy. Whether you have lots of money in the bank and credit on your bank cards or no funds because taxes and/or rent have drained you, sharing what you have is a useful way to exchange goods and services.

You may have light bulbs and someone has a bottle of wine. Exchange them. A Facebook group affiliated with Girl Gone International (Mallorca) has a local clothing swap where they exchange clothing freely. Whatever is left goes to charity. Join groups that are networking. If you can’t find one in your area, send us an email and we’ll try to find one for you on Mallorca.

Someone who was staying in a vacation rental in Llucmajor got “stuck here” for the lockdown and sent us an email trying to find a store where she could purchase a sweater. A member of our team knew someone nearby who was a similar size and the nice visitor was able to procure a warm sweater.

I have a friend who is over retirement age but has lots of energy. She exchanges light housework and shopping duties for beauty supplies from a small boutique cosmetic manufacturer. In this way, the lady making these lovely, more expensive cosmetics has a trustworthy and reliable helper who cannot afford to purchase them but appreciates them for their value and provides her time.

During COVID19 Quarantine, when people cannot leave their homes or enter yours to work, instead of buying a gift certificate, share food. Share your beverages – check out our Directory and have something delivered to you and your friend.

These solutions are happening near you. If you can’t find any, make your own opportunities. This is a time of building resilience and community.

Alternative Forms of Payment #

A few decades ago, people traded boats, houses or cars without exchanging currency. Each just paid the transfer tax but the value of the exchange was of equal value so, in essence, just the titles were exchanged. We need to consider this again. If you have a house in the UK and want a place on Mallorca of same or similar values, consider the deal of transferring titles (if each of you owns the property free of liens) but having each party pay the transfer tax. Same with a boat, a car or any other property.

For example, let’s consider a boat. Some people do not have funds to pay the tax which ranges from 4-18% VAT. If someone has a motorcycle or a car and wants a boat, the transfer of title is mandatory and the tax of the value of each will need to be paid. However, the total amount of the transaction is greatly reduced but the items are exchanged. Creative solutions might be needed to sort out the specifics to your situation.

For us here at Affordable Mallorca, we have created a property listing platform that offers BTC pricing for sellers and buyers. Our legal team has a way to support people using digital currencies for the exchange of boats and houses. We have long seen the need for this financial solution for people. If you would like to know more, contact me at [email protected].

Alternative Forms of Payment #

A few decades ago, people traded boats, houses or cars without exchanging currency. Each just paid the transfer tax but the value of the exchange was of equal value so, in essence, just the titles were exchanged. We need to consider this again. If you have a house in the UK and want a place on Mallorca of same or similar values, consider the deal of transferring titles (if each of you owns the property free of liens) but having each party pay the transfer tax. Same with a boat, a car or any other property.

For example, let’s consider a boat. Some people do not have funds to pay the tax which ranges from 4-18% VAT. If someone has a motorcycle or a car and wants a boat, the transfer of title is mandatory and the tax of the value of each will need to be paid. However, the total amount of the transaction is greatly reduced but the items are exchanged. According to BREXIT, if a Brit has a boat valued at €25,000 and that boat is flagged in the UK but moored in Spain, it will need to be retitled in Spain to be legal. Creative solutions might be needed to sort out the specifics to your situation.

For us here at Affordable Mallorca, we have created a property listing platform that offers BTC pricing for sellers and buyers. Our legal team has a way to support people using digital currencies for the exchange of boats and houses. We have long seen the need for this financial solution for people. If you would like to know more, contact me at [email protected].

Virtual Currencies

Much has been written about virtual currencies. We are not debating the efficacy in this article about the pros and cons of this payment method. We are strong advocates for the saying ‘caveat emptor’ or Buyer beware. Education is key here. We can offer a view of how to see the pitfalls and navigate the path forward.

Spain has no specific regulation on cryptocurrencies except that they cannot be treated as legal tender, which is exclusively reserved for the euro as the national currency. Crypto is not considered a financial instrument for promissory notes, derivatives or a similar instrument. To educate yourself, here’s a link to the EU Legislation on Virtual Currencies>>

On Mallorca, you can find Bitcoin ATMs. Crusty’s Pizza has an ATM where you can sell BTC and get cash to pay for pizza. Other vendors and contractors will accept BTC from wallet to wallet with no need to pay an exchange rate for fiat (government backed) currencies. On Mallorca, here is a link that shows a map for BTC ATMs >>

Look for vendors that accept BTC and you can trade in that. Please note – the exchange of crypto for anything illegal will get you a visit by Guardia Civil.

Accepting Payment for Services in BTC

Companies are paying in BTC and other crypto currencies. Over 4,000 companies worldwide pay employees in BTC. Thousands of companies accept payment in BTC. Once you adjust to the concept, two things to watch for:

1. BTC volatility – As yet, no true stabilizing mechanism exists so getting in and out of the crypto market quickly and efficiently is important unless you find others who will accept BTC payments. This leads to second problem…
2. High cost to get on and off an exchange – Costs are the same or more as exchange one fiat (government-backed) currency for another and the bank fees to transfer. Costs have yet to be lower than traditional currencies. But if you don’t have access to fiat money, this is a viable alternative in the short-term. In the long-term, find friends and partners who will trade in BTC and this will bring down the costs.

I paid a contractor in BTC for 18-months. My paperwork was equal to standard payment methods. His was also equal to standard payment methods except neither of us had the cost of accepting the payment in BTC like you do when a bank accepts a wire or electronic transfer. The cost of the transfers, in and out of exchanges can be expensive. But Amazon, Godaddy, Overstock.com, some airlines and hotel companies accept BTC so he used my payments to purchase goods and travel to Indonesia, the US and other places.

Conclusion #

As we navigate this coming decade, one way to reduce the uncertainty is to realize we are all in this together. Sure, you’ll have people who are not harmed as greatly as others. That is the natural way of things. But there are more of us who will need to find ways to live harmoniously, pay our bills, feel secure in our communities and have the freedom of movement to rock on in this glorious life.

One thing I know: We must find a way to alleviate our fears, see reality for what it is and make the best of it. Collectively, our voices are stronger when in harmony toward the greater good. Let’s explore this new terrain together.

This is an ongoing series so come back and check for more. Other topics we will cover are:

• How is well-being defined?
• Physical well-being.
• Economic well-being.
• Social well-being.
• Development and activity.
• Emotional well-being.
• Psychological well-being.
• Life satisfaction.
• Domain specific satisfaction.

Sources

Personal experience
Bitwage.com
Globallegalinsights.com
Pymnts.com
Bitcoinist.com

#Mallorca #Majorca #EconomicSecurity #SharerEconomy #VirtualCurrencies