“Why do you feel moving outside the US is the only option you have?” an online acquaintance inquired recently.
The answer to that question feels so painfully obvious to me that I had to really stop and think about it.
If you’ve been thinking about living abroad and you’re not sure whether it makes sense for you in your individual financial circumstances, here’s some food for thought. (I’m talking specifically to my readers in the US here.)
Now, let me be clear. If your income covers your expenses and leaves you with something left over, if your savings, 401(K), IRA and investments are growing every month, I’m not really talking to you. (Although you might be interested in some information here to help you protect those assets. . .)
If you’re still reading, you probably fall into one of two groups. Statistically, I’m on pretty safe ground with that assumption.
- You’re scraping by. You’re not getting deeper into debt, but you’re not getting ahead either. One unexpected expense is likely to demolish your savings or tip you into debt.
- You’re sinking. Your money runs out before the end of the month, your savings are depleted, and you’re starting to worry about keeping up with your basic living expenses like rent or mortgage, car payments, or maybe even food.
If you’re in either one of these situations, you have only two choices if you want to turn your financial life around. You can
- Increase your incomeIf this were easy, everyone would be doing it and the middle class would be growing, not shrinking. Opportunities to find better paying work are very limited right now. Starting a business takes money and time. You could start a business or add a part-time job to your full-time job, but some employers are firing moonlighting employees.Let’s say you’re able to add a part-time job that keeps you afloat. How long can you sustain that kind of work schedule? How long can you do it while keeping your family intact and yourself healthy?If you’re already retired, you can’t increase your Social Security or pension check.
- Reduce your expensesIf you own a home, steps you can take to reduce your expenses while living there are limited. (Since selling property takes so long these days, downsizing or selling to rent someplace smaller aren’t great options for the short term.)You can do your own yardwork or housework if you’ve been paying someone else, you can cut back on what you spend for clothing, eating out and entertainment, you can reduce or eliminate Cable TV.Once you’ve made those reductions, what’s left? Perhaps you live in a city with good public transportation and you can get rid of a car, but most Americans don’t.
Then what? Cut out your health insurance? You’ll be in good company — according to Bloomberg, there were 52 million of us, as of last March.
So let’s say you’ve cut your expenses to the bone, and you’ve found a way to increase your income through a job change or adding part-time work. What sort of life do you have left?
Is it a life that nourishes you and makes you happy? Does it bring your family closer together? Does it enhance your vibrant good health?
Probably not so much. . .
If you’re a regular reader, you know the financial downturn in ’09 pretty much wiped us out. We believe living overseas is the only viable option to salvage our finances and improve our quality of life. Here’s why.
Quality of Life
Quality of life is extremely subjective. It involves some tangibles — decent housing, food, clothing, transportation, health care — and a lot of intangibles. Our quality of life if we stay will be more of what it’s been in the past 2-1/2 years — lousy.
If we go, our financial stress will be greatly reduced or even gone. Because we’re choosing a place where the pace of life is slower, overall stress should be way down, too. That can only improve our quality of life.
Many expats find their health improves as well, and we’re hopeful that will be true for us. They’re able to lose some unwanted pounds without effort, and fresh fruit and vegetables are abundant and cheap. Medical care is hugely less expensive.
It’s true that we’ll be farther away from family. Our kids have all left the nest and the Central Florida area. We have three in New England, one in New York and one in California. All pretty much an airplane ride away now, and after we move. My parents are both gone, but my husband’s folks are still with us. They live about 500 miles away now, and we may need to make some emergency trips to the US.
Currently we have income from three sources: my husband’s job, my freelance writing and blogging, and — for the past few months — his Social Security check. After we move, we’ll still have about 2/3 of our current income. He’ll be looking for ways to generate some income after we move as well.
If we go, we are pretty well assured that the tangible part of the equation will be much less expensive. (Of course, we’re only looking at moving to places where these costs are low. Japan, Singapore and Abu Dhabi are not on our list.) The cost of living overseas, for us, will be about a third of what we’re paying now.
So with our income reduced by about 35% and cost of living reduced about 180%,
we’ll have some funds left for some of the intangibles that improve quality of life — entertainment, travel, doctor visits, things like that.
Obviously, you need to consider the cost of the move itself. Airline tickets, cost of shipping goods overseas, maybe staying in temporary (more expensive) housing until you find a longer-term rental, all add up.
In our case, we figure we’ll recoup the cost of moving ourselves and our beloved dogs within about four months of lower-cost living in Panama. After that, we can start paying down some credit card balances that have crept up over the past couple of years.
If we stay here, over that same four-month period, we’ll — at best — tread water financially.
Do your own math — you may be surprised at the answer you come up with.
Are you already living abroad? How do your expenses and quality of life compare with what you expected?