Living Abroad — Does it Make Financial Sense?

financial sense“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.

  1. 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.
  2. 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.

Monthly Expenses

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?


  1. Ed Rivers says:

    This is an interesting post. It’s hard to say which category I’m in (probably the first one with just getting by), but I’m not really hurting financially. Granted, the government takes care of nearly all of my expenses while I go to college full-time (GI Bill), but that only last for 3 years and I’ve got one year left of it before I will have to start paying tuition myself. Hopefully, I can finish my degree by the time it runs out and find a teaching job that will enable me to pay off my meager student loan ($12,000, compared to the average student bill of $50,000-$80,000) and start saving for buying a house (overseas!) in the future.

    One thing I should point out is that, when we move overseas, we will be taking our middle-class expectations with us; which is the wrong idea. A (disappointing) aspect of American culture and society is the constant need/demand/requirement to make lots of money in order to live “the life” which is based heavily on materialism and consumerism. Going abroad, we’ll be having those expectations of 24-hour Walmarts (IKEA might be suitable as an alternative), Starbucks on every street corner (in ENGLISH, where everybody SPEAKS English), overnight or 3-day delivery from Amazon, or super-fast internet to let us watch Netflix whenever we want. That lifestyle is simply unsustainable (especially given the fact that the USA consumes over 25% of the world’s resources and our population is just barely at 350 million people) and I just cannot be a part of it anymore.

    I got out of the military during the height of the Great Recession just as all of my coworkers were calling me crazy (while they re-enlisted because they were scared) and decided to finally go to college. Since 2009, I haven’t been struggling in paying any bills and my monthly disability check is enough to cover most rents wherever I go (outside of living in the Northeast or West Coast), but I don’t want to live in and contribute to a society that lives for money and materialism (which directly results IN debt) and puts family and quality of life second (since the majority of complaints I hear from fellow college students is about money they don’t have or the nice, expensive, things they can’t afford–which mirrors contemporary ideals). Moving abroad, my main concern will be quality of life, while money and material things comes second and third (money because I want to save enough to buy a house). In most places that I’ll go, housing will either be provided by schools or I’ll find an apartment that suits a single-guy lifestyle–minus the fancy sports car or makeshift beer cave with 50-inch LED TV and Playstation 3/Xbox 360. (I’m nearing 30 and I just don’t care for those things anymore)

    Saving will be my biggest priority going overseas; and with hardly any bills outside of a student loan (which can be paid off easily), I think I’ll be in a position to come out ahead enough to retire “fairly” early (I’m shooting for 40-45) and spend the rest of my life/time focused on teaching and raising a family while traveling the world. The American Middle-Class lifestyle just isn’t for me–actually, that lifestyle in many other countries would be considered Upper-Class simply by the annual salaries we make (i.e. $35,000 a year is considered “wealthy” for a lot of places).

    • Ed, you make a lot of very good points. Have you decided yet where you’ll start your teaching career? If you’re interested in maximum savings, take a look at S. Korea and China.

  2. I am still early in my new place but the cost of living is substantially less. Health care is so broken in the USA that is a huge cost you can reduce. Housing is the other big one (for me). Food can be cheaper and I save something but I am find spending more than I have to on food – so I don’t save a huge amount. There are a bunch of costs getting all setup in a new place. And I have decided to use money to deal with some annoyances. I am now trying to find a way to reduce outside noise with heavy (or even fancy noise reduction) curtains and just decided to pay what it costs to give me some peace.

    Also, at least now, I don’t have a car – so no car insurance, payments… My spending on transportation overall is way down.

    I am going to spend on travel – taking advantage of being in South East Asia. But other than that optional expense I should save a fair amount.

  3. The main reason I left the UK was financial. There was no way we were going to be able to afford to buy a house there, so we moved to Portugal. We also figured that our monthly expenses would be drastically reduced so we could live on a much smaller income. As you say, there is only so much increasing income and cutting back you can do.

    I’ve now found myself (due to personal circumstances) back in the UK in a similar situation but this time I am looking at Romania. Portugal is now just as expensive as the UK (on daily items/bills etc) so I won’t be moving back there. But, cheap alternatives can be found and financially make a lot more sense than the UK.

    Having been an expat there are lots of things to recommend the UK but housing isn’t one of them if you are on a budget and I would like a home of my own.

  4. It’s true, if you can reduce your fixed costs (housing and car especially), you can live on less. The US is the only western industrialized country where health care costs are also an enormous part of that equation.

    John, good luck with the noise reduction! I’d be interested to know what your ultimate solution is. 🙂
    Sarah, hope your next move works out well.

    • That is one HUGE benefit in the UK, totally free health care. There are some exceptions, like prescriptions but on the whole it’s brilliant.

      Portugal is almost the same although I did have health insurance as well which I used quite a bit. I didn’t find it too prohibitive over there though, it was 22 euros a month for cover and to see a doctor was 15 euros.

      US healthcare does bewilder me. How much do you pay over there?

  5. I have to say that moving overseas was the best decision I made. Before I left Boston, I was working a tedious 9 – 5 job and found it really hard to save any money. I was a college graduate working paycheck to paycheck in a financial services company. It was crazy to think that after a leaving a 4 year private college that I would be struggling with money and finding a job.

    I decided to move to overseas to save money and pay off some of my debt. I am so glad that I made that decision since now I’m debt free and have a better standard of living. I’m actually saving about $20K US a year which was unheard of when I was still living in Boston.

    • Izabela, that’s wonderful. I read about a couple who both taught, and they saved over $40,000/year in S. Korea. For those of us who’ve been stuck in the US with its dwindling paychecks, it’s hard to imagine.

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