We’ve been preparing for our move abroad. Doing the research on each country. Visiting. Talking to others. And even planning longer trips. What we’ve found is that there are certain things that one must do before even considering pulling the trigger on moving abroad.
So, here is our number 1 moving tip if you’re considering moving abroad:
#1 Get your financial house in order
This is by far the best moving tip we’ve gotten and it is the one I want to pass on to you. The reason for this is that no matter where you go, if you have financial troubles, they will follow you. You need to make yourself as solvent as possible and you need to be smart, plan ahead, and cross your t’s and dot your i’s. Money is serious business. The last thing you want is to leave your financial affairs in a mess and then have to return home to deal with them. In a recent article in UK’s Telegraph, the number one reason (62%) for British expats returning home earlier than expected was “financial difficulties”.
Here are the things to consider:
- Your House
- Loans /Credit cards
- Bank accounts
- Legal documents
1. House: Do you own your house? If so, what are you planning on doing with it? Will you sell it? Will you rent it? If you rent, who will take care of it? These are just some things that have to be answered. Let me tell you, from our experience, selling a house in today’s market is not easy. I don’t care what anybody says about it getting better. Read our Experience of Selling the House in Today’s Market. If you want to rent your home to either generate income or just to keep it, you will likely have to hire a management company. They typically take a cut of your rents. You will also be responsible for repairs, insurances, taxes, and so on. Just like you are today. Can you imagine taking care of those things when you are thousands of miles way? Getting it done from that far is neither fun nor easy.
2. Loans: Do you have outstanding loans? HELOC perhaps? Personal loans? Student loans? Overdraft accounts? Credit card debt? All those will either need to be paid off before you go or you need to have a plan on how you will pay them when you’re living abroad. This means that you will have to have some sort of an auto-pay set up. And you will need to make sure you have money to cover the bills. My opinion: pay everything off before you go. Makes life much easier.
3. Bank accounts: will you keep your bank accounts in your home country? Or are you planning on transferring your money abroad? Opening bank accounts is not as easy in other countries as you may think. Often there is a referral system, i.e. you will need to know someone to refer you. Or you will need a residency status or possibly even both. Consider setting up an account with a bank that has an affiliate or branches in your future country. Makes life a lot easier. If you choose to keep your money where it is, who will be able to deposit or withdraw on your behalf? How quickly will you be able to get your money if you’re abroad? The point is, you will need a plan and it will need be executed before you go.
4. Income: I’m talking about income after your move. Do you have a private pension or social security? Do you plan on working abroad? Start your own business? How will you support yourself? We are planning on a “working retirement” and by that we really mean an early retirement with part time work. We want to work no more than 20hrs/week. We have a plan on how to achieve that. If that’s what you want, so will you.
5. Budget: Yes it true that many of the countries we’re considering have a much lower cost of living than US. Nonetheless, things add up very quickly. We have worked with a financial planner on how to structure our budget. I would recommend that you do the same. See my post on 6 lies people tell you about moving abroad.
6. Legal documents: Who will be taking care of your assets at home while you are gone? Do you have a will? You should if you don’t. Your financial affairs may require legal documents. Plan for the worst and then you won’t be unpleasantly surprised. Be smart.
So, my moving tip #1 is: before you do anything else clean up your financial house. Seriously. Because no matter what else you do, if your finances are not in order, you will not be able to pull off a happy move abroad. That’s my 2 cents.
I would love to hear from others that have already done this. Did you find cleaning up your finances easy? Do you have any tips or advice?