Moving Abroad: A Financial Checklist
I get a fair number of questions about how expats should set up their finances while living abroad. While the Choudhury family is still fairly new to this, I like to think that we have done a good job of building a resilient system that has worked well as we moved across North America, Europe and Asia over the last eight months.
Through it all, our guiding principle has been to build redundancy into our planning: fraud-related account freezes are a fact of life when traveling abroad, and we never wanted to be without a backup when they happen.
Without any further ado, and in no particular order, here is how we dealt with...
Mail: A US address is mandatory if you intend to keep dealing with US banks while abroad. We updated all of our banking addresses to my inlaws' place in the California, and made sure to sign up for electronic statements so they didn't get overwhelmed with our snail mail. If you don't have a relative you can rely on, services like Earth Class Mail or Virtual Post Mail can provide you with virtual addresses. Beware: some financial institutions have cottoned on to this trick, and now refuse to have you as a customer if you use addresses from these services. I'm looking you, American Express.
Communications: Again, a US phone number is essential if you want to deal with US financial institutions. We killed two birds with one stone (the other being our local communications problem) by buying a pair of Google FI phones before leaving for Qatar. Cumulatively, the plans cost \(45 a month, and we can buy extra 4G data in 1GB increments for $10 apiece. The plans come with unlimited texting and free wifi calling back to the US (\)0.20 if you use the local cell network). While we have local Qatari SIMs as backup, FI's versatility means that we haven't really had to use them.
Cash: Qatar is a cash-based society, so reliably cheap access to cash via ATM was a huge consideration for us. After some research, we settled on the Fidelity Cash Management account for our primary checking needs. The account doesn't charge ATM fees anywhere in the world (reimbursing you if someone does charge you one), and charges a flat 1% fee in the unlikely event you decide to use your debit card for a purchase. Schwab offers a similar product, which we use as a backup cash-stash in case Fidelity freezes our accounts (we like redundancy, remember?).
Credit Cards: My wife and I each have no-foreign-transaction-fee credit cards from four different banks (Amex, Barclays, Chase and Citi), for a total of 8 isolated lines of credit. This pretty much guarantees that one of them will always be available. Yes, we've been down three cards before one worked, so this paranoia isn't completely unjustified: getting caught without access to cash or credit while you are abroad is unpleasant.
Remittances: My wife's salary is deposited into our Fidelity checking account, but my situation was a little bit more complicated. When I was on GBP payroll with GS, I had my salary deposited in a UK HSBC account that I had lying around from my last posting to London, and used the Fidelity transfer service to get the cash back to the US. There is a markup, but I found it to be less than 0.5% off midmarket rates for 10K+ transfers (we usually saved up a little before transferring money back to the US). For the record, I found the effort of timing transfers to take advantage GBP/USD rate fluctuations to not be worth it as everything ended up averaging out over time.
Once I was moved over to Qatari payroll, I found myself in need of a local bank account. I signed up with QNB, and found their services to be perfectly respectable. They have international transfers to the US baked into their website, and I have found their exchange rates to be favorable and their execution fees reasonable (about $3 a pop; coming from the US where international wires start at $30, this was eye-opening).
Whatever method you use to transfer your money back to the US, start slow. Transfer small amounts a few times to begin with to get a feel for transfer times, fees and repeatability. Only transfer large amounts once you feel fully comfortable with a transfer service. Trust me on this: there is no worse feeling than the sinking feeling you get in the pit of your stomach after having $20,000 go astray in the international wire system and not knowing who to talk to about it.
Travel: As anticipated, travel is now a huge part of our life, and I have no intention for paying for my "fair" share of it if at all possible. Qatar Airways is the local flag carrier and is also conveniently a member of the Oneworld alliance, so we decided to concentrate our mileage churning/collection on Oneworld programs. We rotate our credit cards every year, and the sign up bonuses from the credit cards easily cover our annual trips back to the US, as well as a couple of trips around the neighborhood every year. If you aren't already subscribed to /r/churning, you should be!
Taxes: As Americans, we are (alas) taxed on our global income. We do get a hefty 100K per person exemption on our foreign income from the IRS though, which in conjunction with the 0% local income tax in Qatar greatly cuts down on our tax bill.
While our situation is simple, the interaction between pushier foreign tax authorities and the IRS can be much more complicated and it is generally simpler to pay an accountant to handle the mess for you. It is also worth checking to see if your employer provides international tax preparation: we were surprised to find that Amanda's employer contracts with PwC to provide such a service, and I was happy to let them deal with the unhappiness that is dealing with the IRS on my behalf.
Whether you get your own accountant or use the services provided by someone else, make sure your accountant provides guidance on navigating FATCA compliance (i.e. how to tell the government about your bank accounts abroad). The penalties for falling afoul of these regulations are truly horrific, and can negate whatever financial advantage you gain by moving abroad.
So there you have it: the basic outline of a plan to manage your money and investments while you live abroad. I am sure I have missed many things in this post, so I will keep updating it as they pop into my mind. Happy travels!
Last updated: 9/5/2016