For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader Diplomette in Turkey, who is an international aid worker and a mom of two. She noted, “Ten years ago we made the decision to go overseas, and it has been our main strategy for building wealth. In the U.S., likely D.C., we would be an NGO worker and Fed Gov employee, for comparison. Also, although I do not pay U.S. taxes on my foreign earned income, my husband as a Fed must always pay taxes as if he was in D.C.”
She added, “Vacation is our biggest expense. We take several big trips a year, sometimes to the U.S., where we also shop. We spend about 2,000 USD/month on vacations (four major trips a year). Next is food at 1,500/month (restaurants and groceries) and shopping/general expenses (1,200/month, higher at Christmas, etc.). We put about 4,000/month towards savings (cash, investments, IRAs, and 529s).”
We got a few requests from readers to launch our own “money diary” series, so we’ve asked willing readers to fill out a form with lots of details about debt, spending, saving, and more! If you’d like to fill out the form and be considered for a future personal money snapshot, please click here to submit your response! You can see a PDF of the questions if you want to review them ahead of time. See others in the Personal Money Snapshot series here.
Please remember that this is is a real person who has feelings and isn’t gaining anything from this, unlike your usual friendly (soul-deadened, thick-skinned, cold-hearted, money-grubbing) blogger — so please be kind with any comments. Thank you! — Kat
Location: Turkey (but we move every three years); LCOL.
Occupation: International aid worker
Income: $90,000, expat allowances valued at additional $100,000–$150,000
Partner: Husband, age 47; his income as diplomat is another $120,000 w/bonuses for hard language
Household income: $250,000
Net worth: Our combined net worth is about $1.85 million
Net worth when started working: 2005, income was $30,000/year and owed $50,000 in student loans (so, -$20,000).
Living situation: Live in assigned paid apartment
How much debt do you have currently?
We keep one mortgage on a condo in the U.S. so as not to lose credit history. We pay about $400/month for it, and it has $20,000 left. No credit card, student loans, cars, or other mortgage debt.
What was your debt picture look like?
We have no debt, solely as a function of being overseas. In the U.S. we’d have the usual mortgage, credit card, and car. I’m not opposed to debt; it’s just many of our transactions are paid up front and in cash. We’ve bought and sold cars this way.
In our early years we took a few tough assignments (Saudi Arabia, etc.) to pay down student loans (graduate school for international affairs and a law degree). It was so beneficial to do it that way that we are considering going back to those same places for [our kids’] college tuition years.
Eventually I’d like to buy a house in the U.S., but the idea of cashing in a decade of overseas savings for things like paint and furniture and maintenance costs sends me into a panic.
How much money are you spending each month to pay down debt?
$400. We are purposely leaving it open and “letting inflation pay.”
How did you pay for school?
We consolidated our loans in 2004 when interest rates were ~2%. He had about $100,000 and I had $50,000. While in the U.S. we paid a flat monthly amount and were content to do it for the next 30 years, but once we were overseas the combined forces of 1) not paying housing, 2) not paying taxes (me), and 3) earning bonuses and differentials for serving in hardship posts was effectively a debt windfall.
Do you own or rent? How much do you pay monthly?
Housing is assigned as part of the job. This has pros and cons. We don’t pay for it or any of the maintenance of it, and the more senior our positions, the nicer the housing. Right now we live in a four-bedroom apartment in a high-rise tower, about 2,500 square feet. It is difficult to price because of Turkey’s inflation crisis, but probably 5,000–6,000 USD/month. But when our time is up, they immediately kick us out with the next tenant waiting at the door. It is never “home.”
If you have children, how much do/did you spend for childcare and/or education?
1,000 USD/month for a housekeeper who can look after two elementary aged children. We are considered to be getting ripped off, but we pay an expat surge price.
School fees are also paid as part of our jobs, but estimate 40,000 USD/year, total, including international field trips, uniforms, etc.
Home debt: Share your theories and strategies with us (including any that lead you to rent rather than own).
Before we went overseas, we bought a 460,000 USD townhouse in D.C., and my husband had a ~200,000 USD condo from when he was single in Virginia. We added a condo near his parents in Florida in 2013 for 76,000 USD, when housing prices were still not recovered from the sub-prime crisis, and I felt very overstretched at that point.
Once overseas, we had tenants in all three [properties] in and out over eight years, yet never made more than just what was needed to cover costs, if that. Then we took advantage of increased housing prices and sold the two D.C. properties (townhouse sold in 2016 for $630,000 and VA condo sold in 2019 for $250,000) and sat on the money for a year, thinking it was a down payment for a “house house.”
Then COVID hit, we wanted nothing to do with D.C., and when the FL condo next door to ours became vacant, we bought it in all cash. I feel nervous for having cashed in that down payment money but now it’s generating income with a long term tenant. Again I really thought I’d be in a permanent home by my 40s but I can’t walk away from this arrangement just yet.
Have you paid off any major debt?
(See above, regarding school debt.) One thing to note is that with no mortgage, car, credit card, or student loan debt, we’ve had to keep a small mortgage on our FL condo going, for the credit history.
Have you ever done anything noteworthy to avoid or lessen debt?
Just served in some dangerous places — Iraq, Afghanistan, Saudi Arabia, Jordan.
Savings, Investments & Retirement
How much do you save each month or year in retirement vehicles like 401Ks, Roth IRAs, and others?
All told we save about $3,000/month on retirement. We max out Roths, now $6,500/year, invest in one of those Fidelity/Personal Capital retirement funds where you pick the year and they pick your allocation, and my husband has his USG 401k, the TSP account.
One thing about working for a foreign employer is there is no 401k, which is silly to worry about because I shouldn’t need one since I’m not paying taxes anyway. But my American brain still wants the employer match and tax deferral. My husband maxes out his TSP (Fed 401k) and invests in what I would consider risky allocations (mostly stock), using a strategy now popular with some Feds — grow fast early, get to $1M, then scale back.
How much money do you allocate to other tax-savvy investments/accounts like HSAs, 529s, FSAs, and others?
We max out FSAs for both childcare and health, and use them in full every year (surgeries, vision, dental, braces). We also pay about $1,000–$1,200/month towards 529s for two kids.
How much do you save outside of retirement accounts?
We have a weekly automatic withdrawal set up that goes: (1) $350 to emergency savings. We let this get up to about $30,000 before stopping saving here but so far we’ve never hit that much. (2) $300/week to investments (my “faux” 401k)
Talk to us about investments. Do you have a financial planner?
We played with CD laddering when interest rates were good, between 2015–2019. I don’t see us doing that again. I take a very boring and pragmatic approach to investing with a financial adviser that comes with a Personal Capital membership, but I have to supplement their advice with financial planners that specialize in expats and know more about tax shelters, etc. My husband is taking a more risky approach with his TSP 401k account, trying to aggressively reach $1M value and then shifting to a more balanced allocation. He’s at about $600,000 now.
Do you have an end goal for saving or are you just saving for a rainy day?
Having a house in the U.S. paid off in cash by retirement is my savings goal. Everything else is just investments.
When did you start saving seriously? How has your savings strategy changed over the years?
2010, and our strategy has been mostly to take money out of our hands through auto-deduction before we could spend it. That mechanism has not changed but we’ve been able to be bolder with the numbers thanks to a current LCOL assignment.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
We are living in paid housing; that’s the number one thing that saves money. It helps that we happen to be assigned to a LCOL country, but we’ve been able to save money even in HCOL countries because our housing is paid.
Have you ever made a big money move or investment with savings in mind, such as rolling over an older IRA into a Roth IRA or superfunding a 529?
I made a dumb mistake when I was younger. I wanted to seed my new Roth IRA, so I used an old 401k conversion to do it, paid $11,000 in taxes with a smile, thinking I was being clever because interest compounds and now I had equal money in tax deferred and non-tax deferred accounts (“hedging!”). I realize my accountant then was trying to stop me but I was too bull-headed. My Roth is now at $125,000 and never seems to grow more than $1,000–$2,000/year, if that.
Do you have an estate plan in place? A trust?
We have plans to allocate 50/50 to each kid, but nothing fancy beyond that. Will need to think of it going forward.
How much do you have in cash that’s available today?
How much do you have in cash that’s available in a week?
How much is in your “emergency fund,” and did you include it in the previous question?
$12,000, we took advantage of some of the high yield savings accounts that opened up this summer. Our policy is to get this to $30,000 (even though our monthly expenses are $15,000) and stop saving, but we never make it past $20,000 before something strikes.
How much do you have in retirement savings?
Together about $1,000,000 (his $700,000, mine $300,000)
How much do you have in long-term investments and savings (CDs, index funds, stocks) that are not behind a retirement wall?
If property values (home, car) are included in your net worth, how much are those worth?
About $460,000 on two FL condos: one that we own outright, another about $25,000 left on mortgage.
How much do you spend on the following categories on a monthly basis?
Restaurants, bars, takeout, and delivery: $600
Clothing and accessories: $1,200 (I’m embarrassed by this but it’s skewed by trips to the U.S. in the summer where we binge at outlet malls for the year.)
Rent/living expenses: $25
Kid-related expenses: $1.200 for nanny/housekeeper, math tutor, extracurriculars
Other major expenses: Vacations. The main perk of expat life. We take four major trips/year and maybe 10 smaller ones. We tack on vacations to work travel and family visits. Amortized into a monthly cost we spent $2,500/month on vacations last year.
Health care – premiums and other costs: $250/month for a family of four. There is a perception that health care is automatically cheaper overseas, but good health care is expensive. Not America-expensive, but $250 for an MRI, $180 for a derm consult, etc.
What’s your spending range for these things? What’s your average?
Vacations – Range: $2,000–$3,000/month. Note that airfare is usually covered through work.
Vacations – Average: $5,000
Charity – Range of donations: $1,000–$1,500/year in cash
Charity – Average donation or giving amount: $1,200
Individual items of clothing – Range: $50–$200
Individual items of clothing – Average: $150
Apartment or house – Range: $400–$800 for condos when they’re not rented
Apartment or house – Current main residence: $0
Car or Other Vehicle – Range: $0
Car or Other Vehicle – Last purchase / current main vehicle: $9,000 in 2021
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $2,500/month if I stopped vacationing, but I don’t because vacations are one of the main points of living overseas!
If you’re married: When was your wedding, how much did it cost (total), and how much did YOU pay?
2010, cost $20,000 total, I paid $8,000
Tell us about your wedding!
We got married in Vegas at the height of the financial crisis, and the hotel/planners threw in so many awesome things that would normally cost extra now (ice sculptures, waived the resort fee for all 150 of our guests!).
If you own, how much did your car cost?
15,000 USD, 2012 Honda CRV — fun fact, you cannot take a financed car overseas, has to be paid in full.
If you own, how much did your home (permanent residence) cost?
Hope to someday have a permanent residence!
If you have vacation homes, timeshares, or income properties, how much did those cost? (If you have income properties, please tell us more!)
$76,000 for a condo in Tampa bought in 2013; $218,000 for the identical condo next door to it, bought in 2022. Both 2br/2ba. One rented out seasonally and serves as our “U.S. base” (owner’s closet, etc.). One empty and has a long term renter in it.
Have any large medical expenses (including nursing homes) for yourself or others played a role in your financial picture?
Not yet, we do many procedures around vision and teeth overseas to keep costs down.
Are there any other large expenses in your life, now or previously?
I pay taxes as a self-employed person, then apply Foreign Earned Income Exclusion to claim it all back. If I need to travel to the U.S. and spend more than 35 days/year on U.S. soil, I owe all the taxes. I try not to let this influence decisions around visiting family, but there are things I’ve missed because it costs me 30,000 USD, etc.
At any point in your life to date, has inheritance played a role in your money situation?
My parents, being immigrants, relied on my grandfather’s cash rather than credit for which they would not have qualified. He bought them a house outright in Chicago in the 1980s and I think it really set them in the right direction, financially, from there. The secret is always to live in some kind of paid housing!
How has your family provided financial support in your adult life, if any? (Or, do you provide support to them?)
In grad school through my first job, my parents took the approach of “We’ll buy a property, you live in it, and pay us rent.” They gained from that, as D.C. property values nearly doubled over those years. My husband’s parents took the approach of “You’re responsible for buying your own property, but we’ll give you the down payment.” It’s interesting how they both had different approaches but were mutually opposed to us renting. We would not have been able to afford the move to D.C. and initial years without their support.
Does your family provide any non-financial support (such as regular childcare)?
Nope, the one big con is that we are very, very far away.
Do you have a general money strategy?
Stay overseas, stay in paid housing, work in roles that pay education, airfare, and other perks.
Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
Yes — we invest in this fully by sponsoring housekeepers when we live in a country. I grew up in the Midwest, where the philosophy is “If you can’t take care of your own house/children/husband/health, you shouldn’t have them.” My friends in the U.S. have au pairs that play with the kids while my friends clean the bathrooms. It’s freeing to live in societies where the expectation is you need around-the-clock, full-time help. It is labor, in the end, and I don’t believe in doing it for free, as a woman. Better to hire someone to clean our kitchen so that I can go to the gym, work, etc., than sacrifice so that both of us are out of paid work.
What are your favorite resources for personal finance?
Suze Orman set me on the right path early on — say what you will, she was great in my 20s. Now in my 40s, I’m more interested in theory of money — Freakonomics-type deep dives, class divide in America, makes you think how your unconscious decisions are made for you by some kind of class algorithm. Like, do I really need a house in the U.S.? Or are we, college-educated married couple, expected to get one? Why can’t we all live in apartment block with our parents and siblings and their families, like other cultures? Etc.
What advice would you give your younger self about personal finance?
No amount of personal financial strategy will contribute more to your financial security than securing a high-earning job that you can do for a long time. Be flexible, work on yourself, and invest in your own education and skills. The money comes after.
Diplomette shared some final thoughts:
I think it’s easy to look at our lifestyle and roll your eyes — fancy cocktail party sort, I get it, but we are effectively exiles in many ways, living in borrowed spaces with hideous furniture, children with no sense of connection, etc. It’s by choice and I’m not complaining, but there is a balance and the sacrifices are serious. I’m writing this to distract myself after a massive earthquake in Turkey has shaken us over the last three days [February 2023] and the country is in crisis. It would be great to trade it for a burger at Five Guys in a country where everything mostly works. But we’ve made the tradeoffs and we’re here, come what may.
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Want more posts like this? These are some of the latest Money Snapshots…
This is just fascinating, and extremely well thought out. Thank you so much for sharing this with us. It is really helpful to hear the pros/cons.
I have a close friend who is a Professor living overseas in Abu Dhabi with her family, and much of her experience aligns with yours. It is truly an amazing experience for them.
This is so interesting. Would love for you to do a week in the life if you have time!
I love this! As a Midwesterner who stayed in the Midwest, I have no one I know who lives this type of life style. So fascinating!
Fascinating, and thanks so much for sharing!
This question comes from a place of curiosity, not judgment: if I read correctly, you spend up to $1,500 annually on charity. Do you think of donating more? Do you not donate more because you consider your work to be charity? Spending $30,000/year on vacations vs $1,500/year on charity is a striking difference that caught my eye.
I am not an aid worker. I donate $ because I don’t contribute much in the way of time (or any expertise). I think that the aid worker lives the life and walks the charitable walk (even getting paid). These jobs are IMO 24/7 jobs where the emotional labor can really weigh on people and they need to unplug and recharge to stay in the game.
I’m also not an aid worker, but I did work for an international nonprofit for a while. During those years, I donated a smaller percentage of my salary than I do now, partially because I felt that my job was helping people in need, and partially because I was paid below market rate for a lot of work, so it was almost like the charity payments were coming directly out of my salary.
The OP is doing more than most people ever will. I also think charitable giving is a scam that does very little good.
A lot of companies pay expats to fly home at least one a year, so this level of travel when your whole family is in the US seems reasonable (and it’s for a family).
I’m curious about why you think charitable donations commensurate with income are required of people.
This is very interesting. I used to work for USAID, so it’s a nice look of what could have been.
Hi, twin! My spouse is also FS and I’m in international development, and we’ve got two small kids. We’ve never done the Middle East but plenty of hardship posts and our financial situation is similar to yours — large travel budget, lots of savings/investments, a bit of real estate, FEIE, etc… and of course the random assigned housing, 10 year old Drexel, and general lack of roots. You’re in a great financial situation. Do you plan to take advantage of your spouse’s pension and retire early when he become eligible?
One thing I will say, is that unless you’re in a specific field that’s concentrated in MENA, there are lots of great, family-friendly and comfortable posts in Africa that come with similar allowances.
Fellow Expat – I’m curious as to how you contribute to a Roth from overseas? It was my understanding that you had to have “earned income” in the U.S. in order to contribute. The taxes we pay in the country we live in cancel out any taxes we would owe in the U.S. – so our AGI on our taxes is $0.
Are we mistaken? (If so, that would be great news!)
Did you ever read any books on finances for expats (and the rules around PFICs) that were helpful? Would love some recs as we are new to the expat life.