If you read part one of our story, then you know that we started out with nothing. We were two teenagers with a baby and had a lot working against us. In part two we talked about how we put in the work, made sacrifices, and ended up creating a life that by all accounts shouldn’t have happened — and then we quickly realized that it wasn’t everything we’d expected. After recovering from the shock that getting everything we wanted hadn’t actually made us happy, we decided that life is short and we needed to do something about it.
SPOILER: We sold our house, our cars, and most of our stuff and moved to the other side of the world!
We took an opportunity to become expats and for the past 5+ years have been using our expat package to achieve FIRE, which stands for Financial Independence/Retire Early. FIRE is a lifestyle movement based on the idea that you can retire decades before ‘traditional’ retirement age (even in your 30s or 40s) by lowering your expenses and increasing your income enough to save up 25x your annual living expenses. How, you ask? By saving at least 50% of your income until you reach that magic number. The more you save, the faster you’ll get to FIRE.
The bottom line is this: if you spend less than you earn and invest the rest, eventually you will have save up enough money to live off of forever. It’s not easy, but it is simple. Some argue that you should build the gap between your income and your expenses by focusing heavily on one or the other, but because of our expat package we’ve been lucky enough to do both at the same time.
The problem with the word ‘expat’
Before dive in, I want to acknowledge that the word expat is steeped in privilege and I refuse to ignore that here. It’s no secret that wealthy, white foreigners moving out of their home countries get called ‘expats’ while working-class, non-white foreigners get called ‘immigrants’. While I don’t share many details about our lives in the name of privacy, I will share that Mr. Unsettled and I have white skin, we each hold a desirable passport, and are on the receiving end of all of the privileges that come along with both. Privilege doesn’t get talked about enough in the FIRE community as far as I’m concerned, and I think it’s very important to acknowledge the inequalities that make it more accessible for some people to achieve FIRE. So. For the purposes of this blog, when I use the term ‘expat’ I am referring to any foreigner who moves away from their home country for a short period of time and who intends to eventually return to said home country. It’s a term that we identify with in our situation but we also understand the reasons that the term can be problematic.
Why Did We Become Expats?
People leave their home countries for lots of reasons. Some people are lured by the promise of adventure, travel, and an upgraded lifestyle. For some, it’s the money and the career bump that can come from gaining valuable international work experience. And let’s not forget that for many others, the lack of opportunities in their home country forces them to move (alone) to a place where they can earn a better living and send money back to support their families.
Recognizing our privilege, for us it was a combination of the first two reasons. And the decision to move overseas wasn’t as difficult as you might imagine. The nature of Mr. Unsettled’s career path meant that he spent a good chunk of the year travelling internationally. Moving to be closer to his overseas work meant that he didn’t need to be away for 150 days a year.
Add to this the fact that we’d be moving with the support and resources of a large company who took care of the logistics of the move. This included all of the paperwork included in securing visas, the logistics of getting us and our stuff from point A to point B, organizing (and paying for!) hotels on either end of our move, setting up a service to help us with the minutiae of setting up a new life in our new country, etc.
See? Easy decision.
The expat community is an understandably diverse group in many ways, especially economically. In the past decade, companies have been cutting salaries and benefits — even stopping international hires completely — in order to save their bottom line. Thankfully Mr. Unsettled’s industry has not been affected as much as others, and therefore he is lucky enough to benefit from a generous expat package — a series of benefits given in order to entice an employee to leave the comfort of their home country and live somewhere else temporarily. We know how lucky we are and that it could all be taken away in an instant.
That’s why it was important to us to use this opportunity to set up our future in the best way possible. If you’re curious to see how we are using our corporate expat package to facilitate our goal of early retirement, read on:
We negotiated a competitive compensation package
Mr. Unsettled receives his base salary and on top of that gets premiums added to cover the difference in the cost of living, transportation, etc. I’m not going to disclose the exact number here but I hate when FIRE bloggers aren’t transparent about the fact that saving 50% of your income is much easier when you’re starting with a high salary. For context, I will share that our monthly net income is >$10,000 and is nearly double our previous take home pay. Mr. Unsettled also receives bonuses each year: one that’s performance-based, and another as a “completion” bonus as his employment contract is renewed annually. He also receives an annual raise that varies but has been between 3-6%. In addition, he kept the same benefits he had back home like being able to contribute to his company’s 401k and receive the company match of about 10% of his salary as long as he contributes at least 8%.
Of course the compensation is a great motivator! But a high salary is relative…what pays the bills in Thailand won’t cut it in London. Our package has a significant COL (cost of living) adjustment because it’s more expensive to live here vs. “home”, but the reason it feels even higher is because we’ve been able to lower our monthly expenses significantly.
And as other expats understand, it’s not just the income that you need to consider when accepting an overseas posting. The benefits will make or break any expat package. Therefore, I want to share which deal-breaker expenses are included in our compensation:
Housing Expenses
One of the largest monthly benefits we receive as part of Mr. Unsettled’s compensation package is for housing. This includes the monthly costs for our apartment, including maintenance fee and one assigned parking space. This is paid directly to the landlord on our behalf. The company also paid all of the initial rental costs which included the realtor fees, security deposit, and a non-refundable fee paid to the landlord that is customary in our new country. To give you an idea, these extra fees can easily add up to a five-figure sum.
Our apartment is large (100m2) in a desirable neighborhood in the city center, along a major train line. The monthly cost is substantially more than we would choose to pay if we were responsible for our own housing expenses, and for the same monthly price we could have gotten a large detached house in the suburbs of this city.
Health Insurance
We are provided with a global health insurance plan that has a relatively low annual deductible ($3,000 per family) and covers us anywhere in the world (including the United States)…for a fraction of the cost of US-based medical insurance. We also benefit from a service that we can call anywhere in the world, 24/7/365 to receive medical advice and get help seeking care. The services we receive are then covered by our health insurance plan. So if we needed to receive a medical evacuation from the top of a mountain in the Alps, or if we’re in Spain and need to get an appointment to see a doctor but can’t explain our symptoms in Spanish, we’re covered.
Travel Expenses
We receive two annual round-trip economy flights each to our home country — or a destination of our choice valued at equal or less than the cost of going “home”.
International School Fees
We receive 100% of tuition and fees for our teenager’s private international school. This is paid directly to the school on our behalf. This benefit also includes transportation to/from school, which is a mix of public transportation and busing provided by the school.
Taxes
All of those benefits are added to Mr. Unsettled’s W-2 income, which leads to possibly the most important (and complicated!) part of our package: we’re tax equalized, which means that our tax liability is the same as if we’d never left the US. We are responsible for the US Federal taxes owed on Mr. Unsettled’s base income, and that’s it. This means that the company covers all of those extra taxes incurred here and back in the US as a result of his higher income. And then the company adds those expenses to Mr. Unsettled’s W-2, which then racks up a higher tax bill the next year. Thankfully the company also covers the cost of tax preparation services so that we’re not responsible for sorting it all out. On the downside, this tax firm works for the company and therefore can’t help us with tax planning or strategy. For that reason, we hired an independent CPA last year who could help us with both.
So as you can see, all of those benefits add up, and without all of that we wouldn’t be where we are today. The combination of a higher income plus the company covering our big-ticket monthly expenses allows us to invest most of our monthly income, leading us down a path of financial independence.
However, there are a few non- company-sponsored things we did in order to put ourselves in the best position possible, and they’re things you can do even if you’re not an expat with a big expat package:
We paid off all of our debt before we left the US.
We sold our house, cars, and most of our stuff before we left. This was possible because we got lucky and made a nice profit on the sale of our house (under $100,000). We paid off the remaining balance on our student loans (< $10,000) with the proceeds of our house sale. That made us debt free and ensured that we wouldn’t be sending any recurring payments back home. Eliminating our debt has made it easier to save each month. We don’t necessarily believe that all debt is bad, but won’t deny that not having any makes things easier.
We started working (remotely) with a Certified Financial Planner right away.
One part money expert and two parts couples’ counselor, our CFP (fee-only, of course!) helped us define our money values and recognize any ways our past attitudes about money had been holding us back. We needed to get crystal clear on where we were and where we wanted to be. In doing this, we were able to set up our funds in a way that made us feel like we were doing everything we could to prepare for the future while also living the lifestyle we wanted in the present.
By investing the time and money to get serious about our financial plan, we’ve been able to set up our lifestyle in such a way that each year we spend here moves us significantly closer our future retirement date. We’ve been working this plan — saving an average of 70% of our income each year and increasing our net worth to nearly quadruple what is was when we started — since 2015.
Of course those aren’t the only things we do to ensure the success of our plan, but paying off debt and then getting some outside help with our money mindsets was a huge help in getting us started on the path to FIRE.