Raise your hand if you have debt. Yup, me too. According to Market Watch, Americans have $12.73 trillion worth of household debt as of March 2017, topping the 2008 peak of $12.68 trillion! About $1 trillion of that is in credit cards alone. How much of that is YOUR share?
We all know that debt holds us back, but what can we actually do about it? The first thing you should do is acknowledge it. Add it up and get a total. I like to use Unbury Me to visualize how different steps will affect my payoff date. Then, when I need to make a payment, I use TransferWise to send money back to my US account.
Debt Management Abroad
Moving abroad with no debt is ideal, but for many of us it isn’t realistic. If you can pay off all of your debts before moving, you will have less required monthly expenses. However, you should not use up all of your savings in order to achieve this, as you will need a starter budget to help yourself get set up in your new location.
When moving abroad, you can’t just focus on your total debt. You need to break it down into individual loans and monthly payments. Many personal finance experts, such as Dave Ramsey and Suzy Orman will recommend that you eliminate debt by lowest debt first (Dave) or highest interest debt first (Suzy). I respect both of their opinions.
However, for people moving abroad, the most important thing is minimizing monthly expenses. When I moved to Spain, I had $262.27 in minimum monthly payments. That’s a lot when your steady income is 700 euros a month. Now I’m down to about $42 a month in required debt repayment. How did I do that? Let’s take a look: