living expenses

Debt Management For Moving Abroad

Debt Management For Moving Abroad

Melissa

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?

the shame of debt
You, me, and about 80% of Americans.

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.

debt
Control your debt or your debt will control you.

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:

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Living Expenses in Spain

Living Expenses in Spain

Melissa

Research Your Living Expenses

Before moving to Spain  to teach English with the Auxiliares de Conversacion program, I did a lot of research to try to figure out what my living expenses would be. There are some really great resources with sample budgets from different cities, like this series by COMO Consulting. Obviously, there won’t be information for every possible city. Neither of my two cities (Huelva, Andalusia and Vitoria-Gasteiz, Basque Country) were included, but you can still use them as a benchmark to get a pretty good idea.

Something to keep in mind when looking at other people’s living expenses is that even though you see WHAT they spend, you don’t often get a glimpse into HOW they spend. That is what I intend to do with this post. I’m going to use examples of my living expenses from Huelva and from Vitoria-Gasteiz, but the techniques for cutting costs should be applicable in any city.

MY LIVING EXPENSES

Rent: 225

Groceries: 65

Phone: 10

Electricity: 25

Internet: 16

TOTAL: 341 euros

budeting for living expenses abroad
Core Living Expenses: Make a list and check it twice.

 

This is my share of required monthly living expenses in northern Spain. Everything else is variable. If you can keep your core living expenses at around half of your income, you’ll have a lot more flexibility for some of the other things you’d like to do, such as traveling, shopping, and saving.

But how do you keep your expenses so low? The cost of living difference does most of the work for you. The north of Spain is considered an expensive region in comparison to other communities in Spain, but with a little planning, you can make it work. Here is a breakdown of my living expenses in the north and the south, and how different choices affect the price.

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