This guest post from Joe Z. is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
I love the premise and the concepts of GRS. The principles that J.D. and the rest of the community espouse here really do work. However, one topic that I never really thought would apply to me personally was geographic arbitrage, the notion that you can save big bucks by living abroad while keeping the same income.
I want to give you a personal story about how this concept has helped us to:
- Pay down nearly 70% of our mortgage
- Provide a huge boost to my career
- Allow us to travel extensively
- Given us an adventure to remember for the rest of our lives
My wife and I always figured we probably wouldn't find a good opportunity to go overseas for another decade or so (if ever). We're both 27 and were pretty set in our current jobs as I was an IT project manager and she was a self-employed artist. But then we had one of those ordinary moments that proved to be a tremendous turning point in our lives because we took action.
Taking a Chance
About 18 months ago, my job at a large automotive company was going very well as I was just wrapping up a couple very successful projects. One of the high-level managers had come out from headquarters and was discussing the status of our company globally and spent quite a lot of time on what was happening in some emerging markets and China specifically. At the end of his presentation he mentioned (possibly a bit tongue-in-cheek) that they were having a very hard time recruiting people to work in China and if anyone was interested to let him know. After a polite round of laughter in the room I barely gave it a second thought.
My wife and I really love living in the U.S. and are both very close to our family members and friends. I had been with my company for about three years and was really feeling comfortable with my work and co-workers. But when I started thinking in detail about the initial objections I had, they started to seem more like excuses and less like valid reasons. When I broached the subject to my wife and her initial reaction was more surprise than outright rejection, I knew we might be able to make it work. Roughly four months later, after tons of meetings, a dozen vaccinations, and countless details being sorted out, we started a two-year assignment in China.
Anyone that has lived overseas for a while will tell you that it's not always easy. Anyone that has lived in the non-Westernized parts of Asia where we are can tell you that some of the time it's unbelievably hard. Almost no one outside of the westernized cities in China speaks English. The local food is exotic much of the time, and the culture is so different than the U.S. Every day is an adventure here! We are choosing to live like nobody else for a while so we can really live like nobody else after we get back. That being said, I would highly recommend an international assignment to anyone working at a company where this is possible.
Coping with Questions
Now that you know our basic story, I want to speak to a couple main topics that I think are relevant to GRS readers. Some of these questions are the types of things that cause someone to instantly dismiss an assignment. However, when you find out how the process normally works, it's likely not as big a deal-breaker as you thought. If you want more information you can read some others articles (both informative and entertaining) at our blog.
What does an international assignment require?
There were hundreds of details to arrange. However, the most important thing is having support from your managers (both home and host countries) and your HR department. You'll need to depend on these people a lot for all sorts of things so make sure they are on board. Once they are, you would sort out everything from moving to your new job to housing to language training.
What about your jobs back home?
My wife owning her own art business turned out to be a helpful piece of the puzzle in our case. She has been able to go back to the U.S. for a few big jobs. She also has spent a while developing her online sales of portraits while she is here. It's substantially easier if one spouse can continue with no interruption, but many companies will also help with training or job placement for the spouse during or after the assignment.
I took a bit of a risk not knowing what my role will be when I get back. In fact, as I have been drafting this article we had some major turnover in our department, including my manager and mentor. However, I've received very positive feedback from a number of managers about possible options when I get back. It is definitely critical to work at planning and coordinating your reintegration. After all, you're effectively interviewing for a new job once you get back.
What did you do about housing?
We found some family members to temporarily rent our house for the first part of our assignment but at the moment it is vacant and we have it on the market. This didn't work out as smoothly as it could have as the housing market is still in a rough patch in our area (as it is in most places in the U.S.). We also timed it about as horribly as we could since we put our house on the market the month after the homebuyer's tax credit ended and demand was at some all-time lows. Regardless of these challenges it has still been a plus as our housing over here is 100% paid for by my company.
How did you pay off so much of your mortgage?
The benefits for accepting an international assignment are really good at most international companies. When you add up the housing allowance, travel allowance, moving expenses, and “hardship pay” you get it would likely come out to between a 25-75% increase.
We have taken most of this excess salary (after charitable contributions, taxes, and a somewhat increased travel budget) and paid it directly against the mortgage. When we arrived in China we owned about 12% of our house. Now we own just over 50% and should be close to 80% when our assignment finishes next year!
How much do you travel?
We definitely travel a lot more than we did in the U.S.! In addition to business trips to Europe and South Africa, we've been to Hong Kong, South Korea, and at least a half dozen cities in China. We're also planning a big trip to Australia next year. We don't have a huge vacation allotment and have to use some of it to get home for holidays. However, thanks to some great planning by my wife we've been able to have some fantastic long weekend trips. We could definitely have saved even more money than we have but we wanted to experience as much of Asia as we could. In addition, most places in Asia are cheap to visit — especially compared to Europe or the US.
I don't think I could live there — isn't everything too different?
I definitely wouldn't suggest Asia if you have a particularly weak stomach or are OCD about cleanliness. But what about South America or Europe? There are hundreds of reasons you could come up with not to go. However, if you really drill down, it may just be fear of the unknown or fear of change that's holding you back. Educate yourself a bit and see if many of your reasons (excuses?) aren't really as big a deal as they seemed. And no, they don't generally eat dog in China — at least not in Northern China. And even if they did, you wouldn't be able to tell the difference between that and the silkworm you had as your appetizer…