I wanted to be very transparent about the costs involved in this from the outset because there’s so little financial transparency in these conversations online, particularly when it comes to expat life in Europe. Everybody’s stories always seem to begin with “I sold everything I owned” and end with “and moved abroad”, which is like, okay, good for you, but …?! I intend to keep the financial conversation very open and honest here, and I hope this will help anyone contemplating a move of their own.
The TL;DR version: in order to be financially comfortable and confident, I need to leave the US with at least $65,000. Forty-five of that will be my “spending” money, $20,000 will remain in “reserve”. This is so that I’m protected in either of the following cases:
- I lose all of my freelance work and find nothing else while in France (the $45,000)
- I need to return to the US, temporarily or permanently, for whatever reason (the $20,000)
Ideally, at the end of my 16 months, I would love to say that I still have the $65,000 I came with. That is unlikely, but it won’t hurt to try. Currently, I’m sitting on just under $38,000 in savings and another $5,500 in an IRA, though that I’m not touching. Here’s how I plan on filling the gap:
If my estimates are correct, my annual income both this year and next will hover right around $105,000. I say “estimates” because that’ll depend on my bonus and my freelance income, which is sometimes a matter of blind luck. In addition to my full-time job, I consult for a number of different companies on the side in the field of anti-corruption and anti-fraud, broadly speaking. Sometimes these are tiny gigs, sometimes not, it all depends on the mysterious ways of the market.
If you’re thinking to yourself, “what the hell, that’s a lot of money, what’s her problem”, you’re almost entirely correct in thinking so, but I live in a very expensive city (DC), travel a lot, and sometimes get hit with unexpected bills, just like everyone else. Plus, I’m a contractor, so I pay more in taxes than a regular employee and have fewer benefits. Additionally, due to the asinine tax system we have, there are some categories in which it actually makes more sense for me to spend the money I have than to save it – for example, I could spend ~ $3,500 on “educational expenses”, or I could end up paying a very large percentage of that to the government, so instead I choose to invest in some kind of skill or competency. I can’t squirrel away huge chunks of my income every month, but I’ll obviously try to rein some things in.
The goal will be to budget carefully (I’ll post my budget spreadsheet for anyone interested), eliminate wasteful spending (more on this later), and put away $1,000 in salary per month. With a tentative departure date of October 1, 2017, I should be $12,000 closer to my goal.
The remaining $15,000, hopefully more, as much as possible, will have to be made up of freelance income. If I take on one to two projects per week at my standard rate, approximately $250 per project, I should be able to get an extra $1,500 per month, or another $18,000 total by my departure. That would put me on the tarmac at $68,000, which is a good place to be. This number shoots up astronomically if I land a golden egg client, though little depends on me in that regard, or if I become a total shut-in and work 80-hour weeks, which I could do, but won’t. Because a lot of my side income depends on precision and attention to detail, I try not to overwhelm myself, since there comes a point beyond which I’m too tired and I just risk producing a subpar work product, therefore jeopardizing future earnings.
I mentioned that there are some big expenses I can’t cut, but there are also some I won’t. I’ll cover this in a comprehensive budget post soon, but this is another thing I feel often makes expat/travel/living abroad blogs disingenuous – all of the “I moved into my parents’ basement and ate air, and so can you!” posts disregard the realities of everyone else’s life circumstances, unique by definition.
$38,000 in savings today
+ $1,000/mo x 12 = $12,000 to be saved from salary
+ $1,500/mo x 12 = $18,000 to be saved from freelance income
As you may recall from about a million words ago, at least $45,000 of those $65,000 – $68,000 will be needed to cover expenses for 16 months. Here’s how I arrived at this figure:
Monthly Budget by Category
Rent: EUR 800 – I’ll probably use Airbnb due to advantageous credit card terms (each dollar I spend will net me 3 bonus miles) and not having to worry about hooking up wifi, cable, a washing machine, etc. I’ll try to go as low as I can here, but I have several non-negotiables: walking/tram distance to both school and the city center, a washing machine (sorry, #gringa), and pets allowed. Some kind of cable TV setup purely for constant practice/immersion would also be helpful.
Health insurance: EUR 45 – I’m overestimating a bit, but let’s just say it’ll be that
Food: EUR 500 – I’m way overestimating this category, but having a bit of a buffer here will help me to be able to move things around a bit in other categories as needed
Travel: EUR 300 – again, this is a big travel budget for someone who’s going to be doing a degree program and working, but I figured a buffer wouldn’t hurt, and I foresee a lot of SNCF in my future anyway.
Cat: EUR 50 – my estimates suggest this will suffice for food and litter. He’s pretty low-maintenance otherwise and has plenty of toys and accoutrements already – and yes, he’s obviously coming with.
Health & beauty: EUR 50 – whatever face/body/hair stuff I need, although I, like my cat, prefer a simple routine.
Phone: EUR 50 – standard.
Totals and Notes
My in-country costs for the length of the program (16 months) come to a minimum of EUR 1,795 or US $2,154 total per month, or US $34,464 for the whole getup. Let’s round up to $35,000. The program itself, which may well be France’s most expensive degree that isn’t an MBA, is another EUR 8,500 or about US $10,000. Et voilà.
As you can see, this budget doesn’t leave a lot of wiggle room for emergencies, which is where (hopefully) a combination of freelance income and the “reserve” budget would come in. It’s also lacking a fairly standard category – “shopping” – and I’ll explain why in detail a little later.
Also, these calculations don’t take any of the costs of the actual move into account – plane tickets, visa stuff, checked bags, microchipped cat, vet documents, etc. – because those are all one-time costs with which I actually do, magically, have some wiggle room. For example, I’m sitting on a small pot of United/Star Alliance miles, currently about 250,000 in all, and I expect to spend 30,000 of those on a one-way ticket, so all I’ll be responsible for are taxes and extra luggage / cat fees – under $300 total. I’m rolling all of the moving costs into a completely separate budget, though, so I’ll cover that in a separate post.
I am also deliberately leaving anything I could earn selling my stuff out of the equation. My car is in good condition; in a year, it could probably go for $3,000 in a private sale. The rest of my stuff could end up netting another $2,000, maybe less. For tax purposes, it may end up being a better idea to donate instead of selling; that’s a calculation I have yet to finalize. Whatever comes out of the sale will be added to the “reserve” fund; some of it may have to go towards a cheapo storage unit until I have the time and means to take the important keepsake stuff to my parents’ house. Conveniently, they live in neither France nor the US, so that’s going to be a whole separate process.
I am, of course, praying to all currency conversion gods that this current rate doesn’t change significantly between now and then, and I’m watching the markets carefully. I’m not so much wishing the euro would get weaker as I am for the dollar to get stronger, but if we could get to 1 : 1.05, for example, I’d be positively beside myself.
Fortunately, in the time it took to write and polish this, I completed four side projects that together came to $2,585, all going straight to savings. I should note that that sum total is not at all typical for four measly projects, I just got lucky. I’ve got one more side project confirmed, due next week and likely billable right around the $250 mark, and two more potential projects worth $1,800 total (again, atypical pricing). Once all this money hits the bank, I’ll post an update on my progress, and I’d eventually like to write more about what I do as a freelance gig and how all of that works.
The flipside to this, of course, is that the more I earn, the more I pay in taxes (taxed at the full monty rate), so I have to be exceedingly careful with all my records and really go after every possible deduction. There are some benefits to this type of salary arrangement, but it’s a never-ending cycle of preparing the next quarterly IRS payment and pulling money out of savings to cover whatever I owe every April, so I suppose it’s lucky that I really like my job.
Next up: a serious overview of my current income, fixed costs, variable costs, and what might very well be a brutal budget. Stay tuned.