Foreigner's Finances

On Thursday we took a look at why Americans working abroad can’t invest in a Roth IRA and how to avoid double taxation on foreign income.

We learned you don’t have to pay taxes on your income while working abroad. Great! But how do you save for retirement without access to tax-deferred accounts like 401ks and IRAs?

Unfortunately, you’re hands are tied as a foreigner working abroad – at least compared to our friends in America with access to 401ks and IRAs.

You still have the option of investing your money in taxed accounts in America through a broker like Vanguard, Schwab, E*trade, or Zecco but you don’t receive any tax benefits and have to pay taxes on your gains and dividends.

These accounts don’t require you to be in America so you’re more than willing to set one up to start your retirement savings.

Retirement seems far away, but the sooner you start, the easier it is to properly save. Don’t let the absence of tax-efficient accounts scare you away from starting your retirement savings.

A taxable account can be a great start for your money and then when you eventually return home, you can take your progress and continue on with a IRA or 401k.

Here’s what you should know before you invest, and some options if you choose to take the plunge into investing for retirement.

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The other day I received a question from a reader, Jack, on my 5 Minute Intro to Roth IRAs video post.

Jack asked:

A question for those of us abroad, or rather a request for clarification: I was of the belief that foreign-earned income which qualifies for the foreign-earned income exclusion cannot be used for a Roth IRA. You make no direct reference to this. Can you clarify at all?

Jack is correct. If you are working abroad and have no income in America, you cannot invest in a Roth IRA for the year(s) you are gone.

So why is this?

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This is a guest post from Mr Credit Card of www.askmrcreditcard.com. Mr Credit Card used to work and live in Japan years ago and today, he is going to give us some tips on how to earn airline miles for a trip back to America.

I worked and lived in Japan a few years ago and during that time I’ve been able to get quite a few free business class flights for my vacations.

The reason is that the company that I worked with gave me a business credit card, which happened to be an American Express. Whenever I took any business trips or gave client entertainments, I always charged to the card and earn reward points. I also had a personal AmEx card and I was able to combine accounts to really boost my point earnings.

That essentially, was my little secret to getting lots of miles.

This is particularly important for expats living abroad who want to save money on trips back home or on vacation somewhere else. So below are some of my tips for earning miles when you are an expat abroad.

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I love sushi and I’ve been introduced to some delicious Japanese foods, but sometimes I just want some food from America.

Luckily, so does my girlfriend and she loves to cook. She searches food blogs and has creatively constructed 10-15 meals that taste like I flew back to Chicago and am eating at my mom’s kitchen.

Today, I’ll show you how to make her American/Mexican nachos in Japan.

Included in the post will be the ingredients we’ve found at stores in rural Japan, the cost of the nachos to serve two, and pictures of the process. I’ll also provide some alternative methods in case you can’t find an ingredient at your local grocery store.

We quickly learned that Japanese liquor stores are the place to go for international food. They already import beer, liquor, and wine from abroad and most stores usually import some foods as well. Even though we live in a very small town, we still lucked out with having a great international food liquor store nearby.

So here’s the ingredients for Corinne’s Nachos:

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Many of my junior high students are surprised to hear that Christmas is such a major holiday in most of the western world. In Japan, New Year’s Day is considered the most important holiday of the year. The Japanese recognize Christmas, but it’s mostly just a nice day for couples to be together and exchange a present or two.

The more I talked about Christmas with my students, the more I was learned about the many differences between American and Japan when it comes to theses two major holidays.

Below you’ll find a few of these differences and I hope it shows you how differently Americans see the world from other countries.

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I’m currently an Assistant Language Teacher (ALT) through the JET Program. I work at a Japanese junior high in a small town in western Fukui, about a two hour train ride from Kyoto.

I didn’t even know this job existed until two years ago.

It’s unfortunate that so many jobs and professions can be overlooked by people just because they don’t know they exist.

So what is an ALT? What’s the job description? What is the average day like? Is it fun?

ALTs teach English in junior highs and high schools across Japan. The biggest misconception about the job is that you need to know Japanese. Besides a handful of words, I have no and this almost never negatively affects my workday.

Different variations of the ALT exist across countries all over the world. But with over one hundred ALTs in my prefecture alone, I’ll attempt to introduce you to our way of life as an ALT in Japan through the JET Program.

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Note: I’m writing this post while completely content with my life in Japan. I’m suffering from very little homesickness and this post is in no way a vendetta against Japan. I’ve wanted to write a critical post about Japanese finance for a while, but in no way is this me being sad and missing home and Chipotle. Well, I do miss that one a little.

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The perception of Japan in America is one of futuristic technology, ninjas, and sushi. For the most part, this is accurate. But not much is known about how the Japanese handle their daily finances.

I always thought most countries used debit, credit, ATMs, online bill-pay, and other 21st century finance concoction like Americans. Upon landing in Tokyo in July, I was introduced to a different side of Japanese finance.

The way the Japanese handle their finances seems like they’re ten years behind America.

Here are the 4 aspects of Japanese finance I’ve been disappointed with.

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One of my original goals for Foreigner’s Finances was to personally learn more about how different nations view money.

I’m fascinated by the topic of money in general. The fact that everyone uses money everyday, but relates to it differently, fascinates me. Throw in international differences and customs and there are some interesting facts and opinions to be found.

Today we’re going to narrow down the international money topic and take a look at how different Asian nations handle credit cards. I’ve managed to accumulate some interesting facts about six of the Asian countries to give you an idea about how they react to credit and plastic.

To give my American audience some perspective, I started off with American credit card facts so you can compare to the Asian countries.

Enjoy!

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Corinne and I are officially the proud owners of this 1998 Nissan Cube! Purchasing our first car – and in Japan, of all places – was quite the learning experience, but we came out better consumers because of it.

The Why

The need for a car was created because Corinne was having troubles getting to work. With no car, she had been taking the train into the city and walking forty-five minutes to work four or five times a week. We’re located in a more rural area, but we have a local train line that goes into the major city that is a nine minute walk from our house.The problem is the train only comes once an hour and the last train is usually around 11 p.m. With the train only coming once an hour, she was commuting almost two hours everyday, when a drive to work would only take fifteen minutes.

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After a month of sharing a phone, my girlfriend and I decided to be grown-ups and buy her a phone.

A lot of other ALTs (Assistant Language Teachers) in the area have the iPhone because of its low price in Japan where it’s not very popular. I originally passed on it in July, but we decided to go with it this time for the internet access, GPS for the car, and, let’s admit – cool factor

We brought along my seventy-five year Japanese friend who runs my English club for translation help. After two hours of negotiation and a weeks wait, she had the phone.

One of the most difficult things about finances in Japan is letting little details go. I wasn’t 100% sure on the exact pricing for the phone, but we went with it anyway. This is something that wouldn’t have flown in America, but working with a translator who speaks broken English tests your patience after a while.

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