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 following is a guest post by Kevin Fleming. Kevin runs CreditShout, a personal finance blog dedicated to educating people on how to manage their finances and reviewing the best credit cards.

College students who travel abroad often bring credit cards along with them in order to easily facilitate their overseas transactions. If you fit into this category, there are a few things you should consider when traveling internationally with a credit card.

Not only does the type of card you choose to use matter immensely, so does your record-keeping and your pre-planning.

Here’s a quick guide on going abroad with credit.

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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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As some of you know, I’ve been teaching English in Japan for 6 months now. Teaching English abroad is a popular post-college choice for many grads and I believe many more people should learn about the opportunities that are out there.

I recently had the opportunity to interview my cousin and friend, Travis Lueth, who is an ESL teacher in Seoul, South Korea. We discussed how he found the job, his average work day, salary, living in Seoul, and silk worms.

If you’d like to follow or ask Travis a question about his life in Seoul, you can find him at twitter.com/thegoodship

Austin: Can you tell me a little about your school?

Travis: I teach at a private school called Hogwans here in Seoul, South Korea. Personally, I teach about 3rd to 6th graders or 8, 9, and 10 year olds.

A: How did you find the job?

T: Last year when I was about to graduate in December a good friend of mine, Joshua, was looking at his job prospects and ended up getting a job in Korea. At the time I thought he was crazy, but about 5-6 months later when I was looking at the end of my lease without any job prospects it became a real option for me.

A: How long have you been in Korea?

T: I will have been in Korea for 5 months this week. It’s been an interesting 5 months. I was woefully and mentally unprepared for what I was getting myself into it.

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“[Chinese women] under 32 have an effective savings rate of zero.”

This quote comes from an article from Financial Times (via Jezebel) highlighting the 21st century yue guang zu or “spend-all-your-salary clan” women of China.

These twenty-something, working-class women are spending the bulk of their monthly paychecks on glamorous items like clothes, jewelry, expensive restaurants, and clubs with no care in the world. Their false confidence is solely based on the belief that their lives are better than their parents, and that their paychecks will continue to rise as time goes on.

The article highlighted one woman’s spending habits, “she spends at least 70-80 per cent of her salary every month – but towards the end of the year, it creeps up to 100 per cent or more”.

Unfortunately, the excessive spending habits of the yue guang zu are all to similar to many people in America. It’s important to spend your hard earned money on the things you love, but spending like these girls do as a therapeutic act will only lead to disaster.

Here’s 6 reasons why you shouldn’t save money like a young Chinese woman.

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Money Around the World is a continuing series where I take a look at how different parts of the world handle money and what we can learn from it. Part 1 looked at credit card use in Asia and part 2 looked at Europe’s credit card habits.

South America is an emerging nation where a lot of growth is occurring. Just like a teenager, quick-growing continents can also go trough growing pains and this is what South America has to deal with in today’s economy.

Today, I’ll take a look at how 71 countries in South America use credit cards. As more and more people come into money, we’ll see if South American nations are being smart with their new credit or if abuse and debt is running rampant.

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Welcome to part 2 of the newly named “Money Around the World” series where we take a look at how citizens of different countries use and view different aspects of personal finance.

Two weeks ago we took a look at how countries in Asia use credit cards. From Japan to Russia we learned about the varying opinions and use of credit cards in Asia.

This week we’re going to travel west to Europe to see how six of the continent’s countries use credit cards.

Like most places, Europe uses credit cards much more conservatively than America. According to MSN.com, “only 27% of all plastic in issue in Europe is credit cards, and 73% is debit cards.” The idea of carrying over credit card debt from one month to the next seems like a foreign idea to most of the countries in Europe.

Regardless, I managed to find some intriguing facts about six of Europe’s most powerful countries and how they view and handle credit cards.

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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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This post originally ran as a guest post at Green Panda Treehouse.

Finding a cheap plane ticket for a vacation or trip abroad is always cause for celebration. However, excessive celebration can blind you from the fact that the plane ticket is just a sliver of the entire travel expense.

The actual travel portion of a trip – plane, bus, gas for the car, subway, etc. – is usually the most expensive aspect of traveling and the most deceiving for budgeting. It is the hidden costs of travel that can cause an exciting adventure to quickly turn into a financial nightmare.

I’ll show you a real life example of this and demonstrate how adding an extra 70% to your travel budget can cause those hidden travel expenses to be handled properly. Leaving home and seeing the world is a  great time in anyone’s life so plan ahead so you can stop worrying about money, and start enjoying your trip.

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