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.

(more…)

There are a lot of big purchases in our lives – TVs, laptops, phones, iPods, Kindles. A lot of the time we think we can’t live without these items for more than a couple of days – maybe a week at most. Often if they break or wear down, we immediately go out and buy a replacement without thinking.

But for people who still receive some presents on Christmas or birthdays, having a little patience and the calendar on your side can lead to big savings with these big-ticket items.

Here’s how Corinne and I saved $750 on a laptop using this savings tip.

(more…)

If you want to really want to get a handle on your money situation, look no further that improving your credit score.

Easily the most overlooked aspect of one’s finances, your credit score is the number that tells lenders how trustful you for credit cards, mortgages, and other loans. This one number affects whether or not you get a loan, the interest rate of the loan, and your credit limit for the loan.

The biggest purchases of your life – a house, cars , a  business, etc. – are effected by the size of your credit score and if it’s low, you’ll end up paying hundreds of thousands of dollars more in your lifetime just because you’re more risky to lenders.

(more…)

2010 is here along with new resolutions and hope that better times are ahead. Unfortunately, history shows we’re not too good at sticking with our new year’s resolutions.

According to the Fox affiliate, Fox50.com: “By the end of the year, [ ] nearly 97 percent of New Year’s resolutions won’t be kept.”

It’s also shown that what Americans really want is to do better with their money in 2010. According to US News & World Report only reducing stress (65%) was a more preferred resolution to saving money (63%) this year.

So 63% of us want to improve our money situation, but only 3% of our resolutions will succeed. Pretty grim numbers.

(more…)

Bad money situations do not appear out of mid air. Poor education, bad luck, or lazy habits are just a few of the many problems that can lead to a difficult money situation. But one thing is for certain: complicated and dire money situations are tough to navigate.

Massive debt can be incredibly constricting and cause a lot of stress in one’s life. It’s difficult to escape a poor money situation and, unfortunately, too often the bad habits continue because the individual avoids taking action due to the size of the problem.

What an individual who is suffering from debt needs is clarity.

With bills piling up and not enough money coming in, the situation can seem complex. It may seem like there is always someone who is demanding more money, yet, there is no money available. The credit cards help for a while, but even they have their limits. Deep down inside, the person may want to fix the problem, but they just can’t seem to get themselves in a place where they are able to tackle the situation.

This is where meditation comes in. Yes, Foreigner’s Finances is going to get new-agey for a minute.

(more…)

As some of you may know, the Federal Reserve recently banned overdraft fees for ATMs and debt card purchases. Starting in July 1, 2010, customers will have to choose to opt-in to overdraft protection or else they will be denied at the register if they attempt to purchase an item without enough money in their account. Banks will also be required to make the details of the overdraft fee protection available and clear to the consumer.

At first, this appears to be a big hooray for the consumer. But the more I thought about the move, the more I disagreed with its intended motives.

(more…)

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.

(more…)

I received a bass guitar as a Christmas present my freshman year of high school.

Without a driver’s license or a girlfriend, I locked myself in my room and taught myself to play along with Blink-182 songs. I absolutely loved the thing and eventually taught myself to play a real guitar after borrowing my uncle’s acoustic. Unfortunately, my senior year of high school he needed the guitar back, so I decided to purchase one for myself.

My friend and I were driving around one day and we stumbled upon a pawn shop a couple of towns over. Pawn shops are in every town, but it seems like no one ever visits them. They really lose out in the cheap good’s game to thrift stores and the Salvation Army.

We went into the shop, not expecting much, but as soon as we walked in I spotted a beautiful acoustic guitar sitting on the ledge behind the cashier. It was polished and sitting up on its very own stand. I expected the guitar to be way out of my price range, but I decided to ask anyway.

(more…)

Another ALT (assistant language teacher) and I were recently talking about post-college life. He’s been out of college for a little over a year, while I have just been out for five months.

I told him how I was really enjoying the freedom and doing what I wanted for the first time in my life. For 22 years I felt like I was doing what was expected of me, and was never doing what I truly wanted. That finally changed when I got on the plane to Japan in July.

I told my friend I was enjoying not having to go to the library to study for a test, or having to keep myself awake through morning classes, but I mostly enjoyed coming home at four or five in the afternoon and being completely done with work and obligations.

(more…)

Last week we explored the numbers behind credit card debt. This week we’re going to take a look at how compound interest works in your favor by giving you more money for free.

With the ups and downs of the economy over the last twelve months, it’s difficult for anyone to know what to do with your money. Invest in the market and ride the roller coaster, or keep it at home where you can see it and no company will steal it?

The historical returns of the market, mixed with inflation, shows that keeping your money under your pillow isn’t worth it and sometimes you need to take some risk. Inflation has averaged around 3% a year so your money is losing value everyday it sits in your wallet or in a safe at your house.

The power of compounding interest is something that cannot be ignored. At first, it sounds like another boring financial term like dividend or exchange-traded fund, but compounding interesting is your best friend, and when you see it in action it really changes your mind about keeping your money in a safe at home. Picture your money giving you free baby money as a thanks for putting it in a savings vehicle.

(more…)