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Expat Finances 201: Investing With Taxable Accounts

This is the second article in a series of personal finance and investment articles mainly for American expats, though domestic residents and non-Americans will find it useful as well.

101 is a foundation for everyone, but particularly useful to those with student loans or other debt

201 is a primer to investment for those with no debt, or with savings of less than $10,000

Creating the Most Simple Budget

On Jogging the Life Nomadic

 

So, you've never been out of the country, you don't even have a passport and the funds in your checking account are pretty low. This is typically the case for most people.  The number one excuse for not traveling boils down to it being expensive, and, it is.  However, this doesn't mean it can't or shouldn't happen.  Let's take a moment to think about your current budget. Sit down and open your online bank account.  Total up your leisurely expenses.  This includes going out to eat, buying drinks, purchasing clothes and music, etc. The first time I ever did this, the number was astounding.  I almost went into a panic knowing how much I had spent on entertainment and eating out.  Living on a budget is more than having enough money to pay your rent and bills. These days if you pay all of your bills on time, you could be considered someone who is somewhat good with money.  A lot of people simply set aside this money and then the rest of it becomes expendable income. Don't do this.  You can start by following a few simple tips that will help boost the cash flow into your savings thus allowing you to plan a trip out of the country.  

1. If making any purchases, use cash. If you don't have the cash, don't make the purchase.  Every month, I take out a certain amount of cash for the fun stuff. I put this cash in an envelope and put it in a junk drawer.  If I need some cash, I take it from the envelope.  This money is meant for my occasional morning coffee before work, my drink after work, dinner, movies, etc. With this method, I am able to visibly see how much money I am spending every day, every other day, every week.  There was one night I went out with a group of people in downtown Seoul.  We had dinner then headed straight for the bar.  I got obliterated. The tequila shots couldn't come fast enough and I struggled to keep my head up on the taxi ride home.  The next day, after puking my guts out for hours, I was ready to eat again. I remembered I had taken $100 out of my envelope, so I grabbed my wallet and peeked inside.  All of it was gone and I had no idea how it happened.  At that moment,  I was grateful I hadn't taken my debit card out on the town.  

2. Don't use the credit card unless the purchase is one that needs to be made in payments.  I prefer to pay for things in full but there are times when that may not be possible.  For example, your computer crashes and you need a new one.  These days, computers and the internet are a must.  This would be a purchase I would put on a credit card.  However, don't stick to paying the minimum every month.  Pay it back in larger installments because paying interest on anything is the pits and it's just more money out of your pocket. 

3. Eat at home.  Most food you buy in restaurants is overpriced and unhealthy.  Cooking at home can be fun and rewarding.  Learn to cook the food you love to eat when you go out.  You'd be surprised how easy it is to follow a recipe and how delicious the meal turned out.  Others will be impressed and you just found a new hobby. This will also help with grocery expenses.  Buying ingredients that work well together will spare you multiple trips to the store and will also create a more fixed grocery budget every month.  Also, you will no longer say bye-bye to all the extra money you spend on tipping your waiter. 

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