Basic Financial Advice for New Expats

article from November 22, 2010
By Jamie Douglas

In my travels and communications with folks who are thinking of relocating outside of their country, I have found that there are many sources of advice as well as many opportunities to get taken to the cleaners by unscrupulous operators.

In a previous article, I offered the choices of renting vs. buying in a foreign land. I can assure you that when you get to your destination and go to the places where expats meet for coffee and croissants on a weekly basis, there will always be people there who are looking to make a buck off you. Everyone has a deal, from that condo near the beach, to those high-yield, short-term investments, and of course there's that coffee plantation that will pay for itself in 3 years. (Why are they selling the golden cow?) You will also find many other new arrivals who have been there for a few months and may know a little more than you.

As for your cash on hand, always carry what you think you will spend along with a debit card from your bank. There are ATMs wherever there is a bank where you can extract needed funds.

There is absolutely no need to transfer your money into the country you are in just because they are offering better interest rates on US dollars. When all is said and done, you will have exposed your funds to much greater risk for very little gain. In many instances, the capital gains taxes on interest are very high, and in some instances, the banks simply don’t have the money to give to you when you want to make that withdrawal to buy a car or a house: Come back tomorrow, or the next day.

Then there is the constant uncertainty of devaluation. (Not that the US$ has done so great lately.) And who would have thought that the euro, the currency  that the Oracle of Omaha, Warren Buffet – you know, the one who said that derivatives were toxic and then lost billions on them – and George Soros, as well as Sandy Weil’s Citigroup and many others said was the safe-haven for the wealthy, would suddenly be on the verge of extinction?

But not to worry. As long as the US cotton farmers produce that special cotton that is made into that special denim, which is made into paper to make US banknotes, and the treasury does not run out of ink, there will be fresh crisp new dollar bills injected into the economy, and with few exceptions, the US dollar has been relatively stable in Latin America since the last Mexican and Argentinean meltdowns.

Hold on to your money, in US dollars or Swiss francs (CHF), and be frugal, because with the current economic situation and all the false hope being spread by the bankers and governments worldwide, we don’t really know what will happen. If anything, silver has outperformed just about every other commodity. But then again, when things go south, it’s unlikely that your local grocer will sell you meat for silver – or gold, for that matter.

So, when you go to your Wednesday morning coffee klatch with your fellow expats, just let them know your Social Security is barely covering your living expenses, and you will soon find the true friends that we all need – and you will still have your money at the end of the month.

Jamie Douglas
At large in South America

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.