My Money Mistakes: Student Loans

One of my early money mistakes was my student loans. Although they weren’t my first money mistake, they were definitely my first big mistake.

First, I chose a field in college that could easily be described as a “hopes and dreams” field. I don’t want to say what the major was, but let’s just say that taking out loans for it was dumb. For some salt in the wound, because I came from a relatively poor household, I got grants and scholarships high enough to cover the costs and living expenses of college. Let me repeat that: I got enough financial aid and merit scholarships to go to school for free, and I still took out student loans in addition.

You can see why I consider this my first big mistake.

Over the course of my undergrad years, I amassed a total of around $22,000 in student loans. I also took out some credit cards during that time and often carried a balance.

In the summer before my final year, it hit me that I was reaching the end of college, and that I had this giant debt and no idea what to do next. I know, I know. I listened to the Dave Ramsey show a bit today, and there are debts that are much greater than my $22k. Compared to someone who's amassed a $600k student loan sum, my amount sounds paltry. But that's also a danger of making comparisons like that: $22,000 is a lot of money for someone in his 20's who graduated with an impractical degree. In any case, it felt like a lot.

In my last year, I applied myself seriously at school. I'd been an OK student before, but in my last year I really tried. In so doing, I made contacts that would ultimately lead to real career advancement later. The loan amount climbed though as I took out my final loans for my undergrad years.

By the end, I had the previously quoted $22k debt. Around $1500 was in an unsubsidized loan, while the others were all subsidized. That was a bit of accidental good luck.

In the intervening years before moving abroad, I went to graduate school paid for with a teaching assistant position, and I did a variety of jobs, some of which were related to my field and some not. I consolidated all my student loans at a 7% interest rate right before the financial crisis caused interest rates to drop to basically nothing. I used tools like Upromise to shuttle extra pennies into the loans, and I used Sallie Mae's offers to lower the interest rate after a certain number of on-time payments and with automatic withdrawal.

The payment plan I'd selected meant that the payments were interest-only for a decade or something crazy. However, I tried making whatever extra payments I could to lower the principle enough that the scheduled payment amount would also take off at least some of the principle.

While I worked in graduate school, the loans went into subsidized deferment even though I was earning a very modest salary. I used that time to keep paying money into the loans, and left graduate school with a lower principle amount. I also opened my Roth IRA at that time.

I listened to Dave Ramsey and tried to get the "baby steps" thing going, but what ultimately got the loans paid off was two things:

• The habits and the desire to pay the loans off that built up while I was essentially broke.
• Getting a job that paid me a lot more money.

I would have eventually paid off the loans on my previous track, but it would have taken decades. I was dedicated though. All that was missing was the income to get the job done, and I got that moving to Germany. When I look at our net worth chart, I'm shocked at how quickly things changed once we had a steady situation. We went from a negative net worth of $23k when we moved here to a positive net worth of around $16k in two years.

I think there are a lot of warnings one can take away from this. The first: avoid debt. Just dodge the bullet, and you won't have to waste time trying to heal the wound.

The second: earning power is important. My degree was a silly degree to go into debt for. I don't regret the degree itself because my life is good, but I sat in negative net worth territory for too long, and a lot of my earned money went to interest payments. That's money that Sallie Mae gets to loan out now and earn income on.

Meanwhile, because my income was so low so often, I often had credit cards that needed to be taken care whenever I got enough money for debt-paydown times. I wanted to be done with the student loans, and looking back, I had periods where I intelligently managed my money, but lack of steady income plus debt equaled lots of squandered time as income came and went along with emergency funds.

The third lesson is that learning to live frugally is worthwhile from as early an age as possible. I got serious about saving money once I left school. I still made plenty of mistakes from that point, but I was beginning the saving practice in earnest then. If only that could have been shifted to when I was 16 and earning my first paychecks from my fast-food job. I had friends who already did have a savings mindset and who saved up thousands before leaving high school just from side jobs.

And the fourth I'll list is this: student loan debt can be paid off. You can get rid of it. You can do it pretty quickly too if you set your mind to it, earn enough, and spend it frugally. Just get it done and move on. When you make the final payment, you sadly won't get a screen full of balloons and a giant "Congratulations!", but it's something that you'll never have to worry about again.

Churning Isn't Worth it for Us

After talking with my wife, we're going to back off on the card churning/travel-hacking thing. When we spoke, she was totally in alignment with me and expressed similar concerns that I mention below.

Sometimes you have to just admit that something isn't worth it. We're trying to build a deep savings habit. Habits take time and effort, and credit card rewards disrupt the savings habit.

Encouraged Spending

I found myself looking for things to spend money on. If I'd ever had a thought floating in my mind soup about something I'd like to buy, I began telling myself that I'd planned buying it all along. Now was indeed the time to do it since we had the new card. That way I could get to the end of the process and say, "We only spent money we meant to," even though it probably wasn't true.

I want to think about ways of saving money rather than spending money, and I don't want to think that spending comes with big rewards. 

Expensive Thinking

I found myself angling for more expensive solutions than I'd otherwise accept in order to meet the minimum spend. Every purchase was anchored to the number $4000. I reserved a hotel for a lot more money than I would if I'd purchased it with my normal credit card. I looked at brand new high-end products when used or otherwise less expensive items would meet our needs.

Luxury Dependence

These high end credit cards are trying to get us used to the idea of luxury, and luxury is a weakness. Airport lounges, high-end hotels, first-class airplane tickets, speedy security checks, elite status, and metal cards are all nice, but they clearly want the card user to become accustomed and dependent on these niceties.

I don't want to feel like I'm entitled to that stuff. One day these cards might not be so generous with their perks, but the luxury dependance would likely remain. And then you're trapped. 

Points Aren't True Assets

Points are kind of like assets, but not really. The issuing company can change the rules whenever they want. The airlines can jack up their fuel surcharges. The points accumulate no income, and their value doesn't appreciate with time. As far as I can tell, there are no laws protecting you as a points holder.

If we spend a bunch of money now to get the bonus within the next month, we'd be spending today's money in order to save money potentially about a year from now. That's putting lot of faith that the points will be worth something then, and it's a lot of faith that the money that I could have saved today couldn't have been used in a better way. 

Stress

It was causing me stress, and that sucks. I don't want to resent my wife if she didn't put some spend on the card. I don't want my afternoon ruined if the card machine at the grocery store doesn't work. I don't want to call American banks more often than I usually have do, which for the past few years has been never. And I hated the buyer's remorse that came with buying expensive stuff.

I've always prided myself on avoiding unnecessary stress traps, and this project was becoming one. 

The moment where this really hit me is when I did our monthly net worth calculation, and I saw that it had dropped in a month where our stock performance beat the market. Additionally, I knew that it would continue to drop as we fulfilled the minimum spend over the next two months. Meanwhile, there were great deals in the stock market if only I could get some cash in to buy them. But no cash was coming. 

We got a couple awards from less ambitious cards, and maybe I'll do some of those in the future. But for the bigger cards, we just don't spend the kind of money that justifies trying to churn them. And to spend that money means forgoing buying real assets now that could be worth much more than the credit card points are next year. 

Anyway, that's my thinking. I'll write more about rewards and stuff, but for now, they're nice but not worth sacrificing real saving for. 

Post-Vacation Deprogramming

Since our last vacation, I've been going through bouts of thinking something was financially logical only to doubt myself. I mentioned before my ambivalence about credit card reward hacking, and that's continued. But moreover, I'm looking at all sorts of decisions before and since the vacation that are just puzzling, and I have to conclude that vacations of the modern variety are enormous mental and money traps if you're not exceedingly careful.

For example, social media is a vast reinforcement mechanism for what is normal and expected. Professionally and personally, I am surrounded by people who take fairly extravagant vacations and share them to social media. Moreover, the photography surrounding the vacations is rapidly improving, making personal vacations closely resemble advertisements.

As for advertisements, has anybody else noticed that YouTube can start to resemble ads for ads for ads? It's like ads all the way down. We watch ads before we watch our nicer more interesting ads. Whether it be for trailers, or makeup, or electronics, or just about anything else, it's easy to get sucked into a perpetual ad whirlpool.

Two realties that present real traps for me and my wife:

• We live far away from our broader families. 
• We live in the tourism capital of the world (Europe, broadly speaking). 

That makes taking some kind of vacation or extended travel somewhat inevitable. We can be careful, and we have been more careful in the past, but right now, I feel like something is off in my thinking and planning. 

Credit Card Award Beginner

Over the summer, while making several US trips, I managed to score a few credit card awards. These were the easy to achieve kind: spend $500 in three months and get back around $150.

In August, I might have bit off more than I can chew. I went for one of the big mid-tier cards that offer you a bunch of points for $4000 spend in three months. It has no foreign transaction fees, so I can stick a lot of our local transactions on the card. That's no problem.

But despite some lofty goals, I'm finding it hard to spend the money. First, there's a lag between being approved for the card and its arrival abroad. In that time, some spending has to happen just to eat, so that spend doesn't count towards the reward, though the clock had started ticking on the 90 days.

Second, there are few good options for manufactured spend in Germany. Those Visa cards you can load up in the U.S. don't really exist in the same way here. There's no Plastiq, so rent and a bunch of other bills happen directly from our normal bank account.

One of the rules I set for this project was to not spend extraneous money that we otherwise would not have spent. One the one hand, we haven't gone out and bought a bunch of crazy extra stuff. No new computers or cell phones.

The stuff we planned to buy that would have helped us cross the spending threshold keep getting cheaper the longer we plan. For example, we planned to put a bunch of next summer's U.S. trip on the card, but we determined that a trip would be too expensive, so we chucked that. We planned on buying a nice couch, but even with the reward, we find couches too expensive and keep finding acceptable couches at lower price points. We are taking a brief vacation on one of my long weekends, but with low-cost airlines in Europe, it just wasn't that expensive. And we planned on doing some nice-ish things for the apartment, but short of a full kitchen overhaul, we can't stand spending the money.

And some of the more outlandish ideas, such as buying a new iPhone, get snuffed out mentally before they have much gestation time.

On the other hand, we wouldn't have done even this amount of spending without the card, so it's encouraged us to open our wallets more than we otherwise would have. The couch we have is an eyesore, but it's functional. The apartment improvements could have waited. The small trip could have been even smaller.

I've been forced to update how we budget, which adds complication. It's much harder now to get a big picture idea of how well we're managing money since a budgeted item happens this month but the actual paying for it happens next month or later. I've developed some new systems, but what used to be simple is now more complex, and I believe complexity makes overspending more likely.

I keep coming back to one thing: the reward is worth between $600-$1000 depending on how well it's used. But if you don't spend any money at all, then such a reward pales in comparison to the value saved.

I've been going back to some of my favorite sources for financial inspiration, and some of my spending ideas feel more suspect. For example, I thought of front-loading our mobile prepaid amounts for the next year. But now I'm wondering if I even really need a mobile phone. I have some internet services that I use. I could prepay them... or I could cancel them and just keep the money.

I'm not certain if I'll do any of those things, but I'm considering it. So there's a kind of mental battle between my desire to try churning out of curiosity, my default frugal side, my radical frugal side that wants to move into a studio apartment and sell our furniture and use the library's internet, a certain amount of sunk cost fallacy lurking in the background, and my desire for the stuff we're going to buy.

I know an American family here that churns U.S. credit cards successfully, but I have no idea what their budget looks like, and I believe that they have willing helpers in the US who spend on the card on their behalf. I'm not so trusting as to give any of my family my credit card, so that avenue is not open to us.

At the very least, I doubt I'll do this again any time soon no matter how it turns out. It really doesn't appear practical for us.

Some US Expat Challenges

Before I moved out of the US, I didn't give much thought to the challenges of saving money and trying to build wealth. I was just happy to have a job, and I was happy that my wife accepted this new adventure.

But once here, it became increasingly clear that we Americans have challenges while living abroad that are unique to us. Here are some.

Filing Two Tax Returns

This is the big one. We Amis have to file both in our resident country as well as the US, and under certain circumstances we can owe taxes to both countries. There's no exit interview when you move abroad, so you just have to learn this on your own by reading the IRS website or by asking other expats. If you miss one or several returns, you're going to have a bunch of work to sort through to catch up, not to mention potential penalties.

As for the actual filing, you can use programs like TurboTax to file in the States, but TurboTax doesn't know everything. As soon as you move away from simply being an employee for a single employer earning under whatever the cutoff for the Foreign Earned Income Exclusion is, you enter a much more complicated tax situation. For example, being self-employed while resident abroad requires some familiarity with the treaties negotiated between the US and your resident country, if such a treaty exists.

U.S. Banks Probably Don't Want to Deal with You

You face an uncertain result if you tell your American bank back home that you've moved abroad. Many simply maintain an American address with a family member rather than take the risk of their bank closing their accounts. It's the same story with credit cards and investing accounts.

Foreign Banks May not Want to Deal with You

Because of the long arm of the U.S. government, foreign banks are required to disclose information about American account holders to the U.S. government. When opening an account abroad, you may be sent IRS Form W-9 from the foreign bank.

Many banks don't want the hassle, and they may simply refuse to give you an account because of it. When FATCA was passed, there were lots of stories of Americans losing access to banks and banking products. It's gotten better since then, but we always have to assume that it could happen again.

Floating Currencies and Conversion

Living abroad subjects you to currency risk. If you have any kind of financial life in the US, you will need dollars at some point, and you will then be hit with the reality of ever-shifting global currencies.

When my wife and I first moved here, the euro was worth around 1.38 dollars. In the first year, we tried just getting our lives together and didn't aggressively pay down the debts accrued to move here. Within around a year, the euro plunged in value, and suddenly we faced debts accrued in dollars becoming larger relative to our European incomes simply due to currency fluctuation.

On top of that, converting currencies costs money. If you use a service like XE Trade or Transferwise, they will charge you some kind of fee or make money by converting at a slightly disadvantageous rate. But they're much better than using a bank or one of those conversion kiosks.

Complex Rules for Investing

Once you've actually saved your money, it's unclear where to put it. Save it abroad or in the US? What kind of vehicle? Savings accounts pay basically nothing (especially in the eurozone), but when you look at equities you are entering a new world of complexity. Individual stocks or funds?  Real estate and rental income? You have to consider the taxation rules for both countries when making your decision, and you have to consider potential future changes to the law. What strategy is the lowest risk within this complex matrix of possibilities? I've made my own choices here (buying individual stocks rather than funds), but each person will have to make their own choices.

For example, buying funds as an American in Germany is really risky. If you buy funds in Germany, the US will tax them punitively. If you buy funds in the US, Germany taxes them less punitively than they used to, but I find the rules excessively complex and somewhat punitive.

Do You Speak the Language?

We are at risk, though this applies to everyone, when we don't speak the home country's language as well as everyone else. The fine print matters, and if you find English legalese tricky, it's only going to be trickier in a language you didn't spend speaking during your school years.

That list should give you an idea of what we're dealing with. In many ways, of course, we're very privileged. We chose to be abroad. We chose this country. At least in Germany, most Germans seem happy to have us living here.

But there are a lot of traps you can step in while living abroad. I'm still learning.

How Our Current Budget is Constructed

For the past few years, we've been using Google Sheets for our budget, and it's worked very well. The original idea came from Dave Ramsey's Total Money Makeover, but as with anything you work at over years, we've made it our own.

I'm in the process of doing some alterations, so I wanted to document how we're doing it now before I  take too many next steps away from the current system.

The basics are as follows:

• We use Google Sheets because it's easily shareable, it's extensible, and it's actually very feature-rich. Plus there are lots of people writing about it and sharing spreadsheets to steal ideas from. 
• The budget tracks our spending cash amounts in Germany. It's all in euros. If you added up the German credit cards, Girokonto and cash, it should basically equal the Remainder amount in the active budget month. 
• One sheet is a master list of transactions. In my last post I discussed the kinds of information stored there. We use "Date", "Vendor", "Budget Month","Category", "Amount" (with minus signs for expenses), and "Notes" in case there's non-repeating useful information. Both income and expenses are listed on the transactions list. 
• Following that are individual sheets for each month with the following structure: 
• On the left-most column are the categories with headings for "Income", "Saving", "Expenses", and "Totals". 
• The second column has expected amounts. Some of these are recurring expenses such as rent, and some are unique, such as "Travel" and "Household". The latter refers to general expenses that my wife and I agree on. 
• In the income section are our jobs and other occasionally recurring income sources in addition to the remaining or deficient money from the previous month. A month of frugality gives us money in the next month while a month of spending leaves us with less. Ideally though, there's neither a deficit or surplus because we don't overspend, and we try to save everything that isn't earmarked for something else ASAP.
• A special sub category is "BLOW". We each get the exact same "BLOW" each month, and it's just the leftover amounts after everything else is accounted for. "BLOW" is basically money one of us may spend without asking the other person, and we tend to put clothing purchases, restaurant visits, coffee, presents, etc. into "BLOW". Basically, there's a subtotal added up of the other categories, and then the blow cells are that amount divided by two. The exception is when we know we're going to spend more in a month than we bring in, in which case "BLOW" goes to zero. More on this later. 
• To the right of this column is "Actual", which contains the amounts as they're added to the master "Transactions" list. When building your spreadsheet, the =SUMIFS() function is your friend. The idea is to SUM everything from the "Amount" column of the "Transactions" list, if it matches both the "Category" and the "Budget Month". 
• To the right of that is a simple subtraction function that shows the remaining amount. Subtract "Actual" from "Expected", and you get a number. Multiply that by -1 to get something a bit more useful. For example, if you expect -100 but only spend -50 you'd have 50 remaining following this approach.
• At the bottom are the various totals and subtotals. One cell represents the actual remaining money after everything is accounted for. That gets referenced next month. 
• One sheet looks just like a month sheet, but it adds up everything from the year. This lets us plan out yearly spending and check our progress as the year goes on. 

Not too crazy, right? It takes awhile to build the spreadsheet, but it's pretty easy to manage once it gets going. It kind of looks like this:

Category	Estimate	Actual	Remainder
INCOME
MyJob	A number	SUMIFS calculation	=SUM(B2-C2)*-1
HerJob	etc.	etc.	etc.
Last Month Leftover
Other
SAVING
Retirement
Tagesgeld
DEBT
Credit Card
Student Loan
Car Loan
EXPENSES
Rent
Electricity
Groceries
MyBLOW	=IF(B24<0, 0, IF(C9>0,0, SUM(B24/-2)))
HerBLOW	=IF(B24<0, 0, IF(C9>0,0, SUM(B24/-2)))
TOTALS
Total Income	These	cells
Total Expenses (with BLOW)	are	full
Total Expenses (no BLOW)	of	SUM
Remainder (before BLOW)	functions	and
Remainder (after BLOW)	basic	math.

Saving/Paying Off Debt

When saving any money, it looks like an expense. When drawing from savings, it looks like income. Both get the same category, so that at the end of the year, it's easy to tell whether a net amount was saved vs. drawn from. So if we save €2.000 in February but withdraw €1500 from savings in April, we have a net €500 savings amount. 

You can have several sub-categories of savings, such as Retirement, Tagesgeld (basically the German low interest savings account), Emergency Fund, or whatever you want. Same rules apply for each. 

We are out of debt, but when we were paying it off, payments were an expense like any other.

Credit Cards

We use credit cards, but they are paid off every month automatically. Therefore, a credit card purchase gets added to the transaction list like a cash or a direct debit transaction. 

More about BLOW

A bit more about "BLOW". This can only work if you and your spouse are on the same page and are pretty frugal. Since BLOW is the remainder, and any savings appear just like spending earlier in the budget, there's an incentive to under-save earlier in the budget to give yourself extra BLOW. "Hey, if I don't save anything this month I can buy the new phone/bike/camera/console/computer/dress/coat/hat/etc." This is why deciding on a standard amount of monthly BLOW ahead of time is important. We budget around €200 per person per month as BLOW. Honestly, I'd like to even lower this number further because it really adds up, but that amount is low enough to not allow giant expensive purchases while allowing a fair amount of freedom, and BLOW covers a lot of stuff.

At the end of the month, BLOW is treated differently. This took me a while to figure out, but there should be some incentive to saving BLOW. Before I figured it out, unspent BLOW just became unspent money for the next month's total household budget, which meant you couldn't save up for anything in the BLOW category. It also meant that overspending on BLOW just got erased into the overall household budget, and that's unfair to the thriftier partner. 

So now, the BLOW amount is zeroed out at the end of one budget month and added into the next budget month. To do that, I add some transactions to the master list. The first makes the current budget month BLOW remainder equal zero. Basically, if the remaining amount is greater than 0, it gets subtracted from the current month and added in a separate transaction to the next month. If the remainder is less than 0, it gets added back to the current month and subtracted from the next month. This happens entirely in the BLOW category cells and doesn't appear as income at the top of the month sheet. 

In this way, BLOW surpluses and deficits follow you from month to month. In a way, it becomes a quasi-separate fictional account that's entirely tracked through the budget spreadsheet. One consequence: the Remainder cell at the end of the month will not include the BLOW remainder once the month is closed out. 

Split Transactions

This system allows for split transactions pretty easily. Just create two transactions from the same vendor on the same date and for the same budget month. Use SUM to show your work in the Amount column to show how you extract part of a transaction from the total.

=SUM(x-y)

Why do this? Sometimes I'll buy something as part of a larger transaction that mixes categories. My wife, for example, doesn't drink any alcohol, so if I buy a bottle of wine as part of a grocery spend, I will split that out to be part of my BLOW spend. This helps discourage us from underhandedly saving on BLOW while nominally spending on a shared category. 

Last Stuff

It works for us, but there's no guarantee that it will work for anyone else. Maybe the BLOW incentive is too much temptation. Maybe this seems like too much work. Maybe your significant other is unwilling to help. In any case, budgeting has been worth it for us.

Tracking Spending Overview

"Track your spending" has a better chance of helping than hurting. I've been tracking my spending for years, and I vouch for it. Thankfully my wife is on board, so we've gotten very good at it.

Some people who have really honed their habits don't need to because they have trained themselves to habitually avoid overspending. But if you are trying to change your financial life you probably don't have those habits yet, and it can only help to write things down. Plus, if you like gathering and manipulating data, writing down data about years of transactions can provide lots of possibilities.

Here are the things that are absolutely necessary to write down:

• Transaction date. You need this to know how much is coming in and out in a given time-period. 
• Vendor name. If you don't have one, then just make one up that's memorable. "Toilet" and "Kiosk" and "Apotheke" are common European stand-ins for fairly generic vendors.  
• Category. I personally think it's better to start simple and add complexity in response to necessity than start with dozens of sub categories. The categories that are necessary for you to track will reveal themselves over time. If you want to keep it really simple, just use categories for housing, transportation, utilities, food, and everything else (we use David Ramsey's "Blow" to cover a wide variety of things). If you have debts, add those in. 
• Amount. Obvious, right? I personally list expenses with a minus sign in front, since that makes it easier to add to spreadsheet formulas. 

Those are the biggies. Here are some others that might be useful:

• Budget Month. I use "budget month" because it lets me stick things that happen in one month in a different month. For example, if you get paid at the end of the month, you want that money for the next month and not the one that just happened. 
• Account. This might be useful or it might not be. If you're doing things with credit cards, it may be useful to know if some spending happened on a credit card rather than coming out of a cash account. 
• Notes. Maybe there's something unusual about the transaction that you want to easily recall. 
• Tax-Related. If you want to deduct something, it may be good to write it down at the time of purchase. I don't do this
• Project. This is a new idea for me. Basically it lets you categorize certain spending as part of a larger effort. So, for example, if you go on a vacation, there may be costs that are categorized as "Travel", "Food", "Lodging", "Blow", and on and on, but a project tag (in this case something like "2018_SummerVacation" or "2018_SavingsGoal") lets you track the entire extended spending for the effort. You could really go off the deep end on this if you start viewing your life as a series of larger and smaller projects. 

I personally write everything down in a spreadsheet. You could also use paper if you want, but spreadsheets have the advantage of being easily modifiable, and the data can be easily analyzed as you get better at using the spreadsheet. 

I use Mint additionally, but I don't rely on it for budgeting or contemplating my cash flow. It's great for seeing transactions pop up from all my various American accounts, but their budgeting tools are too stiff for my purposes. It's better than nothing, but I think the time devoted to developing one's own system is superior. 

Once you've been doing this for awhile, it becomes second nature. I won't lie: it can take some time to build the habit. Some ways to make it easier:

• If you carry a smartphone, write down every petty cash transaction in some kind of notes app. This is for when you don't get a receipt. I've used some automation apps on iOS to add these notes to the spreadsheet once I've written them down.
• Keep every receipt and then add them to the list later. Insist on receipts if it looks like the vendor will supply them. 
• Spend less and have fewer transactions so you have to do this less often. 

Budgeting and Decisions

Yesterday, my wife and I came to a conclusion: we will not be doing a big U.S. visit in 2019. I got super stressed about this decision while we were making it, but the decision became much easier after doing three things:

• Adding up the costs of the last big trip taken a few months ago. 
• Looking at our budget for the next few months. 
• Talking about the decision with each other. 

The numbers don't lie. The last trip was really expensive. Although there are areas where we could cut costs and optimize, the next one would likely also be expensive in unavoidable ways, and combined with some other upcoming costs and upcoming financial uncertainties (cough cough taxes) it meant we'd be opening ourselves up to too much financial risk. Additionally, even if the uncertainties went our way, another trip would set us back on our longer term financial goals. 

So we had to bail on the idea. I sent out the messages to the relatives. Sorry. No big trip this year. I'd feel guilty, except that I know the numbers and how unrealistic it is to expect to do this every year. 

This is one reason why we should set financial goals, track our spending and budget future spending. At numerous points in my life, major decisions were made much clearer when the budget spit out its numbers. Rather than just a vague unease with a purchase or choice, the numbers show us why we are uneasy. They show us how the unwritten budget math in our minds is most likely lying and presenting an overly rosy view of things. Nearly any major decision can be reinforced or rejected by checking the budget. 

But we have to make one and follow it. It's hard, but it's worth it. 

Saving Abroad

I've been living outside of the U.S. for a number of years now, and something I discovered after moving away:

It's tricky to save money as an American living abroad.

Because we're subject to U.S. taxation and our home country's taxation (in my case Germany), we often have to jump through hoops that most other people never even think about. You can get mad about it. I did. Having to do all this extra work and face the extra complication and potential tax penalties and costs from complying felt like persecution. For those of us who are earning a middle class living, it feels punitive.

It's unfair. Full stop. But there's not much to do about it other than:

• Give up.
• Deal with it and figure it out. 

And it's possible that you might have some fun figuring it out! At the very least, there's a lot to learn in the process.

So I'm writing this to help organize my thoughts about dealing with money while living abroad and potentially help anyone who comes across this material.

Why Save?

A colleague of mine was told recently by his boss that he had two days to visit his dying mother. She's in North America. He's in Germany. If you haven't made that flight, it's basically a day per trip. If he wanted more time, he could personally hire a replacement, whom he would have to pay himself.

I have long believed in saving, but this was a strong reminder. It was like an extra push on a slowly turning wheel.

Keep saving!

We should save because it gives us options. We should save because we hate being forced into a corner and accepting something just because we're forced to financially. Don't you hate that? That feeling of being stuck? I do.

Once we've saved enough, we have all sorts of choices. Before then, we have few choices.

I asked myself what I would do if in that situation. Right now, I'd probably accept it even though I've saved a bit. But in a few years, I hope to be able to say without much second thought, "Then it's been a pleasure working with you," and quit.

My colleague is in constant financial distress. He's quite open about it. Mortgage. New gadgets. Car loan. Expensive hobbies. The usual story.  He has few choices in this most recent situation. He has few choices in all sorts of situations. I really don't know what he'll do. Sometimes I just want to shake him.

But I don't know the magic words that would get him to change without him just resenting me, so I just try to be a good example and not heap too much praise on his expensive stuff. And I'll write here, to remind you and to remind me to keep at it.

Give yourself options.

Save.