🐧 Phantom Costs of Living Abroad

INSIDE: Rental Costs, Health/Travel Insurance, International School, Foreign Taxes, Lack of Retirement Schemes, FX, Etc.
June 30, 2024

I got a lot of enthusiastic responses to my last newsletter on fulfilling unconventional goals.

So, I’m writing more case studies soon. (DM me if you have a story we can feature.)

Today, in 10 minutes or less, you’ll learn:

  • ✈️ Travel costs, rental upfront costs, health/travel insurance costs
  • 💵 Taxes, lack of retirement schemes, and international school fees
  • 💻️ VPN, virtual mailbox, phone service fees, and currency fluctuation

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👻 Phantom Costs of Living Abroad

I’ve been living abroad for 5 years.

One thing I’ve learned:

You’ll see lots of people bragging about their expat, digital nomad, or remote working lifestyle on social media, but they’re not telling you the whole story.

Especially the phantom costs.

In this newsletter, I’m going to list numerous hidden costs associated with living abroad that you don’t typically hear about.

Let’s start with one of my biggest expenses:

Travel costs

While you’re abroad, the reality is your family and friends will be distributed around the world.

Anticipate more frequent travel. Flying to visit family, especially if you have aging parents. And visiting friends for weddings, birthdays, and vacations.

Here’s a couple of my recent expenses:

  • Visiting family: $646.30 for a round-trip flight between Mexico City and Detroit, Michigan to visit my parents
  • Attending a birthday: $721.35 for a round-trip flight between Mexico City and Austin, Texas for a friend’s birthday festivities

In my case, the costs aren’t too much higher than domestic US travel.

But if you’re moving to Asia from the US/Europe (like when I was living in Singapore), prepare to shell out more if you want to stay in touch with family and friends.

Season 6 The Re-Entry Minimization GIF by The Big Bang Theory

Rental upfront costs

In some countries, foreigners run into thousands of dollars of unexpected housing costs due to lack of local connections.

For example:

  • Singaporean friend moving to NYC for a tech job - My friend had no credit score, US tenant history, etc. Just his offer letter. To qualify for housing, he needed to get a guarantor (3rd party services charge 40% to over 100% of first month’s rent).
  • Renting an apartment in Mexico City - Many landlords require a local guarantor to co-sign the agreement. Obviously, if you’re a foreigner, you won’t have the local connections. Alternatively, you can negotiate to pay a higher deposit (e.g. 2-3 months rent) or buy a 3rd party guarantor.

On the other hand, my experience renting in Singapore was relatively straightforward (no guarantor required).

Watch out for additional expenses to qualify for housing in your new city.

Guarantor 3rd party service in NYC

Health/travel insurance costs

If you’re an expat, then getting an international health insurance with coverage in your new country (and frequented countries) is essential.

Here’s examples of what I spent:

  • Nomad Health - my current insurance, which covers me in 175+ countries for $196/month or $2,352/year.
  • FWD International Health Insurance - what I had in Singapore, which covered me across ASEAN for $2,703 (S$3,652) in annual premiums.

If you’re a digital nomad or frequent traveler, then get travel insurance.

For example, in 2019, I took a travel sabbatical and spent $1,617.59 on 1-year travel insurance through World Nomads. This covered potential incidents related to my adventure activities like scuba diving or motorcycle trips.

I’m very grateful to be in relatively good health. I haven’t had to expense major treatments or health emergencies.

But if you’re like me, it’s worth paying for peace of mind and sufficient preparation.

International school fees

If you have kids, then obviously you want the best education for them.

While public schools are a solid option in the US, Australia, and some European countries, in many countries, you may opt for private international schools.

For example:

  • Singapore American School - Cost is $43,944 (S$$59,350) for a first year high schooler.
  • Mexico City American School Foundation - Cost is $17,249.81/year for grade 9-12 tuition and $2,379/year for bus service.

These costs can seriously stack up, especially if you’re sending 2 kids to private schools for their entire K-12 education.

Foreign & home country taxes

Expats tend to fall into two camps:

1/ Tax-obsessed or 2/ Blissfully unaware

If you fall into (1), skip this section. You won’t need it. But for everyone else who could care less about taxes, take time to review one of your biggest expense categories!

Here’s two surprising taxes I paid:

  • Exit Tax (Deemed Exercise Rule) - No one talks about this in Singapore. After leaving Singapore, I had to pay an exit tax on all my unexercised ESOP granted to me in the red dot. After talking with other expats who spent thousands of dollars on this tax, I wrote a guide to the Deemed Exercise Rule here.
  • US Self-Employment Taxes - I’ve written before about tax benefits for US expats. As a self-employed American abroad, I assumed that I could apply these benefits to my 15.3% self-employment tax. I was wrong.

As a precaution, it’s smart to set aside funds throughout the year for covering your tax obligations.

Lack of retirement schemes

If you’re new to a country, typically you won’t be eligible for local retirement schemes until you gain Permanent Residency or Citizenship.

You may also no longer be eligible for certain benefits in your home country.

For example:

  • When working for my last US employer, I contributed to a US 401k and paid FICA taxes which are essentially Social Security contributions.
  • After I moved to Singapore, I was not eligible for the CPF (Singapore’s version of Social Security) as a temporary resident. CPF is only offered to PR and Citizens.*
  • Meanwhile, as a US expat, it’s much more difficult to access certain tax-advantaged accounts like 401k, HSA, etc.

Hence, I would consider:

  • Contributing to your home country tax-advantaged accounts after going abroad - eg as a US expat, you can still contribute to your IRAs above your expat tax deductions/exclusion threshold.
  • New country tax-advantaged accounts available to you - likely limited or none

In many cases, expect that you’ll sacrifice some tax benefits from your home country.

*Foreigners are eligible for the Supplemental Retirement Scheme, which does have some tax benefits on contribution and withdrawal.


VPN, virtual mailbox, and phone service fees

While you’re abroad, you’ll likely still want to keep a mailbox, phone number, and internet connection back in your home country.

This helps you handle miscellaneous admin tasks like getting your replacement debit / credit cards, PIN codes, and password reset texts.

Here’s what I spent:

  • VPN - $116.95/year for an ExpressVPN subscription
  • Virtual mailbox - $24/month or $288/year for my Stable business mailbox
  • Virtual phone number - Free for Google Voice personal usage (but if you get a paid option, it’d be $15/mo for Openphone)

Not massive costs, but most people don’t consider these when moving abroad.


Currency fluctuation

This seems harmless at first, but the costs can add up if you’re not careful.

For example:

  • After Covid hit, my American friend living in Indonesia saw his IDR-denominated income devalue 18% in 2 months - He was getting paid 50% of his salary in IDR. When the USD to IDR conversion rate fluctuated from 13771 on Feb 22, 2020 to 16377 on April 4, 2020, he felt a lot of pain.
  • Foreign investments - I made the mistake of making SGD-denominated investments and forgetting that after selling the asset, I wanted to convert to USD to align with my spend. This added extra costs to investing.

Currency conversion gets especially gnarly when you’re buying and selling large assets overseas like a house.

Wise is my go-to money transfer app


In summary

When making an international move, factor in phantom costs not typically discussed in social media.

Run the numbers.

🌐 Beyond your borders

📸 Social-Media Influencers Aren’t Getting Rich—They’re Barely Getting By (link)

🇪🇺 Is Europe a Buy Here? (link)

🇨🇳 China offers visa exemption to Australia, New Zealand and Poland (link)

🇸🇬 Remote job opportunities surge in Singapore as bosses and workers embrace WFH options (link)

🇩🇪 Foreigners Living in Germany Can Now Obtain German Citizenship More Quickly (link)

📆 How I can help

That’s all for today!

Whenever you’re ready, here’s how I can help you:

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3. US expat tax service - Get personalized help on your tax returns from a US expat tax professional.

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Dexter Zhuang

Dexter is the founder of Money Abroad, an online education platform helping high-performers design their independent money path. He has 10+ years of experience building products and teams at public companies (Dropbox) and scaling startups (Xendit) across the US, Asia, and Latin America. His work has been featured in global outlets like Business Insider, CBS, US News & World Report, and Tech in Asia. He graduated from Dartmouth College.

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