If you’re trying to pay down debt, there are always basic debt repayment strategies you can use. You can fine-tune your budget, create a payoff plan, and maybe even refinance for a lower interest rate.
Or, you could step outside your comfort zone and do something extreme: Move overseas.
All debt and little income
Sarah Li-Cain didn’t realize what was in store for her when she moved to Australia with her now ex-boyfriend. During her time there, she racked up $9,000 in credit card debt.
When things didn’t work out, she headed back home to Canada and searched for ways to get out of debt. The problem was, she couldn’t find a solid job.
“I had a few minimum wage jobs but desperately wanted to keep traveling,” said Li-Cain, founder of HighFivingDollars.com and author of “The Authentic Budget.” She also wanted to pay off her debt in a reasonable timeframe.
With a degree in education, it didn’t help that teaching jobs were scarce.
“I had friends who were still struggling to get jobs despite years of substitute teaching,” explained Li-Cain.
An overseas opportunity
With what seemed like perfect timing, Li-Cain heard about a teaching job in South Korea.
“I thought this was an easy way to build my career, travel, and pay off debt,” Li-Cain recalled. She didn’t have to think twice before taking it.
The teaching contract Li-Cain signed was key for helping her with her debt situation. It included housing and she received a monthly stipend to pay for electricity and water. Li-Cain also lived across the street from the school, so there was no costly commute.
With a bare-bones budget, Li-Cain was able to pay off her credit card debt in less than a year.
Free from the burden of debt, she left South Korea when her contract ended and moved to China for eight years to teach at a British school. Li-Cain eventually moved back to the U.S. and settled in Jacksonville, Florida. She doesn’t plan to stop traveling, but she’s now doing it without compromising her financial situation.
“I stopped making the same mistakes I did before, like emotional spending,” Li-Cain explained. She also works hard to seek happiness through mental and physical health, rather than through money.
Living like a local
Li-Cain isn’t alone in thinking that moving to a different country can help pay down debt faster. Matthew Massee, an SEO specialist for law firm Utah Advocates, spent time in Guangzhou, China, to pay off his student loans.
“I earned a low salary by U.S. standards,” Massee said. “But in China, I had an extremely comfortable salary.” Plus, his work contract covered his rent and, with government subsidies, his monthly utility bill came to less than $20.
The other part of Massee’s plan was to give up some of the things he enjoyed so he could live like the people around him.
“I switched to soy milk and pork instead of milk and beef, tea instead of coffee, and local vegetables instead of avocados,” Massee said. It helped that the rural area in which he lived had no English speakers.
“I was able to easily save over 70 percent of my monthly income,” he added. With that, he paid off his $12,000 student loan balance in about 13 months.
Massee is back in the U.S. now and has no debt. His experience in China has helped him to strive for a modest, happy life. “Seeing global poverty firsthand, every day, shifted my perspective greatly,” said Massee.
3 ways to get out of debt while overseas
Li-Cain and Massee found perfect opportunities to help them reach their goals. But if you need help getting out of debt, simply moving abroad may not be enough. Here are three things you’ll need to do while you’re overseas.
1. Get organized before you go
Even if your main goal for moving abroad is to pay down debt, the excitement of living in a new place can make it hard to remember your obligations back home.
Contact your lenders and give them your international address and phone number. Ask if they’ll take payments from an international account. If not, make sure you already know how you’re going to get cash from your bank account overseas to your account in the U.S.
Some banks with a global presence, such as HSBC and Citibank, may even have branches in the country to which you’re moving.
2. Set up automatic payments
Depending on where you go, internet access may be spotty. You may also run into other troubles like having your laptop stolen, or there’s no local bank branch from which you can send money.
Setting your debt payments to auto-pilot can help with this. You can determine the amount that gets paid automatically every month.
For example, you can set it to the minimum payment in case something happens and you can’t send money. Or, you can set the automatic payment higher to keep you and your budget accountable.
The important thing is that your process is fail-safe.
3. Avoid inflating your lifestyle
Many countries have a lower cost of living than that of the United States. So, it may be tempting when you move abroad to change your lifestyle to enjoy more luxuries.
“You can definitely do a lot of amazing things cheaply,” explained Li-Cain. “Like eat out every night, get weekly massages, hire a cleaner and cook, and still have money left over.” But, she cautioned, that can add up fast. Li-Cain recommends sticking to local shops and restaurants, as well as cooking at home often.
Even if you can manage to pay down debt with an inflated lifestyle, it will still take longer to reach your goal of being debt-free.
To avoid this, create a budget to live by during your time abroad. Keep track of your income and expenses, and prioritize debt payoff. If your work contract offers allowances for certain living expenses, use the money you would have spent to pay down your debt.
Is moving abroad right for you?
If you’re considering taking a job overseas as one of your ways to get out of debt, make sure you think things through. With a lower cost of living and a job that potentially covers some living expenses, you can have the help getting out of debt that you need.
But there are also things you’ll need to plan and research. For example, what visa requirements are there? Do you need a job before you leave or can you find one after you get there?
Most importantly, make sure you find the right job. Doing something you don’t enjoy will likely be just as frustrating in a different country as it would be at home.
If you decide to take the plunge because heading overseas is the best option for you, keep your goal in mind and focus on paying down your debt as quickly as possible. After that, you’ll have the freedom to live the way you want.
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