In January 2022, a professor at the Wharton Business School of Pennsylvania, the number two ranked business school in the country, caused an online viral firestorm by asking her class of students a simple question.
The professor asked her students to estimate the average American annual salary.
Over 25% of her students assumed that the average American made a six-figure salary. One of her students guessed that the average American salary was at least $800,000!
It’s easy to comment here on the catastrophic reality disconnect inherent in at least 25% of over-privileged students.
Maybe another time.
What I want to do is pretend I’m Prof. X and guess your reaction to that viral news – shock, indignity, more shock, disbelief, and incredulous shock.
It’s amazing how unaware and disconnected others can be to the financial difficulties of others. The average American makes about $45,000 to $53,000. (Meanwhile, the average annual tuition at Wharton is $80,000.)
Meanwhile, the average American household is burdened with over $155,000 in debts.
My point is that if you are grappling with unmanageable debt, then it may take years for you to recover. And in the meantime, your debt burden will increase, and your credit history will suffer.
What if I told you that you could reset your life and finances by living abroad?
If you could reset your finances, temporarily or permanently, would you?
Dig a Deeper Hole or Think Differently?
The problem with living in the United States is that it is expensive to live in the United States. It’s so expensive that overprivileged Wharton Business School students assume that you need $800,000 to pay for American standards of living.
Try this great MIT Living Wage Calculator. It tells you how much living wage you must make to live in most American cities, relative to the number of dependents you have.
A single person with no kids living in New York City must make at least $41,500 annually to live there. However, the average rent in most elite neighborhoods can range between $3,000 to $5,000 per month.
So, unless you live in a rent-controlled apartment in a working-class neighborhood, the average working-class rent can range between $1,500 to $2,500.
Throw progressively worsening unmanageable debt into the mix, and you can see how hard it is to financially survive in the United States.
I have been prefacing this idea of moving abroad to live with statistics enabled persuasion for a reason. It’s a big decision to make.
I know because I did it myself.
I Did It (And it Wasn’t Easy)
I am a native New Yorker and I have been living in Manila, the Philippines, for almost five years now. After a decade of unemployment, divorce, depression, and financial ruin, I was at a dead-end in New York City by 2017.
After a decade of living on the goodwill of relatives, I had nothing. I couldn’t afford to rent a closet in a condo.
I had been traveling most of my life and understood that the cost of living is cheaper in other countries if you maintain an American salary as a remote worker, have a pension or have significant savings.
I am not telling you that my life improved the second I left the United States. I moved to Manila because English is spoken by many. I am a freelance remote writer. So, every dollar I make converts into 50 units of the local currency.
The Philippines is impoverished and developed, but the country was experiencing an economic expansion before the pandemic. I live in a $550 monthly condo with cable and high-speed internet. The health system is C+ at best in the major urban cities. However, the civil infrastructure is rudimentary.
I am still learning the language, which helps me stay independent. And people are friendly.
However, living on my own helped me to live below my means. The cost of living here is very low. I can make as much money as I need based on how much I can sit on my butt and write.
There are a lot of things I miss about the United States – the insanely high cost of living is not one of them.
Should You Live Abroad to Improve Your Finances?
So, should you restart your life and finances by living abroad? I highly recommend it with some caveats.
You must reassess your personal finances. You need to make a budget, live below your means, and develop a plan for improving your finances. Unless you are retiring, you should have a financial goal for moving abroad.
Living in a country with a low standard of living can help you get out of debt, save money, and improve your credit history. You can develop a local business plan to start a business.
My point is that if you don’t reassess your mindset about money, which would have precipitated you to move to another country, then your financial problems will worsen.
And you don’t have to move to the other side of the world, like me. You can move to Ecuador, Costa Rica, Peru, Panama, Mexico, Bolivia, Paraguay, and many other safe Central and South American countries nearer to the U.S. border. And many of these countries have English-speaking enclaves in major cities and visa incentives for Americans willing to move there.
If you can stand the heat, culture shock, and language adjustment, I would recommend living in Thailand, Indonesia, or the Philippines.
If you can earn anywhere between $1,500 to $2,500 monthly while living below your means, then you can live comfortably in another country at a very low cost of living.
This is NOT a decision you should make likely. Visit the country in question and live there a week or month to feel it out before committing. Make a detailed five-year to ten-year financial improvement plan.
My point is that living abroad should be on your list of options to improve your finances. Employing the same kind of thinking that got you in a financial debt hole won’t get you out of it.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.