Balancing long term home base with foreign income and living

[jm21]

Hey All,

Was wondering if anyone could give some insight on managing multiple currencies, a home base, and collecting points as an expat.

My wife (30F) and I (29M) are Canadians that have been living in Germany for ~ 2 years. I don't (can't) work much (here for a Master's degree and on a limited work visa) but she earns enough euros to cover out living wages and travel adventures.

When we first arrived here our asset base was 100% in Canada and we would transfer cash every few months to our German account for the living expenses. Eventually, what little extra income we had built up to a decent sized "float" in our German account and now we don't ever need to touch money back in Canada.

Things will change soon though... my degree is finishing up and I've already got a job lined up in another EU country. This means that we will be seeing a huge boost in income. Having lived quite comfortably off of the low income of the past 2 years, I foresee a rather large savings rate coming our way! 

This means we need to start thinking a bit more strategically. It's been easy up till now - we never had much extra money, and if we did, it was used for travel. We're hoping to hit FI in 7-10yrs and have a clean slate to start with (no debt). Will be in the EU for 1-2 more years before moving back to North America.

My initial thought is to keep a minimum amount of cash in the EU bank account (just enough for ~3 months expenses), transferring over to our Canadian account to invest/save, and use our Canadian rewards card wherever possible in order to  rack up points to help pay for some of the travel we do.

Is this plan completely out to lunch? Transferring money via a FOREX account every month to pay a CC bill seems a bit "crazy" to me.  How do you other expats handle earning/living in one country, with a home base in another??

[gocurrycracker]

We more or less do what you are thinking, just without the overseas income - everything is paid with a US credit card, minimal cash is kept in the non-US country, and all investing is done in the US.

If it is only 1 - 2 years of EU work before going back to Canada, I would probably just continue as you are.

If it is more like 10+ years in EU (because life in the EU is pretty nice... currently in Stockholm) then priorities and benefits would be different.

The only sticking points might be:
1) taxes - depending on the tax relationship between Canada and your EU country, it might be beneficial to contribute to EU country's retirement accounts
2) Canada credit card - you'll pay conversion costs 2x - once on the purchase, and once when transferring Euros back to Canada to pay the bill
3) Since you will be accumulating a lot of Euros, finding the most efficient transfer options would be worth some investigating

[jm21]

We more or less do what you are thinking, just without the overseas income - everything is paid with a US credit card, minimal cash is kept in the non-US country, and all investing is done in the US.

If it is only 1 - 2 years of EU work before going back to Canada, I would probably just continue as you are.

If it is more like 10+ years in EU (because life in the EU is pretty nice... currently in Stockholm) then priorities and benefits would be different.

The only sticking points might be:
1) taxes - depending on the tax relationship between Canada and your EU country, it might be beneficial to contribute to EU country's retirement accounts
2) Canada credit card - you'll pay conversion costs 2x - once on the purchase, and once when transferring Euros back to Canada to pay the bill
3) Since you will be accumulating a lot of Euros, finding the most efficient transfer options would be worth some investigating

Thanks for the reply GCC.

It'll be a 1-2 year "assignment" so I think this is the path we will take.
 
We will be moving to Sweden, which has a tax treaty w/ Canada, but from what I can tell it won't be of much benefit to contribute to any retirement accounts there. I will have some state pension that can be transferred to Canada, but it will be locked up until I'm 65 and the same thing goes for the employer-matched pension they offer. I think I'll completely forgo this company match too, as it'll be locked up till I'm 65 and almost certainly require some kind of a fee to transfer over. A lot to go through for a small match on 1-2 years' worth of savings. I think we will focus on contributing to our Canadian TFSA accounts during this time.

Good point on the foreign transaction fees for our CC; looks like our card is subject to 2.5%. This foreign transaction fee puts a big question mark into my plan!

[gocurrycracker]

lots of cards have no FTF, so just get one of those