Day 38: Step #14, Figuring Your Capital Budget

How Much Money Do You Need To Launch Your New Life Overseas?

Dear Student,

We’ve talked through details for how to figure the value of your new-life-overseas nest egg…and we’ve considered detailed cost of living budgets for the world’s top havens right now.

However, there is another budget to consider—the one for getting you where you want to be in the first place. Your getting-started capital budget.

How much does it cost to launch a new life in a new country? There’s no single answer to this question, of course. You have to figure your own capital budget based on your circumstances and where you’re moving.

Your cost of launching your new life in a new country starts with the cost of your plane fare there and the cost of the hotel (guesthouse, short-term rental, etc.) where you stay while scouting longer-term digs.

Next, you have the cost of moving in to your longer-term digs. Typically, this amounts to paying the first month’s rent in advance and a security deposit typically equal to one month’s rent. You know what you’re budgeting for rent long term. Double that, and you have the amount of up-front capital required to move in.

The local electric company may also require some small deposit to connect you…say, US$50 or US$100. In Panama, for example, this deposit is figured based on the size of your apartment (in square meters) and your answers to a questionnaire (which asks about how often you’ll be running the air conditioning, for example, and if you iron your clothes…).

If you rent unfurnished, you’ll have to figure the cost of outfitting your new pad. You know what kind of furniture and what level of finish and interior design you want to invest in. Your furnishing budget could amount to US$2,000 or US$3,000…or it could be tens of thousands of dollars. This is completely controllable and at your discretion.

Even if you rent fully furnished, you’ll want to budget for some household expense—the costs of sheets, towels, kitchen items, cleaning products, etc.

The total cost of furnishing and outfitting your new home can be more or less depending on what you’re planning to ship overseas with you. If you intend to send a container-load of antique furniture, linens, and other household paraphernalia, then your initial household set-up expense could be small or zero.

Of course, if you intend to send a container load of your stuff to meet you in your new home, you’ll have to budget for that expense. On Day 16, we walked through the pluses and minuses of international shipping, and I gave you a contact for organizing a move of your stuff to your new home if you decide that’s what you want to do. If this is your plan, that same resource is useful to get an estimate of the associated cost.

Likewise, if you intend to ship your car with you (I strongly recommend against it, for all the reasons we discussed on Day 17) or your pets, you’ll have to factor those costs into your getting-established budget.

In addition to the shipping expense, if you move household goods, personal items, or a vehicle to your new address overseas, you may also have a duty to pay. This can be waived (in full or up to a specified ceiling) as a benefit of your residency visa.

Which brings us to the other potentially significant expense of launching your new life overseas—the cost of your visa. If your intention is to reside in your chosen haven full-time, then you’re going to need a residency visa. The alternative would be to reconcile yourself to regular border runs, typically every 90 days, to restart your tourist visa. I don’t recommend this as a long-term strategy, though over the years I’ve known many people who have enjoyed lives in various places for many years at a time without ever worrying about formalizing the residency arrangement. I have a friend in Paris, an American, who has been living and doing business in that city for nearly 30 years. He remains, technically, a tourist…

No residency visa anywhere is free. At a minimum, even if you decide to manage the entire process yourself and not to engage the services of a local attorney, you’ll have to pay the associated government fees.

Typically, I recommend that you do engage a local attorney’s help, though. The cost for this can be a few hundred dollars to perhaps US$2,000.

The overall cost of obtaining a visa (attorney cost, fees, etc.) can range from a low of US$500 (in Colombia, for example) to a high of US$2,500. These are per-person costs and should be doubled if you’re moving as a couple. In some cases, if your residency visa must be renewed at certain intervals, you’ll have to pay additional filing or processing fees, again, per person.

One other expense you might want to budget for is language study. If you need or want to learn the new language of your adopted homeland, you may want to invest in a tutor, an immersion program, or, at least, a textbook or an online course.

That’s it.

What does all that amount to?

Here’s a sample getting-started budget to prompt your thinking. These figures are based on the costs of a couple establishing itself full-time in Panama City, with residency arranged under the country’s pensionado program…

• Plane Fare: US$500 per person

• Security Deposit & First Month’s Rent: US$2,400 (assuming rental of a furnished apartment for US$1,200 per month)

• Household Expense: US$500 (this is generous)

• Installation Of Utilities: US$75

• Residency Visa: US$3,000 per person

That’s a total of US$6,475.

You can build out and adapt from there. Plane fare assumes you live in North America and are flexible in your advance booking. If you’re relocating from Asia, your plane fare would be more (obviously).

Find an apartment you want to rent for more or less, and your initial capital requirement for moving in increases or decreases accordingly. Rent unfurnished, and you’d need to budget for at least basic furnishings (a table and chairs, a bed, a sofa). Apply for residency using a different visa option (Panama offers a dozen), and this expense likewise would change.

Plan to ship a container load of your stuff, and you’ll have to budget for that. If you have two dogs and two cats to bring with you, again, you’ll have to allow for the additional associated expense.