Moving Abroad: How To Settle Your Finances Before Leaving
When you move to a new country, there is a lot to think about. How does the currency affect your wage, how often can you see your family, and do you speak the same language? If you have some debts on your record, then the money worries can soon mount up.
Today, we will help you figure out the best way to settle your debts before leaving the country. This could mean taking on loans like Possible Finance or talking to banks in different countries.
Make A Timetable
Before you do anything else, you should make a timetable of how much you can pay off until moving day. Tightening your purse strings could make an extra leap toward closing your loans, especially knowing that this broke time in your life has an expiration date.
For example, if you normally have $100 spending money (after bills, debts, and groceries) and use that money to spend on fun things (like takeout, cinema trips, or games), cutting down on these expenses for 3 months may seem do-able. Reducing the free-spending money to $20 means you can pay off an extra $80 a month for 3 months.
Of course, if you don’t have any extra spending money, then this advice won’t be helpful. Instead, you should make your timetable act as a countdown to change. This countdown can act as a huge motivator to keep you within your budget during the moving process.
Ideally, you can create a snowball effect in your loans, to help pay everything faster.
Remember The Snowball Effect
The snowball effect is when you pay off a loan completely, and then use that monthly payment to make larger payments to another loan – snowballing your payments into larger chunks, reducing your time in debt.
It is easier to explain with examples. Say you have 4 debts, a $1,000 credit card (Debt A), a $5,000 loan (Debt B), a $10,000 loan (Debt C) and a $25,000 auto loan (Debt D).
You pay $50 a month to Debt A, $200 to Debt B, $250 to Debt C, and $300 to Debt D.
In this timescale, it will take you 1 year and 8 months to pay off Debt A. Once you do so, you might think, “Yay, $50 back into my pocket”, but instead you should use this $50 to pay off Debt B, boosting the payment from $200 a month to $250.
By the time you pay off Debt A, Debt B will only have $1,400 left to pay. With the additional $50, you can pay off the debt 1 month earlier. It might not seem like a big jump, but let’s watch how these numbers snowball.
With Debt A & B paid, you still have 15 months left on Debt C, but you can change your $250 a month payment into $500, using the previous Debt A and Debt B amounts. Adding A, B and C together reduces the 15 months to 8, almost halving the time left on Debt C.
At this point, you still have 50 months (just over 5 years) left on Debt D. However the $300 payment can be boosted by $500, now that A, B & C have been paid off. Now paying $800 a month instead of $300, that 50-month time scale has dropped to 19 months.
Choosing to snowball your payments into larger and larger chunks will allow you to pay off your debts years earlier than planned. Knowing this can reduce debts to $0 before you move to a new country.
Talk To Your Lenders And Banks
If the snowball effect cannot reduce your debts fast enough, you should speak to your lenders about international schemes. Your banks could have a system in place which allows you to pay the balance using foreign currencies.
The rates may be different, or they might come with a charge for the international payment. Despite it often being more expensive, this option is often the simplest to achieve, as you don’t need to move your money or debts, and the lender will be aware of your relocation.
Some banks may put you on Possible Finance loans, which are similar to payday loans but with a longer repayment plan.
Talk To Your New Local Bank About Consolidation Loans
If you would rather take your debts with you to your new country, then you should contact a bank in the country. Ideally, this bank should allow for international payments while you are still in America but also has a walk-in center near your new location.
When talking to this foreign bank, explain your current debt situation and ask for a consolidation loan. Consolidation loans are when you put all of your debts into one account, making it easier to manage as you only have to pay one place.
When the bank gives you the loan, you pay off the original credit cards and loan you were borrowing from and pay the new consolidation loan instead. This means you don’t have to worry about international fees when you arrive in the new country.
Remember Currency Changes and Interest Changes
Each country has its own financial laws and government. This means that the charges you expect in America might not exist or might be more expensive in other countries. Before you make any changes, consider which option is the best financial choice.
Is it cheaper to receive international charges but keep your debts in America, or does this new location have a stronger value in their currency – making it cheaper to use their banks?
The answer will be different depending on the country you are moving to. Figuring out this element of the move will help you find the cheapest option.
Summary
Before you choose which option to go for, you need to figure out which is the easiest to accomplish and which is the cheapest overall. This means figuring out the math of completing a snowball payment, asking your bank if they accept international payments, and researching the country you hope to move to.
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