Author Topic: Reader Case Study [El Salvador] Started my journey to FI 3 years ago, whats ne  (Read 1039 times)

ricardomtg

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Topic Title:Reader Case Study [El Salvador] Started my journey to FI 3 years ago, whats next

Life Situation:I'm 27 married, my wife is 26. We have 3 kids (16, 3 and a 11month baby), we live in San Salvador, El Salvador.

I started on my journey to FI 3 years ago. I was in a pretty big credit card debt hole, I owed $71,000 and had two mortgages. The first one was for $150,000 and the second one, which I still have, is $220,00. After I sold my rental apt for $150,000, I pocketed $35,000 and used it to pay half of my credit cards.
My current strategy for my emergency debts is dumping all my extra cash on one card until its completely paid off and jump to the next one.

Gross Salary/Wages:We make $72,000. I make $60,000 a year at my job, and we have a sidebusiness with my wife that earns us about $12,000 more.

Taxes: I pay about $5,200 a year, includes sidehustle taxes.

Current expenses: Mortgage $2,069 per month
Food $250 per month
Nanny $320 per month
Utilities $0 (covered by my job)
Cars: SUV 2008 (121,117 miles)
Gas: $120 per month
Repairs: $45 per month (avg of the past 3 years)
School for my kids: $1,100 per month
Insurance: $0
Clothing: $55 per month
Health/Doctor visits: $120 per month
Entertainment: $360 per month
Credit card monthly payments: $630
Taxes: $410 per month
Misc: $128 per month (avg of the past 3 years)

Total: $5,607 per month or $68,000 a year

Im currently trying to sell my home, which I think is very expensive. It's a $220,00 loan with 9%, I still owe $151,200. I plan on paying my remaining credit card debt of $34,608 with the ~$68,000 i'll get from selling my house, and investing the rest in a 7% quasi-savings account. Citizens of El Salvador dont have access to Vanguard or Betterment accounts but fortunately, for us, specialized saving accounts in local banks and the local stock market yield about 5-7%.
« Last Edit: June 20, 2018, 05:51:01 PM by ricardomtg »

mrcaribbeanmustache

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Hi Ricardo,

Interesting to find another latinamerican in this world. I'm from a country in the caribbean. I'm not married so I can't help you on that side, but I can give you some tips in the other aspects of your post.

On investing as a not US citizen, you can't use betterment nor Vanguard but you might be able to open an account on TD Ameritrade, as a non-us citizen I was able to open a account with then and start investing. You would need to go to their website and fill out your information to see if you can open an account with them https://invest.tdameritrade.com/grid/p/accountApplication. Most likely you well need to communicate with TD directly by email to complete your application and fill out some specific paperwork for people that are non-US citizens that live outside the US. Once you have the account open, you just need to figure out a way to send your money to your TD account so you can buy ETFs, costumer service can help you to figure this out for your particular case. TD Ameritrade has a selection of ETFs that are low cost (some of then not as low as vanguard) but are free to buy. I you buy ETFs out of the free list that they have, you get charged a fee of, I thing, $10 USD per purchase. For people who do dollar cost averaging (investing little by little over time) those fee would be too expensive, so you would want to stay with the commission free ETFs that they sell.

On the numbers that you described in your post, I have a question. Are those numbers (cost, income, and interest rates) in US dollars or in your local currency?
This is important for the following reason, when comparing return rates from US investments to returns to investments and debt interest rates in your country you need to covert the rates of your local currency to the dollar of vive versa. For example, in my country, the local currency depreciates around 4% a year in comparison to the dollar. So, if I have 200 dollars (100 in US dollars, and 100 US dollars worth of local currency) and I put then in a box and take then out a year later, I would have 196 US dollars because with my local currency money I would only be able able to buy 96 dollars instead of 100 because of the depreciation. Taking this into account, when I see investments in my local stock market that yield 5-7% in local currency, like you mentioned, this would be 1-3% yield in US dollars because of the 4% a year depreciation of the local currency. All this means that if we assume a 6-7% yield of the US stock market, I would need to find local investments that yield 10-11% in order for then to be worth it. I don't know how your local currency behaves, but keep this in mind. I know is something to consider for a lot of latinamerican countries.

On the credit card debt front, just focus on paying the one with the highest interest rate first as you probably know (snowball vs avalanche method). Depending on how much debt you have left, and the interest rate on it, you might want to finish paying the debt before you invest.

hope this helps.

cap396

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You could look into a Schwab International account.  I don't know what the qualifications are, but it is (I believe) intended for people living outside the US.

http://international.schwab.com/public/international/us_investing

CrispKale

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Hi, Have you checked out the global investing Vanguard page?
https://global.vanguard.com/portal/site/home

Under the America's they list links to:

  • Caribbean & Offshore
  • Mexico
  • South America
  • Canada
    United States


Once you narrow down the area they give a " Contact Us" phone number where you can get more detailed information on the requirements.
Gathering the Nutrients of Financial Super Food.

House Budget Expense Reports and Early Retirement FIRE Updates at: https://financialkale.com