Case study for an expat

[Joe Moneybags]

ME: 36 years old
LOCATION: Overseas
EDUCATION: BA in Political Science, MA in Education
EXPERIENCE: 8 years teaching in a public school system in the USA (never again!); less than a school year teaching overseas

INCOME:
*Approximately a little more than $20k /year USD tax free from my day job (teaching); free housing, utilities, internet, breakfast & lunch on workdays, overseas health insurance, and flight reimbursement to & from the USA
*$1,200 / month USD from a rental property in the USA; The lease is up at the end of August 2016. I don't know if the tenant will renew it.

BUDGET:
MORTGAGE: $856.38 / mo.
HOA FEES: $129 / mo.
STUDENT DEBT: $480.50 / mo.
STORAGE: $33.33 / mo.
CELL PHONE: About $10 / mo.
FOOD / ENTERTAINMENT / MISC.: Varies, but not much (kept at a relative minimum)
CAR INSURANCE: $288 (paid every 6 months)
PO BOX: $66 (Annually)

ASSETS:
CHECKING: $9,837.58
BROKERAGE: $2,622.25
ROTH IRA: $4664.16
TRADITIONAL IRA: $52,752.84
CAR: Completely paid off, 2013 Nissan Sentra (with only about 8,500 miles)
RENTAL PROPERTY: Valued at $212,511 (according to Zillow)

DEBT:
MORTGAGE: $105,582.96 (3.75%)
STUDENT LOAN DEBT: $38,098.84 balance
-$10,541.12 (5.16%)
-$10,536.21 (5.16%)
-$10,450.52 (5.96%)   
-$6,570.99 (5.96%)

NOTES:
*I've tried refinancing my student loans, but
-The lease agreement for my rental property is in the USA (needed for income verification purposes), but I will return to the USA to visit family & friends over the summer & be back overseas by the end of August
-If I were to refinance, the monthly payment would go from $480.50 to over $700 (for 5 years)
*I haven't filed my taxes for 2015 yet, but I am more than certain that I will get back most if not all of the taxes I paid from a W2 job I had in 2015 ($7,063.93 in federal taxes) due to all the deductions
*I have not contributed to my IRA for 2016 yet

So what can I do to improve my financial situation?

[thedayisbrave]

How married are you to the rental property?

After the mortgage and HOA fees, you're really not making all that much off of it - if making anything at all when factoring in insurance, repairs, vacancy, property management, etc. 

If you plan to move back to the USA and live there, then that's one thing.  But if you're holding onto it as an investment, it's not a great ROI.  I personally wouldn't buy a property worth $200K+ (also Zillow is notoriously inaccurate but that's besides the point) that rents for only $1200.

[FIRE Artist]

Why are you keeping your car?  I assume it is in the US....

I am kind of surprised by the salary, are you teaching ESL or at an American/international school?

[Joe Moneybags]

How married are you to the rental property?

After the mortgage and HOA fees, you're really not making all that much off of it - if making anything at all when factoring in insurance, repairs, vacancy, property management, etc. 

If you plan to move back to the USA and live there, then that's one thing.  But if you're holding onto it as an investment, it's not a great ROI.  I personally wouldn't buy a property worth $200K+ (also Zillow is notoriously inaccurate but that's besides the point) that rents for only $1200.

The going rate for rental properties in the community is between $1,800-$1,850. I'm just renting it out below market rate because the tenant is the son of a former coworker (from my last job) & the property needed several minor repairs. The tenant seemed like someone that was going to pay the rent & take of the property while I was gone rather than a complete stranger. I didn't have much time to do much with the property before I moved overseas.

[Joe Moneybags]

Why are you keeping your car?  I assume it is in the US....

I am kind of surprised by the salary, are you teaching ESL or at an American/international school?

I'm keeping the car because it is cheaper than renting a car for almost 2 months when I go back to visit family & friends. I have family taking care of the car while I'm gone.

I teach at an international school. ESL pays much less.

[Joe Moneybags]

That is a very low salary for an international school.  Since you have actual US-based teaching experience and a Master's degree, you should be able to work your way up to a top tier school. In Beijing, the top tier authentic international schools (WAB, ISB) pay more than double what you are currently getting -- here is the salary schedule for WAB:

http://www.wab.edu/sites/default/files/New%20Teacher%20Salary%20Scale%202015_2016.pdf

Step 8 (where you would come in with 9 years of experience -- that is the max for new teachers at WAB) works out to about $56k net of tax.  Housing is provided. 

Tier 2 schools pay less, but would still be better than what you are currently getting.  Stay away from so-called "Tier 3" or lower schools -- they are typically Chinese managed disaster zones.  They actually are a black mark on your record in terms of moving up the food chain (because the better schools know they are disasters and will question why you accepted a job there).

internationalschoolsreview.com has lots of good free advice on the forums, and is worth paying for to access the school reviews.

If you do not have any US earned income, you will not be able to contribute to an IRA in 2016. 

I would sell the apartment.

Thank you for this.

How can I find out which school are Tier 1?

Unfortunately, I am currently in Shanghai teaching in one of these Tier 3 Chinese schools. Is it too late for me to begin applying to a better school now that the peak recruiting season is over? What are my options? In the meantime, I joined internationalschoolsreview.com so I could learn more about what's out there for me.

[Joe Moneybags]

There's no hard and fast list, but there are posts on the free forum that lay out the rankings.  For Beijing, my recollection is something like this:

Tier 1:  WAB, ISB
Tier 2:  BCIS, YCIS, BSB (this is where my kids went -- great school but they have a preference for UK/commonwealth teachers), Harrow (may have moved up), Keystone (new, may be tier 1 but they target local families with money so there are probably issues with limited English proficiency)
Tier 3:  Canadian International School, Worth Youth Academy

Stay away from Beanstalk (BIBS) -- that is where my kids went for several years and the management is a disaster and pay is low.

It would be harder to move at this point in the contract cycle, but have a look at the individual school recruitment pages -- sometimes people end contracts early last minute for family or other reasons and you might be able to sneak in.

Thank you for your help. I really appreciate it.

[Freedomin5]

If you want to stay in Shanghai, look at (in no particular order):

Shanghai American School (SAS) Puxi and Pudong campuses
YCIS
Concordia international school (it's faith-based though)
Wellington
Harrow
Dulwich
SCIS
BISS
NAIS
SMIC

These are all non-Chinese-run schools. There are probably a few others that I can't think of at the moment. It's probably too late to switch this year but they should be hiring for next year.

Also, if you're looking to supplement your income, in shanghai, the going rate for native english speaking private tutors is 250-300rmb per hour.

[Zamboni]

posting to follow.

My sister-in-law is in Shanghai right now adopting :-)

[Joe Moneybags]

If you want to stay in Shanghai, look at (in no particular order):

Shanghai American School (SAS) Puxi and Pudong campuses
YCIS
Concordia international school (it's faith-based though)
Wellington
Harrow
Dulwich
SCIS
BISS
NAIS
SMIC

These are all non-Chinese-run schools. There are probably a few others that I can't think of at the moment. It's probably too late to switch this year but they should be hiring for next year.

Also, if you're looking to supplement your income, in shanghai, the going rate for native english speaking private tutors is 250-300rmb per hour.

Thanks for this. I'm keeping my options open to other countries as well.

Tutoring is definitely an option.