Author Topic: CASE STUDY: American Expat in UK Starting from Scratch - Help  (Read 3212 times)


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CASE STUDY: American Expat in UK Starting from Scratch - Help
« on: October 02, 2014, 08:56:48 AM »
CASE STUDY: American Expat Living in UK Starting to Save for ER from Scratch - Help

Hello, I am an American married to a Brit and have been living in the UK for the last 3 years. We intend to live here for at least another 12-24 months as I intend to secure British Citizenship before we think about moving again. We are in our late 30's and due to previous circumstances (the details of which are not relevant) we are just now able to start saving heaps of money towards FI.

I will detail out our finances below, but in summary, what I am hoping to get from this forum is some advice as how to proceed. My husband and I are now in a position where we make good money, we have no children, we have no debts, and we want to maximize the money we are finally in a position to save. We live pretty frugally already and our biggest 'splurge' is occasional travel although we both prefer cheaper outdoor holidays (our tent is our second home).

So, here are the details (please note that all money is represented in British pounds. You can multiple those amounts by 1.5 to get a rough idea of what the amounts would be in USD):

Mine: 73,000 base salary annually + up to a 20% of base salary variable bonus paid out quarterly
Hubs: 22,000 base salary + up to a 10% of base salary variable bonus paid out quarterly
Total annual base income: 95,000.00 (or roughly $142,000)

Current expenses - Fixed:
Rent: 522/mo (includes council tax)
Water: 34/mo
All Utilities: 64/mo
Mobile phones: 25/mo
Internet: 25/mo
Netflix: 7/mo
Total fixed monthly expenses = 675/mo

Current Expenses  - Variable:
Groceries & Toiletries: 300/mo
Travel/Car/Petrol: 200/mo
Entertainment/Gifts: 200/mo
Misc. Expenses: 50/mo
Total variable expenses = 750/mo

Total monthly expenses: 1450.00/mo or roughly 17,100 ($25,650) annually.

Emergency Fund: 5,000.00
Car: 3,500.00
Combined work pensions: ~ 28,000.00
Husband's future military pension: ~200.00/month after age of 55
My Social Security payment (if I never worked another day and SS is still around: $1100.00/month at age 65)

Liabilities/Debts: 0 (took us a long time to get to this point!)

Combined, before any bonuses, we bring in about 5,680.00/month and both contribute to our UK pensions up to the amount our employers match which is 20% of our annual earnings (including the employer match).

Given that we have no debts, no mortgage, and have a solid emergency fund, what should we do with our money to get the most out of it over the next 5-10 years?

A few additional details:

We may move back to the US at some point or live in another EU country. How and where do we place our money in order to maximize it if we need to access it from a variety of countries in the future?

I would like to invest our money but I have no idea where is best to do this. I would like to keep this as simple as possible.

We may buy a house in the next few years but we are happy with small accommodation and would hopefully not have a mortgage more than 1x our annual salary if not far, far less.

I think we would be able to live on 20,000/year comfortably assuming we had a mortgage payment that was less than our current rent and/or non-existent (i.e. paid off).
We don't have a specific time frame by which we are trying to achieve FI we just want to know how best to maximize our money as quickly as possible so as to have more options sooner.

I hope this all makes sense and thank you in advance for any suggestions/help!!


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Re: CASE STUDY: American Expat in UK Starting from Scratch - Help
« Reply #1 on: October 02, 2014, 10:22:13 AM »
Hello! I'm far from an expert (see my user name!) so won't be able to give much advice esp on investments, but as a fellow UKer I thought I'd say Hi at least. A few thoughts:
Between you you are earning decent money, and your fixed monthly costs are very low already, which is a good start. (Are you living somewhere remote, with family, or is the rent subsidised?). In terms of groceries etc for two, you could definitely get that down if you wanted to. Have you tried Aldi? I've made the switch recently, and its a revelation. I walk to get groceries, and anything above 20   I literally cannot carry. Yes, they don't deliver, which is a pain, but if there is one near you I would check it out. If someone could give any advice on where to put the (large!) difference between what you are earning and what you are spending, you are well on yoir way. Good luck! I'll watch with interest, as I'll need some UK investment advice soon too :)

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Re: CASE STUDY: American Expat in UK Starting from Scratch - Help
« Reply #2 on: October 02, 2014, 10:42:14 AM »
You're in a complicated investment situation as an American Expat in UK.

You need to be careful what you invest in, in order to satisfy both the USA and UK.

Due to your US citizeship, you want to avoid PFICs (Passive Foreign Investment Companies). This means you can't just buy UK funds.

But in the UK, you need to purchase UK-registered funds (ie: Funds that qualify as UK funds).


My understanding is that some Vanguard ETFs fit the bill in that they are US funds that have gone through the trouble of becoming UK-registered. I think you can find a list published somewhere on the UK gov't website. The good news is that you can probably craft a nice, simple Boglehead-style 3-fund portfolio with safe ETFs from Vanguard.

But don't just assume that the ETF you want is safe - you need to cross-check before buying.

Your other problem is finding a brokerage company that will deal with you (due to FATCA). My recollection from researching this is that most people end up with Schwab and that you might (not sure) have to open an account at a branch when you're visiting the USA.