Get rich with... working remotely from abroad?

[JonyMustache]

What if you could live in Budapest, Hungary (for example), and work remotely for an American company, living on an American salary?

I've been pondering an idea to drastically increase my savings rate even further than it currently is.

I'm a software engineer in the bay area. As you all know, rent and cost of living in this area are expensive, but salaries are very high for us as well.

I've always wanted to explore the world and slow travel, live in different countries in 6 months or even 1 year at a time.

I figured, since I only need a computer and an internet connexion to do my job, I could work from anywhere. So I'm wondering if I could find a company that would pay a US salary but allow me to work from anywhere, and just move to cheaper countries. Seems like there are a bunch of companies that allow remote employees, and even some that don't have offices and 100% of employees are remote.

This way I can travel the world and increase my savings rate at the same time, reaching FI faster.

I've got a wife and a small child. My wife stays at home and plan to homeschool so we wouldn't have to worry about education and school districts, etc.

What do you guys think? Does that seem doable? Anyone doing something like that already? Any advice?

[SoCal]

The savings would be from lower housing costs, not lower taxes.  As a American, you'll pay US federal income and FICA taxes combined with Hungary taxes at a combined rate that is not leas than the US tax tables.  California will tax as well.

[mxt0133]

I thought about this myself with the goal of raising my kids in another country to give them a broader perspective of the world.  So I spent 6 weeks working remotely in south east Asia.  Financially it was a no brainer but the time differential killed me.  My current work arrangement requires a fair amount of meetings.  If it was different where I could do meetings in bursts like in the beginning and end of a project/sprint it might work.  I have considered moving to other parts of the country. One of my team members lives in West Virginia, he has to drive 4 hours to the closest airport when we have company wide on-site events.  He lives pretty well off, bay area salary with rural expenses.

Another possibility is do contract work for 6-9 months of the year and take the other 6-3 months off, sublet your apartment or rent out your house while your away. 

I haven't found an arrangement that works for my family yet and the bay area is really growing on us.

[JonyMustache]

Thanks for the replies.

SoCal: I took Budapest as an example but I'd like to move from country to country without establishing permanent residence in a particular place. This means that officially my residence would stay in the US and in theory I shouldn't have to pay income tax in the host country (I guess it depends on the country but that's something I'd have to figure out on a country to country basis).

There is of course no way to avoid Federal taxes, which is fine. As for California taxes, I'm thinking of moving to a different state with no income tax prior and establishing residence there prior to moving abroad, so this would eliminate the state tax portion.


mxt0133: I thought about the time differential issue but wasn't sure how much of a problem that could be. Seems like this would be a big issue with all those meetings. I'm fortunate that I don't have that many meetings and can do my work autonomously, only keeping in touch about once a day.

One solution for that might be to move to another country in the same or close timezone, maybe in central or latin america. Seems like a city like Santiago would be pleasant to live in (never been but I researched and asked around) while being much cheaper than the Bay Area, and the time difference doesn't seem that much. Right now, we have a contractor working for us from Uruguay and it seems to be working well with the rest of the team, although the guy has to come to the office at 10 and leave at 7 to have most of his hours coincide with ours.

Maybe do that until FIRE and then move to other regions of the world like Southeast Asia.

[electriceagle]

The savings would be from lower housing costs, not lower taxes.  As a American, you'll pay US federal income and FICA taxes combined with Hungary taxes at a combined rate that is not leas than the US tax tables.  California will tax as well.

If you stay out of the country for enough of the year, the first $100k (or so) is free from US taxes.

Edit: If you're working for a US company as a non-expat American, you will pay the full set of US taxes. The exemption for the first 100k (or so) applies to income from a foreign source while you live abroad.

[randymarsh]

The savings would be from lower housing costs, not lower taxes.  As a American, you'll pay US federal income and FICA taxes combined with Hungary taxes at a combined rate that is not leas than the US tax tables.  California will tax as well.

The foreign tax exclusion is around 97K which would shelter a large amount of earnings.

[HairyUpperLip]

I lived in Iowa and worked at Atlanta, Georgia salary rates.

You can try something like that... might be easier than doing Budapest.

[nawhite]

What do you do? My company is hiring remote people for a few IT and Sales roles, but I think you need residence in Colorado for tax purposes only.

[chicagomeg]

I work in a study abroad office & our students who come back from Santiago consistently say that they were shocked at how expensive it is; most things seem to be on par w/prices here in Chicago. I can't speak to the housing costs though, which could still be substantially cheaper. Buenos Aires might be more developed & similarly priced to Santiago.

[JonyMustache]

Wow so many great replies. Thank you everyone.

I guess I should read as much as I can about taxes since that will be a major concern. My plan is not to avoid paying US Federal tax. I'd like to continue being a resident of the United States, earn money in the United States (which is why I would be working remotely, as opposed to finding a new local job every time I move) and only stay in one place for a short enough period to time to be considered a tourist there, not a resident.

mlipps: interesting. Since I don't know anyone who actually lives there, I rely on this website for comparisons: http://www.expatistan.com/cost-of-living/comparison/san-francisco/santiago-chile? Seems like Santiago is still way cheaper than San Francisco. Otherwise, there might be some other nice and cheaper cities to live in.

[Kierun]

I've worked overseas for US companies and based on what your original post stated you'd likely qualify for the foreign earned income exclusion.  http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---What-is-Foreign-Earned-Income

I used the physical presence test for my exclusion.  http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test

You may want to consider establishing residence in a state that doesn't have income tax as why pay state taxes when you're not living there? 

[ch12]

You may want to consider establishing residence in a state that doesn't have income tax as why pay state taxes when you're not living there?

States without income tax:
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

Definitely to be recommended to escape California's horrible tax laws.

You can establish residency in another state relatively easily, as long as you have an address there. I know that South Dakota has fairly lax residency laws, because a lot of RVers like to base themselves there. Florida is also very popular. I'm pretty sure GoCurryCracker is based in Washington state.

A lot of people on Hacker News talk about places to live from time to time. There are lots of cheap places in the US relative to SF (index 243 where median is 100).

[DollarBill]

I've been doing the same research for the States. I realized that the overall tax burden is about the same for all States. If there is no income tax then they have a high sales or property tax or no good jobs or vise versa. It's hard to figure it out. There is always something off. Like if your not paying State tax then no State benefits when you retire. Take a pick!

[ch12]

I've been doing the same research for the States. I realized that the overall tax burden is about the same for all States. If there is no income tax then they have a high sales or property tax or no good jobs or vise versa. It's hard to figure it out. There is always something off. Like if your not paying State tax then no State benefits when you retire. Take a pick!

DollarBill, don't you have a military pension? Do you have to care about lack of jobs? I do still need a job, and that is part of why I am not moving to Florida. It is easy to live here (Sarasota) if you do not need a job.

OP: If you have one that allows you to work remotely then you can take in SF cash with prices at less than half of what they are over there.  Sarasota has the best beach in the United States, where I am currently sitting and watching people splash around. I found that moving to another state (EDIT: from Indiana to Wisconsin) required a cultural shift. And I imagine that you might find the same when moving out of SF. Test drive moving by going to another cheaper state with amenities but much lower costs before moving to another country.

With that said, buck from Bucking the Trend is movin to Spain for a year. It is low cost and beautiful.

[electriceagle]

I work in a study abroad office & our students who come back from Santiago consistently say that they were shocked at how expensive it is; most things seem to be on par w/prices here in Chicago. I can't speak to the housing costs though, which could still be substantially cheaper. Buenos Aires might be more developed & similarly priced to Santiago.

They're probably paying tourist price in Chile and normal price in Chicago.

[nawhite]

You may want to consider establishing residence in a state that doesn't have income tax as why pay state taxes when you're not living there?

States without income tax:
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

Definitely to be recommended to escape California's horrible tax laws.

You can establish residency in another state relatively easily, as long as you have an address there. I know that South Dakota has fairly lax residency laws, because a lot of RVers like to base themselves there. Florida is also very popular. I'm pretty sure GoCurryCracker is based in Washington state.

A lot of people on Hacker News talk about places to live from time to time. There are lots of cheap places in the US relative to SF (index 243 where median is 100).

New thing to be aware of for choosing residency is that some of those states didn't expand medicaid and have crazy healthcare rules. Something to keep in mind in addition to the tax laws.

[Mrs WW]

Sounds like a wonderful plan, but keep in mind that not all European countries will welcome you to stay for more than three months at a time, even if you have a job. Home schoolingis also not a given, even if you're a foreigner.

I feel like such a party pooper, but just want you to not get in trouble!

[JonyMustache]

Thanks.

I should've mentioned that we (wife and I) are also EU citizens so no visa problem there.

[Stache In Training]

My wife works remote for a country just 2 time zones away, and that can be difficult, because people like to schedule meetings early in the morning, (which is really early for her), in the afternoon (which is lunch for her), or from other countries, which means sometimes in the middle of the night.  living in another country may mean that all of your meetings will be in the middle of the night. I feel that would get old really fast.

So I'd say another state with more favorable taxes, and lower cost of living might be a better option, as other people have already suggested.  I just wanted to mention that part, because it's not something you think about at first.

[milkmustache]

I do something similar to this, though I'm single, no kids.

Most people on the thread have already pointed out the various benefits and complexities, money wise, but do think of the social cost, too: while I love to travel and live abroad, the number one thing I miss is my community of friends and family back 'home'. When you move around a lot, you don't have the time to make real connections, and it gets pretty lonely. Particularly with a young kid, you might miss the community of friends/parents, etc.

To practicalities: Definitely verify the living expenses before going; 'poor' countries can be surprisingly expensive! Also, make sure you choose a place with good public transit or biking options cause buying and reselling vehicles would be a major pain.

One thing to keep in mind is health insurance: will your current policy work abroad if you're out of the states for long periods of time? Check on this and, if not, do cost crunching on the alternatives….

[JonyMustache]

If it's ok to ask, in which country/region are you doing it? How do you handle health insurance? Have you saved any money by doing this?

[mpg350]

When I was in the Philippines I met a guy from the US that lived in the Philippines but was getting paid a US salary.  Talk about a great setup