Managing your money while living abroad

Here’s something  people ask me when they hear about my location-flexible life outside the U.S. How do I handle money? How do I get paid, use my checking account, etc.?

Well, it turns out, it’s fairly easy. The most helpful thing was finding a checking account and a credit card with no international transaction fees. Those can add up fast! Using those, combined with direct deposit or Paypal for getting paid makes it work.

Checking & savings accounts

Charles Schwab ATM card
Charles Schwab ATM card

I use Charles Schwab Investor Checking as my primary checking account. It’s a free account, with no minimum balance and no fees of any kind. It’s associated with their investment accounts, but you don’t need to keep your investments with them to use their checking. The best thing about it (besides the fact that it’s free and earns interest) is that they reimburse you for all ATM fees, anywhere in the world. So at the end of each month you get a credit for all the fees. It also has free bill-pay!

I already had an MIT Credit Union account which I’ve enjoyed using for many years. I like to support credit unions. I’m keeping that account also, because my mortgage gets auto-paid from there and my tenants can mail their rent checks directly to them without needing my signature first. Very handy!

I also keep a savings account at Ing Direct (now Capitol One 360), which has long been a good place for an online only savings account.

So that means I have two ATM cards with me. One for each account. I routinely carry the Schwab one and keep the MIT card locked in my apartment. If I lose my Schwab card, I can still get cash from the MIT account until it’s replaced. It’s nice to have that as a backup.

Credit cards

My favorite credit card with no international transaction fees is the Chase Sapphire Preferred Visa. It earns points into Chase Ultimate Rewards and those can be used on nine travel partners: United, British Airways, Southwest, Korean Air, Hyatt, Ritz-Carlton, Marriott, Priority Club and Amtrak.

I also have the Chase Ink Bold Mastercard as a backup, also with no international transaction fees. It adds travel points to the same program and also gives 5x the points for purchases at office supply stores. So for example, I buy iTunes and Amazon gift cards at Office Depot or Staples in the U.S. and use those to buy apps and ebooks (since my business is all about apps, I buy a lot of them).

Now of course, here in Oaxaca, I rarely use the cards because everything is done with cash. But while in the U.S. I put everything on these cards in order to accrue travel points.

Getting paid

Before I left, I asked the two organizations that regularly pay me for teaching courses to do direct deposit. They can be slow to set this up, so as a backup I have friends in the U.S. who receive my mail. They can deposit checks for me by mailing them to my credit union.

I also teach on Udemy and they have always paid me via Paypal, which I can easily transfer to either of my checking accounts.

Getting paper checks out of the loop (not so easy)

Paper checks are still a problem.
Paper checks are still a problem.

As you know, many banks have online bill-pay systems. But if you do an online bill-pay to an individual, the bank cuts a check and sends it to them through the mail. This is the part I wanted to avoid.

For example, I’m the treasurer of our small three-unit condo association. In the past, my neighbors sent checks to me and I deposited them locally in Bank of America ATMs.

But now that I’m in Mexico I needed to find a way to avoid the paper checks being mailed. Luckily, one of my neighbors has their checking account at the same bank, so the solution for them was to do an online transfer (instead of online bill-pay) into the condo’s account (after getting them approved to have access to the account). My other neighbor uses a different bank, so for now, they have to pay in person at a local Bank of America, or deposit it by mail directly to the bank. I found out that can be done without my signature. Electronic transfers between banks are expensive so we ruled that out.

As for me, I paid my condo fees in advance for the six months I’m going to be out of the country. If I do an online bill-pay, a check would be sent (to me, the treasurer!) and my friends in Boston (they are my mailing address) would have to mail the check to Bank of America.

I wish that online banking was truly electronic from end-to-end!

Keeping a U.S. mailing address

Earth Class Mail
Earth Class Mail

So as you can see, I keep a local mailing address at the home of my friends in Boston. Since my condo is rented and I no longer keep an apartment in Boston I need to have a way to keep an official U.S. mailing address (for banking, taxes, etc.)

There are companies that provide a very useful service for handling your mail when you are mobile and out of the country. Earth Class Mail is the one I’ve heard most about. They give you a U.S. mailing address, receive all your mail and packages, and notify you by email with scanned images of the mail. You can decide whether they should shred, trash, or forward the mail to you or anyone else. They also have a check deposit service. Very useful! Their cheapest level of service is $20 per month. I’m lucky to have friends handling my mail, so I don’t need to pay for this service. But I would consider it in the future.

Since I was house-sitting for my friends from January through April in Boston, I was already receiving mail there, so it was very convenient to keep that address for the calendar year. I handled their mail and paid some bills for them while they were in India for four months. So it’s all worked out well!

On using cash for everything while in Mexico

Mexican peso bills are pretty.
Mexican peso bills are pretty.

In the U.S. I was accustomed to using credit cards for absolutely everything! That’s because I wanted to get the maximum points for travel (and it worked out well!) I rarely found a business that wouldn’t take a card, even my local independent coffee shops were happy to take cards for the smallest purchases.

I was also using certain iPhone apps to make small purchases at local businesses. My favorite app is LevelUp. You sign up for an account with them online and give them your preferred credit card to charge things to. Then at your local coffee shop counter, you scan the barcode in your iPhone app. Another really good thing is that it saves money on transaction fees for the local businesses! They charge a flat 2% and offer other advantages for the business. Not only that, but LevelUp gives generous coupons to repeat customers. So after using it for a while I was getting $5 off on some of my purchases!

LevelUp - nice iPhone app for mobile payments
LevelUp – nice iPhone app for mobile payments

So I was very used to not carrying much cash, but always having a credit card and iPhone in my pocket.

Here in Oaxaca, it’s totally different. I pay cash for everything, including rent, language school, local cell phone time, restaurants, etc. That took some getting used to! They use a lot of coins here (a pouch full of 10 peso coins gets heavy!). Also, people never have enough change. So you start to hoard change whenever possible, so you can pay with the exact amount. After I got used to the different currency, I still had trouble distinguishing between some of the coins (1 and 2 peso coins are very similar in size and color), and without my reading glasses it’s hard to read the amount on the back of the coin. I like the bills here (pretty, smooth paper, different colors), but the coins are a pain. Since money (especially coins) gets dirty, I’m feeling the need to wash my hands more frequently (probably a good thing anyway).

Peso coins
Peso coins

So I take out money about once a week from my local ATM and keep some in my pocket, and some in two different wallets (one for coins, one for bills). If my bag is ever stolen, the money is split between locations and isn’t very much anyway.

One could get into a big discussion about cash vs. credit cards (you’re tracked everywhere you go with credit cards), but I have to say I appreciate the convenience of cards and iPhone apps for paying! In a world where privacy seems to be dead anyway, I don’t mind using credit cards. I always pay my balance in full and I enjoy getting the points for travel.

More information

Best Banks for International Travelers with details about Charles Schwab Investor Checking.

Chase Sapphire Preferred Visa. The Points Guy discusses the advantages of this card.

Review of Earth Class Mail by someone who uses their check deposit service.

How LevelUp Works – a great little app for mobile payments