We have talked about using geographical arbitrage to live your best life. It doesn’t have to be where you worked most of your life or grew up. The world is your oyster. You can move to a different state within the US and there certainly are many amazing places in the US to settle down in after you have become financially independent. Some people also like the adventure of living in a totally different country. If you are planning to do that, then this article is for you to map out all the resources for expats that you still need a home connection for.

Before you take the expat leap

The US has one of the best and lowest cost financial systems to take advantage of for investing your funds. The best thing to do is prepare upfront before making the move. Most financial institutions don’t want to open accounts even for US citizens and permanent residents who live abroad. Most likely its because of the compliance hassles that they are trying to avoid. But all is not lost in case you have already made the move. We will talk about that as well

Change your state if you live in a high tax state

Some states are notorious for trying to get you to pay state taxes even after you have left the US claiming that you are abroad on a temporary assignment and your US domicile remains that state. You might be forced to pay taxes until 18 months you are out of the state. California is one such state. Before you leave the US, I strongly recommend going to one of the states with no state tax. As of 2020, seven states—Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming— have no personal income tax.

I personally went to Washington state’s DMV to exchange my California license for a Washington state license. The fact that my company headquarters at the time was in Washington made it easy for me.  You will need a Washington state address ofcourse. I used a friend’s address in Washington to receive my online bank statement. For mailing address to receive license renewals, I used Travelingmailbox.com ‘s address in Seattle. 

Remember to close all accounts with ties to your original state. No drivers license, no library card, Electronic toll pass like EZ-pass etc. Make a clean break so that you don’t have to continue paying US state tax when you have clearly moved abroad and don’t want the hassle to have to prove it to the overzealous state tax department that you have really moved out and have no intention of returning in the short term. 

Bank accounts

While you can expect to create a local bank wherever you settle down, you definitely need a stateside bank for storing the bulk of your money, providing a no-fee debit card, no foreign transaction fees.

Best bank for travelers: Charles Schwab Bank

One of the friendliest banks for travelers is Charles Schwab bank. Take a look at these benefits:

  • No fee, no minimum balance bank account
  • A brokerage account that is bundled with your bank account offering no commission fee trading
  • No ATM fees worldwide (refunds all ATM fees charged by others)
  • No foreign transaction fees
  • Able to complete all transactions online

With the ability to complete all transactions online, no forex transaction charges and ATM refunds, Charles Schwab has the best features an expat can hope for. The catch is, once you become an expat you can no longer open a new account with them. So its best to open the bank account before you leave the US.  Another problem I had in the past was because some international banking systems don’t deal well with intermediary banks and notes “for further credit to” were frequently getting lost and the money returned back. I was forced to get a Transferwise.com account just to have  a bank account that could reliably receive money. These days, Charles Schwab seems to have solved the problem by using intermediary bank accounts with account numbers appended to the Original bank account thus not needing the “for further credit to” note.

Best small business bank: Azlo.com

   Azlo is focused on being an online bank for small business.  I like the fact that I was able to open my account remotely with just a little back and forth asking for proof of address, identity, documents of incorporation. They have a free ACH wire transfer tool which is *very* handy to have when making payments to American businesses without credit card surcharges. One note: Azlo does not pay interest rate, but as they have no minimums, you could use it as your company bank account. You could then use their ACH transfer tool to move the money to a brokerage or another bank where you can invest in money market, bonds or stocks.

Best rates for foreign wire transfers: Transferwise.com

Transferwise.com is the darling of many digital nomads and expats who expect to send and receive foreign exchange frequently. They charge a % fee for foreign transfer, but the actual rates used for transfer are mid-market rates which are much better than what the banks offer. In most of the cases, I have seen their total cost of sending be cheaper than all other offerings. Almost certainly, it is much better than using your bank to send/receive foreign exchange.

Best solution for international bank accounts: Transferwise Borderless Account

        If you are a freelancer or digital nomad or have an international business, you might need the ability to receive payments from clients in different currencies without large transaction charges.  In addition to sending money, Transferwise.com also has a feature called the borderless account which offers you free bank account numbers in multiple countries/currencies.  The accounts can even be in the name of your company. If you have clients paying you in EUR, USD, GBP, AUD etc, it is a great solution to make it easy for your clients to pay you and both you and your clients can avoid the bad exchange rates from banks. You can receive money for free. Once in your borderless account, you can wire transfer the money to your home bank account at favorable rates.

Best travel credit cards

Chase Sapphire Reserve: This is a pricey option ($550 per year), however some of the money can be recovered if you are a frequent traveler. You get a $300 annual credit against travel expenses. You also get

50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 toward travel when you redeem through Chase Ultimate Rewards. In addition:

  • Earn 3x points on travel after earning the travel credit, 3x points on dining and 1x point for all other purchases
  • Receive a 50% bonus when you redeem points for travel through Chase Ultimate Rewards
  • Complimentary airport lounge access.
  • No foreign transaction fees

If you expect to do a lot of traveling, this might be worth it. If not, try to at the minimum get  a credit card with no foreign transaction fees. Visa or Mastercard cards are preferable because they are accepted at more international locations than Discover or American Express.

Best brokerage accounts

Vanguard.com : The grand daddy of index funds thanks to John Bogle, Vanguard is still one of the best brokerage firms to invest the bulk of your money in index equity and bond funds. For the longest time Vanguard was the cost leader in the lowest expense ratio index funds. These days competitors like Fidelity and Schwab have tried to match or go further in offering lower cost index funds as loss leaders, but with expense ratios getting to near zero, you aren’t missing out much if you just stay with Vanguard with their track record of putting investors first and profits second. In fact, Vanguard has a unique corporate structure. Instead of having pressure from shareholders to increase profits at the expense of customers, Vanguard instead is owned by all the mutual funds that it manages. Thus the investors are also the shareholders increasing the incentive to keep costs low.

Fidelity.com: Fidelity frequently wins best online broker awards. Thanks to Vanguard’s competition, Fidelity has also joined the race to the bottom to lower cost of investing. In October 2019, they reduced trade commissions to 0. In addition they have announced with big fanfare the Fidelity Zero funds – a core set of index mutual funds that are either 0% expense ratio or close to it. The main thrust is to show that they are even better than vanguard as their comparison table shows. Two catches: These are Mutual Funds only, no ETFs. So you have to have a Fidelity account to invest in the zero funds. The other is that the set of Zero funds is small. When you venture out of the core portfolio into the active funds, the prices go higher. However, as somebody on the path to FIRE, you wouldn’t be interested in active funds anyway. So Fidelity is a great choice as well

Other honorable mentions are etrade.com, schwab.com (see the bank section above), Robin hood etc. With almost everybody having eliminated commissions and the ability to buy index ETFs from any provider with no cost, the differences between online brokers for FIRE enthusiasts is probably diminishing. It probably comes down to the customer service experience when you do have the rare issues.

Getting a US mail scanning/forwarding address

One of the most important things you will need as a US expat is a US address for receiving your statements, opening accounts etc.  Here are some good mail forwarding sites. I have personally used Travelingmailbox.com for the last 8 years. Good service and reasonable pricing. You can get your mail opened and scanned to read remotely. If it is something that you need physically in your hands, you can ask them to forward it to you (single items or combine a bunch of letters in one step)

Getting a US physical address

In many cases a mail forwarding address is enough. In other cases you will have to have a utility bill in your name. Perhaps you can have a friend or relative in the US temporarily change their electricity bill to your name and then change it back once you have a couple of statements showing your name and address. Alternatively there are companies that allow you to have a physical space lease along with virtual mailbox service. 

Keeping your US phone number

 A US phone number is important for you to use with your financial accounts, receive SMS messages etc. There are a few ways you could do this. You could keep your current provider, but use a different sim when traveling abroad for data and calls. When you need to receive messages or call backs from your bank, you could pop your US sim card in. Be aware though that you will pay an arm and a leg for the privilege if you use some of the main providers like AT&T and Verizon. Even their international roaming plans are not cheap. 

  There are 2 solutions you could use.  One is to get a plan from Google FI. It will cost you $20 per  month plus $10/GB of data. All things considered this is not too bad when you notice that the data does not cost more money even if you are roaming internationally. This helps you avoid having to buy sim cards in every country you make a brief stop in and just use your phone without worrying about where you are. This way you can still call your bank or receive SMS from your financial institution to prove you are you.

If you are a heavy user of data however, even $10/GB could add up. You can try getting a dual-sim phone and use a local sim for data while you save your precious US data to rollover to the next month. 

 An even cheaper option is to use Google Voice to get a virtual phone number. The first time you set it up, you need a physical phone line to verify its you, but you can delete the number after verification and just use Google hangouts app on your phone to send and receive US phone calls and texts for free!! Before I left the US, I changed all my contact numbers to this phone number, so wherever in the world I move to, I don’t need to keep updating all my accounts.

Once you have already moved abroad

Things get a little more challenging, but are not impossible once you are already abroad. You just will have to deal with a lot of delays and rejection. Delay because sometimes you will have to send and receive papers back and forth using your US mailing address to your international address. Rejection because so many financial institutions are leery of working with expats who live outside the 50 states. So be ready to play the numbers game. Keep trying with different providers until you succeed. It might even depend on the judgement of the person who is processing your application.

 Mailing address

You can still choose the mailing service listed above. One of the requirements is that if you want to rent a PO box, postal mailbox or virtual mailbox in the United States, you must fill out the USPS Form 1583. While the form itself is simple, it needs to be notarized. When you are abroad, your choice is usually limited to setting up an appointment at the nearest US embassy which will charge you $5o per document!! There are online notaries as well which might be slightly more convenient, but are still not cheap

 Banks

Banks will refuse to do business with you if they know you live more than 6 months outside of the US. So its important to have a friend or relative in the US who can receive mail on your behalf. You might still have to go over the hurdle of proving proof of address.  Perhaps you can change your address on your driving license to your friends address before you leave the US. It depends on bank to bank. I havebeen successful opening Transferwise.com and Azlo.com banks while I was abroad but using a US mailing address.

 What do to when nothing works

 Make a trip to the US!

In the worst case, you might have to make a trip to the US to resolve all the niggling things like opening a bank account in person, brokerage account, mail forwarding, etc. You could do a trip just for this, but it might be more cost effective for you to combine it with a vacation or a trip to see friends and family. The upside is that you could combine it with a big shopping trip to take back the things from America that you love. But that is stuff for another post :-)