Frugal chicos journal - ERE in Spain

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jacob
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Re: Frugal chicos journal - ERE in Spain

Post by jacob »

anesde wrote:
Wed Dec 30, 2020 5:56 am
Note the downside is you need to also declare all worldwide income.
Just to add: Also as a US citizen you have to declare all worldwide accounts under FATCA. (There are some limits. I think it's $10000.) There are huge penalties ($250k?) for not doing that. It's relatively easy though. Just write down how much you have in each account on 12/31 (tomorrow) so you have the info for when you file. (It's separate from the tax return.)

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

@Jacob

Correct, it is due April 15. I would have to declare accounts in both countries.

anesde
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Re: Frugal chicos journal - ERE in Spain

Post by anesde »

Yes, Jacob is correct. I was referring to the possibility that you weren’t a US Citizen or green card holder in which case you wouldn’t necessarily need to file US taxes. For example, my SO is not a US Citizen and thus we have the option to either declare her (and get the benefits of Married Filing Jointly, but the downside of declaring all of her income) or not declaring (in which case I have to file in the more punitive Married Filing Separately).

The first would make more sense if we had a single income, but given we are DINKs it’s worse plus I just hate the fact that the US would then be able to tax a non-Citizen, non-permanent on worldwide income. She can’t live in US but would be paying them tax! Crazy. I actually will just file as Single until if/when we have kids and then choose Head of Household which is comparable to Married Filing Jointly.

Anyway none of that applies to the Chico’s as you’re both US Citizens already. As to resources I think primary sources are your best bet - I would go straight to the IRS website for info on foreign tax credit vs. foreign income exclusion and read the applicable section of the US-Spain tax treaty. I need to do this myself for US-Portugal when we pull the plug, but also generally on Portugal itself as I’m not very familiar with the tax regime. You need to wrap your head around:

1) How Spain taxes (you’ve done this already)
2) Options for US taxation of foreign income (these are the two options I noted in previous post)
3) How Spain and US treat each other’s tax regimes (US-Spain tax treaty)

The key thing I’ll note is having a good handle on how much Chica’s income will be for the next few years. You don’t want to find yourself in a situation where she earns more than the exclusion, has already paid full taxes to Spain, and now needs to pay more tax (double tax) to US on income above the exclusion. If there’s any chance she’ll make more than the [107] in the next 5 years you’re better off with Option #2, again subject to understanding US-Spain tax treaty.

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Pretty excited to do our Year end recap.

DECEMBER INCOME –$11,751

DECEMBER EXPENSES – $995 USD - The expenses below are in Euros, we do the conversion of the total into USD.
Car annual insurance: $0
Gas (Car): $0 - Still have a full tank since we are only able to move around our town.
Groceries: $264.58 - We contribute buying fruit, veggies or whatever my mom and us need.
Cellphones: $20 - Chica's international plan with Lebara and my monthly plan, also with Lebara. No complains.
Internet & My phone: $0
Misc./Entertainment: $299.64 - A dress for a wedding that Chica will not be able to go to in the US, a couple of gifts and a pair of mountain pants
Cash withdrawals: $230 - we mainly use this cash to pay some groceries that i didn't keep track of, pay the tax lawyer, a couple of coffees and such. I guess we can always do better but I can't complain.

We saved 93,07% of our income.

CURRENT ASSETS: $613,625 ($25,733 increase from last month)
Cash savings: $176,540
Investments: $437,136

ACHIEVEMENTS/HAPPENINGS THIS MONTH:
- We payed off the 20K interest free loan from Chica's parents
- We crashed our goal and achieved the 600K NW (and passed it like a full steam train)
- We had a great Christmas season
- Mini had her first Olentzero (Basque Santa). She got a tippi, rain boots, a water bottle, a doll, a Minnie Mouse backpack and a Peppa pig doll.

Some pics of an outing to the mountains with some friends this month:
Image
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Last edited by Frugalchicos on Sat Jan 02, 2021 3:25 am, edited 5 times in total.

jacob
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Re: Frugal chicos journal - ERE in Spain

Post by jacob »

Frugalchicos wrote:
Fri Jan 01, 2021 2:15 pm
... and a pair of mountain parts
Like rocks?

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Recap 2020
- Started the year with $442,760 and ended with a NW of $613,625.
Difference: $170,865
- Started the year with $202,209 in investments and ended with $437,085.
Difference: $170,865
- Our savings average was 85,82%
- We made $1,034 on eBay and opened an investment account for Mini with $650.
- We received $6,683.24 in dividends
- Our living expenses were $16,069 with an average of $1,339/month
- Our main expenses were the following:
Groceries: $4,427
Gas: $387
Phones: $309
- We basically lived rent free this last year since we were living with relatives

Achievements 2020
- We hit our goal of the year of 525K NW by August. Way to go Chicos
- We successfully kept our expenses below 3.5%
- I got a job.
- Chica got laid off from work for 2 months and was able to get it back
- We did pretty good about not buying unnecessary stuff.
- We are surviving the COVID pandemic. We had rough times and good times. And so everybody else.

Financial Goals 2021
- Hit 750K NW by end of year
- Close our house, finish renovation and move in by fall 2021. Keep costs as planned - about $150K USD
- Live below 3% SWR (about $1,530)
- Me: to get a full time job in a good company or turn my actual job into full time (I am currently covering a long time leave of absence)

Personal Goals 2021:
- Keep going and stay positive during the pandemic
- Chica to visit her family in the US
- Make to time for each other (hard living with family and with a baby)
- Mini to keep doing great.
Last edited by Frugalchicos on Fri Jan 01, 2021 3:27 pm, edited 1 time in total.

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

jacob wrote:
Fri Jan 01, 2021 2:19 pm
Like rocks?
wop, mountain pants, already corrected it. Thanks! :)

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Time for our monthly update

JANUARY INCOME –$10,466.47

JANUARY EXPENSES – $1,404 USD - The expenses below are in Euros, we do the conversion of the total into USD.
Car annual insurance: $0
Gas (Car): 52 - Still have a full tank since we are not able to live our town.
Groceries: $289.25 - We contribute buying fruit, veggies or whatever my mom and us need.
Cellphones: $20 - Chica's international plan with Lebara and my monthly plan, also with Lebara. No complains.
Internet: $0
Misc./Entertainment: $512.65 - $234 in computer parts, $100 vaccine for the baby, $169 in clothes for Chica and I (I finally upgraded my decade old t-shirts!!)

We saved 86.58% of our income.

CURRENT ASSETS: $621,465.33 ($7,840.33 increase from last month)
Cash savings: $83,899.61
Investments: $438,039.04
HOUSE EQUITY: $99,526.68

ACHIEVEMENTS/HAPPENINGS THIS MONTH:
- We are finally closing on the house on Wednesday. Already counted the money as home equity.
- Chica has been recruited for 2 jobs back in Chicago. More on that later
- Mini can already say her name and is obsessed with Peppa Pig.
- Chica's parents are gifting us 30K every year for the next 5 years. They are pretty well positioned in life and want to share their wealth with all their children. We will invest it all.

Ok, so Chica has been contacted by two competitors. It will mean a promotion and a very generous salary bump, somewhere around a 30-40% increase. With all this, we have been considering in going back for a few years to finish our goal of early retirement. It might sound crazy coming from me to be talking about going back to Chicago...but if putting 4 years there means being able to fully retire with a beautiful condo back in the Basque Country and about a million dollars invested...the decision is kind of easy to make. In fact 1.1MM is the projected money invested we have if we move for 4 years.

It is true that it will mean a mental challenge, especially in the winter months and having a 18 month baby with us. However, I feel it would be different having a very determined date of return already set by both of us. I think we can also try to enjoy and do cool things like visiting family, national parks, etc...

We already did calculations based on Chica being paid 140K, me getting a at least 50K job (striving for 65K to be honest), kindergarten, apartment, and other expensive living costs associated to living in Chicago, etc... we would still save about 30K more than living in Spain. Another factor to consider is that I am missing 1 year of SS credits to be eligible for a pension. It could also be beneficial for mini to be fully immersed in the English language before coming back and being enrolled into a Basque school. Oh, and not to mention the taxes matter and how much easier would be to file taxes if living in the US. We would also pay less taxes and would avoid paying money for the gifted money if living in Spain.

We are still weighing the situation but it seems that we are both excited about the prospect of speeding up the retirement goal. I guess we will make a final decision once Chica gets a job offer.

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Re: Frugal chicos journal - ERE in Spain

Post by 2Birds1Stone »

Based on this strangers assessment of your situation, and only having the background of what you've shared here over the past few years....

This would be a HARD no for me, unless there was some other lifestyle/satisfaction improvements. You seem very content in Spain; the surfing, family/friends, and more laid back lifestyle.

With a paid off residence, you're basically teetering with FI by any reasonable measure today, just with your assets alone. Chica makes a great salary in her current role. You're going to be in "runaway" mode sooner than you will realize at current spending/income. Couple that with the $150k gift over 5 years, and the fact that you will more than likely make some sort of money over the next 50 years......it doesn't make sense.

An extra $100k, $500k, or even $1M would not be worth trading your amazing life today for 4 years of the hustle and bustle of working two professional jobs, getting yourself back up and running, and dealing with Chicago weather and culture. Not to mention how much less you will have time for your daughter in her younger years.

Is there any way for her to accept this new position without uprooting your life again, and you having to work FT to offset the increase in lifestyle costs?

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Bankai
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Re: Frugal chicos journal - ERE in Spain

Post by Bankai »

Hi Frugal chicos!

Just caching up with your journal - you guys made amazing progress last year!

Looks like you built a dream life for yourselves! There's just one bit I don't quite understand...
Frugalchicos wrote:
Mon Feb 01, 2021 10:52 am
we would still save about 30K more than living in Spain.
What for? You already won the money game... by far! You're at 33x annual expenses, have paid for appartment, are looking at $150k coming your way over next 5 years, while also still having 85% SR and adding 5 years of expenses saved every year! In a year's time, you'll be at what... 40 years of expenses even with flat market? You'll get to $1M in no time at all (likely less than a decade, probably several years) just by doing what you're already doing.

Unless, as 2B1S said, there's a massive quality of life improvement? But you'd be moving to a city with more that twice the number of homicides each year than the whole of Spain, and with constant rain and brutal winters! Is it really about money? Or is something else bothering you? Some people struggle with not being useful or not realising their full potential, or just prefer big lively city over scenic countryside... If you guys are doing it, just make sure you're clear on what the true reasons are.

Whatever you decide, all the best!

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Re: Frugal chicos journal - ERE in Spain

Post by mooretrees »

Totally agree with the previous posters, you've finally got such a great life in Spain, why move back to the cold, cold Chicago? I was shocked you two would consider it at all. As far as language goes, mini chica can learn English a little bit later, you did, right? You have such a high quality of life where you are, it doesn't seem worth it all for a measly $30 k. From this random stranger on the internet, I veto this choice! I tried to find some quotes from your journal where you complain about the winter, but you're just too positive! I remember reading it though.

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Re: Frugal chicos journal - ERE in Spain

Post by theanimal »

I'm going to throw my hat in as well and say I definitely emphasize what everyone else has said so far. If the Basque country is your end goal, why leave now to achieve a monetary goal that you will hit anyways? What's a couple years difference if it means your quality of life will be so much higher in the interim? Regarding the English immersion: couldn't you just speak English at home? It'd just be the opposite of the situation of the millions in the US who speak Spanish at home and English everywhere else.

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Re: Frugal chicos journal - ERE in Spain

Post by classical_Liberal »

...
Last edited by classical_Liberal on Fri Feb 05, 2021 1:59 am, edited 1 time in total.

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Hi everyone - it's Chica here. Thank you all for your thoughtful replies. All extremely valid points and things we have certainly considered. Wanted to provide some additional context that was left out above:
  • Chico is currently working under a contracted position, he's covering a medical leave for someone who will return in the coming months - his contract technically ends this month and then he goes month to month - so no real job security.
  • In the meantime, he's been keeping an eye out for other job opportunities and there are ZERO logistics jobs in the Basque Country and 14 in the entire country of Spain. The job market here was pretty bad pre-pandemic and it's feeling impossible now.
  • The job market is why Chico left Spain in the first place those many years ago - working here is very hard in general. Most people who have well paying jobs are in those positions because their dad held the position before or their family member owns the business. If you are lucky enough to find a job on your own, many times its contracted/not full time and the pay is very low ($1,200-1,500 a month on average).
  • My job is secure for now but I was laid off for 2 months last summer during the height of the pandemic and since I'm technically an hourly employee, I was the easy choice for lay offs. There is no guarantee that they would keep me full time in the future - if I were to lose my job I have very little hope of finding something new in Spain and definitely not at the salary I'm currently making.
  • And lastly, we love living in Spain but the move here has not been as rosy as we had hoped -- Chico's parents got divorced, we had to move in with his mom, the job situation for Chico, obviously the pandemic put a massive damper on social life (which we know will get better). We know that all the things we love about this place will be here waiting for us in 3-4 years. Being dual citizens with family in both places makes the move back and forth seem more fluid for us, it doesn't have to have such a feeling of permanence.
SO this potential move back is really us getting on the offense -- it's increasing both of our salaries and if we lose our jobs, we have a much better chance of finding a new one and quickly. While the world is still recovering and our house is under construction we can continue attacking our financial goals. Chico likes to say we are Vikings and we are going on a raid :lol:

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Re: Frugal chicos journal - ERE in Spain

Post by Frita »

Some decisions have many competing angles. If you decide to bezerk in Chicago, then decide it’s not for you and return to Spain, what’s the downside? To this outside observer, it seems you’d be about where you would have been (plus some cash) had you skipped the Chicago work.

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Re: Frugal chicos journal - ERE in Spain

Post by anesde »

Without knowing more than what you’ve shared here I would caution that your life pre-mini chica in Chicago might not be quite the same as post-mini chica. I suspect now you have the benefit of free child care, whether it’s Chico himself, or his parents. This isn’t so much a cost caution as I’m sure you can appropriately account for that, but more of a stability/mental health point.

If you both take high stress jobs (and at least Chica’s sounds like it will be) that are demanding of your time how will that affect your relationship? Do you have family in Chicago that you can lean on? Forgive me as from memory but I thought I read previously that Chica’s family are from KC, which is close for a planned visit but not close for a night off.

Will the job offers still be there in a year or would you significantly risk losing the opportunity? If Chica loses her job could you still decide to do this with a substantially similar company/role and just risk the [3-6] months it might take to land the gig?

I’m likely projecting myself here a bit, as I’m working now such that I don’t have to when we (hopefully) have kids. But maybe the job will enable the flexibility to make it work, or maybe you have some family/close friends in the city that can serve as a relief valve, or both.

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Ego
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Re: Frugal chicos journal

Post by Ego »

Frugalchicos wrote:
Wed Mar 04, 2020 8:41 am
I have spent a lot of time applying for jobs and getting discouraged, frustrated and a little angry. The job market is very stagnant, there is very high demand for very few jobs and the conditions are quite unstable and pay is low.
You've been hinting at this for a long time now in a number of posts. You have my respect that you are both willing to alter course when things don't work as planned or when opportunities present themselves. Good for you!

Consider writing some notes to future-you about the things you currently love, hate, wish for, want to do, want to avoid, dread, frustrations, joys, worries, ..... about your current location. If you are anything like Mrs. Ego and I, not long after you return to Chicago you will once again fall under the spell of the dreams that originally drew you Spain in the first place. They may be less potent than the last time or perhaps Mini will make them more potent. Who knows. It is good to have words of advice from yourself to yourself to burn through the fantasies that are sure to return and temper them with some reality.

Good luck!

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Re: Frugal chicos journal - ERE in Spain

Post by Nicolino »

Wow, you miss a couple of weeks here and so many things happen!!

I think it is very responsible for you to take advantage of the opportunity, it will surely mean much more flexibility downstream and the english as a first language thing for mini sounds like a gift to ther. What I would do if I were you is to shoot for a job more aligned with the lifestyle you have come to enjoy back home. If you stay happy, everyone will be better off!!

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Chica, again.

@anesde - you make some great points. The one thing I haven't quite made peace with is putting mini Chica in day care for 8-10 hours a day. While I suspect she would actually LOVE it (she's obsessed with other kids), not being with her all day every day will be a big adjustment. That being said - having both parents home for the first 2 years of life is also not "normal" - one massive silver lining with the pandemic and life here in Spain has been getting to experience all of her firsts. The plan is to send her to 'school' here in the fall anyway though so this is all sort of inevitable.

RE: high stress job -- one angle I'm working is potentially getting a full time offer at my current company - I'm a contracted employee now for international tax purposes but have worked for the company for 10.5 years and have a great relationship with my boss. I told her our intentions in potentially moving back and that I was being recruited by other companies. She's working with HR now to see if they can bring me back full time with a promotion/salary increase. If that's possible, I'll likely stay with my current employer which means maintaining a high level of flexibility, 4 weeks paid vacation and not having to 'prove myself' to a new employer.

@Ego, love the idea of writing notes to your future self - we always say "our future selves will thank us" when we are faced with tough situations/decisions. I'm sure we will be yearning to get back the second we land in the States - life here in Spain is pretty magical, if only the job situation could be a bit better. We will definitely be returning as soon as possible and based on our projected net worth, it seems it could be as soon as 3.5 years from now. Not bad.

@nicolino - Thanks for the encouragement! :)

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Re: Frugal chicos journal - ERE in Spain

Post by Frugalchicos »

Hi guys, it is Chico here. I have been quite busy lately...

I appreciate all your good words about our latest news.

It seems that things are moving along and we are looking at potentially moving back to Chicago in May - June. I am actually excited for the potential opportunity we will have to build a strong net worth and achieve our goals. One of the reasons for moving back (if not the most important) is that we don't want to just go by. I don't do well sitting and waiting for things to happen, especially in the current job market in Spain. We want to achieve our goal and are willing to do what it takes, while doing our best to make the most of it. We don't really want to over analyse things. It is true that we felt we left something unfinished when we left the US and moved to the Basque Country. We didn't feel comfortable enough to call ourselves early retired, we still felt we had to make a living like everybody else (even though we had an impressive financial muscle)... We want to early retire and we are using all the tools to get there as fast as we possibly can. We are both people who easily set our minds to a goal and put all our energy into it. And this time is not any different.

Moving back to Chicago is going to be a challenge, weather sucks, people are rude sometimes, high stress level compared to Europe, etc... However, it is the place where the opportunity is...and as a friend told me once "el que no se embarca, no se marea" or "that one who doesn't get on the boat, doesn't get sick". We just got a condo, we will start renovations in a couple of months and it seems we are buying a parking spot on Friday. An amazing life in many aspects will be waiting for us back in The Basque Country in 4 years, we just need to delay the gratification a bit...in the meantime, to quote my father in law, players gotta play.

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