My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.

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A Long Summer Ahead

Contributed by mm | June 14, 2005 6:30 AM PST

My career at Microsoft is advancing really well, and I may be handpicked to an overseas assignment with greater responsibilities later this year. It is, for sure, a good career move, but there are also lots of financial moving parts to deal with. It will make my summer really, really busy ...

Why? Here is an incomplete list of open (financial) issues I need to work on:

The Package: As a starter, it is going to be an interesting experience to negotiate/work out the compensation package. Besides the relocation benefits and allowance, I also need to cover my base on tax and insurance.

Sell or Lease? The assignment is going to be for about two years, so one major question is how I should deal with my current house -- I bought it two years ago at $315,000; it is worth about $390,000 now. Should I speculate on continuing appreciation, or quit before the alleged housing bubble bursts?

How to Sell or Lease? If I choose to sell, hopefully my package will cover the close costs. Otherwise, I might need to explore options like for-sale-by-owner (FSBO). Also, if I decide to lease out, I need to figure out the new territory of being a landlord.

Rent or Buy? The classic question will apply to my destination city (which I don't want to reveal for now). The city has undergone a spectacular housing boom in the last three years with housing price growth matching that of hot Californian markets. On the other hand, rent is relatively cheap. How should I decide?

Retirement Savings: Now that I will have no access to 401(k) plan and alike, how should I seek the best tax treatment for my retirement savings?

Investments in an International Context: With dollar in its downward channel, how should I position my investments (which is growing in size) in the global context?

Tax: Now I need to deal with taxation in two countries. My package will probably provide professional tax assistance, but I might still need to plan proactively to get the best tax treatment.

Insurance: I figured out I might need to boost our insurance coverage as we are going to deal with more risks on the other side of the ocean.

401(k) or IRA: I will have the option of rolling over my 401(k) balance to a self-directed IRA but there are pros and cons.

Sell the Cars: This is almost the least of my worries, although I still need to find the next owners for my Bimmer and Camry.

So, what does it mean for PFBlog? In short, PFBlog is here to stay, at least until I amassed my first million. I don't see much logistic challenge to continue writing the blog from another corner of the globe. And as a plus, my content will be more relevant and more interesting too for several reasons:

First, in the short run, I can explore many personal finance areas that haven't been explored in the blogsphere -- any item in the above list can make a few good posts by itself.

Second, moving forward, I will still have a vested interest in keeping track of U.S.-side of personal finance issues as my 401(k)/IRA will stay and I need to deal with U.S. tax.

Third, I will be able to add more international color to the blog. I believe many opportunities exist to look at topics like dollar depreciation, worldwide housing boom from a different angle. I cannot wait for that.

(Anyway, there is still a chance that the move might not happen, and even it happens as expected, it will still be several months before I will blog from a different continent. So it will be business as usual for the time being.)

More PFBlog Articles You Might Find Interesting ...

This Post Has Received 13 Comments. Share Your Opinions Too.

s y Commented on June 14, 2005

Shanghai perhaps? I've also been picked to work overseas (London) and am dealing with a few of the same issues. I'll be looking forward to upcoming posts. Congrats!

v n Commented on June 14, 2005

Congratulations! I look forward to the overseas updates!

Me Commented on June 14, 2005

>Shanghai perhaps?
Got a job removing "freedom" and "democracy" from blogs?

FMF Commented on June 14, 2005

Congrats!! But I don't understand why you're not eligible for a 401k and why you have to withdraw your current one. Aren't you still part of the same company?

mm Commented on June 14, 2005

Thank you FMF. 401(k) is a US-only thing and if I move, I will no longer be an employee to MSFT US subsidiary. I don't have to withdraw or roll over my current 401(k) balance, but rollover is an option to me.

k Commented on June 14, 2005

sorry to hear that you have to give up some retirement options,good luck over seas

1stMill Commented on June 14, 2005

Congratulations mm!

Rolling over your 401-K could be very positive for you. Tax treatment for the rollover account remains the same (as your 401-K). However, the rollover account will have one HUGE advantage: Unlike 401-Ks, which are often restricted to a small number of funds, you will have complete control over the type of investment(s) held in the rollover account. Vanguard is worth checking out... They offer low fees, and have access to stocks, bonds, CDs and non-Vanguard funds too. Fidelity would also be a worthwhile alternative.

future ex pat Commented on June 16, 2005

Look forward to hearing more about your ex pat financial experiences. I will be relocating to Latin America in the next few years and am trying to be as prepared as possible...

Tim Commented on June 18, 2005

Fast growing real estate market? Sounds like you are moving to Australia. :)

kk Commented on June 29, 2005

About 401(k) here is another option for you. I assume you have no US taxes when abroad. So if you cash out of 401(k) you pay only 10% penalty and no tax. Assuming you were in 27% tax bracket, you would have made 17% net profit on your 401(k).

mm Commented on June 30, 2005

KK: thank you for your comment. Cash out 401(k) isn't really an option. I still expect to pay US taxes when abroad, and even if I don't, it is not worth the loss of decades of tax-deferred growth.

Paula Commented on July 4, 2005

Plus for rollover: you can pick any funds you want. But there are two negatives. The magic date for withdrawal from a 401(k) without penalty is not 59 1/2. It's 55, if you "separate from service" on or after age 55. Essentially, if you retire from the company on or after that date. You also lack the loan provisions of a 401(k)with an IRA.

BB Commented on October 10, 2005

MM -- So, did you finally reveal where you are headed to?

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