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Living abroad and savings

Chris Farrell Oct 11, 2010

Question: Hi. I’m a 36 professional, and my wife is a 28-year-old doctoral student. She received a fellowship to spend 10 months in Europe, and we’ve decided to go together. I left my job and will be freelancing. We sold our house. We’re getting back nearly all of the $20,000 cash we’d put down on it in 2007. And we’re wondering what you’d recommend we do with that money this coming year.

Other info that may help: We expect to have enough income while we’re in Europe to cover our expenses, but not enough to really be saving. We have an additional $15,000 in savings, should we need to touch it. Our retirement savings total $46,000. Late next year when we’re back in the U.S. and (hopefully) both employed we’ll need to start paying down $40,000 in college and grad-school loans. Stephen, Sarasota, FL

Answer: I’m jealous. Theer, I said it. Living in Europe for 10 months with enough money to meet expenses while you’re there. Do you need someone to carry your luggage?

Ah well. My answer to your money question is pretty plain vanilla compared to the adventure you’re embarking on.

I’d put the money into a federally insured bank or credit union with a good website and customer service. I wouldn’t worry about retirement savings for a year and I’d cut any student loan payments down to the minimum monthly tab. You’re only out of the country for 10 months.

The reason for keeping the savings powder dry is if you need to tap to pay for a job search or to move to another part of the country for a job. I imagine both are likely. You can always attack the student loans and start contributing again to a retirement plan once you’ve settled back in the U.S.

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