How I Paid Off My Student Loans In 3 Years Working Abroad

How I Paid Off My Student Loans In 3 Years Working Abroad How I Paid Off My Student Loans In Three Years While Working Abroad Do you wish you could move to another country to travel, work and experience a different way of life? Maybe you feel that you cant because youve got a pile of debt. For many people, debt holds them back from  traveling, taking a new job, going back to school or even starting a family. But what if you could have your proverbial cake and eat it too? Well, its totally possible, especially if you find a job in an area with a low cost of living, such as China, Korea, the  Philippines  or India. How I paid off $14,000 of student loans in three years During my senior year of  college  I decided to go to China to teach English for a year. I knew the pay$500 a monthwas higher than the average Chinese teachers salary, but Id still be making much less than my classmates who got teaching jobs back in the States. Well-meaning friends advised against it. But I wanted to experience life abroad and  figured,  at the very least, Id keep up  with  my payments. In the end, it was a great decision because several factors helped me to  pay off my  student  loans  in just under three years. Since my employer provided a decent apartment, which  was pretty well furnished by the previous foreign teachers and included water,  electricity  and gas, the expenses that my roommate and I had were quite low. Our main costs were: Food/household products: $100 to 150/month Landline: $5/month Cell phones:  $15/month (each) Internet: $10/month After basic living expenses, and setting aside cash for travel, most months I was able to stash away at least $250. When I returned home the first summer I made a lump-sum payment of over $2000. During my second year I maintained similar habits, enjoying my life and  travel  opportunities, while saving as much as possible. I made another lump-sum  payment and worked all summer to have cash on hand to make  payments  throughout the year. At the start of my third year I married a local guy who hated the idea of me having so much debt and suggested we pay it off as soon as possible. To do this we lived on his income, which was lower than mine, saved my travel bonus, and I started tutoring kids on the weekends to earn extra cash. By June we had enough in savings to pay off the entire loan. We converted the yuan to dollars, got a check and sent it to my bank. By this point I was so close to getting rewarded for my three years of on-time payments that I paid off all but the amount that theyd credit me. Once the credit posted to my account, I was just a couple dollars away from being debt free and paid it off promptly. Related: Student loan refinancing calculator Financial benefits of working abroad One reason that  working  abroad  is  lucrative  for US citizens is the  Foreign Earned Income Exclusion  makes us  exempt  from paying taxes on the first $97,600 (per the 2013 IRS rules) earned each year.  Of course your employer probably has taken out local taxes, so you are taxed, just not twice. Some companies even give  bonuses  if you choose to work abroad.  The Japan Times  reports that U.S. State  Department  employees get hardship differential pay which varies  depending  on how  difficult  the  circumstances  are where theyre working and  The China Daily  says that Coca Cola is giving their Chinese-based employees a 15-percent environmental hazard bonus so that they can buy high-quality air purifiers for their homes. The only downside is that you cant use the money to  contribute  to a Roth IRA since that has to be funded with income earned in the United States. But if you are  freelancerwbuqsbzwrytbscbu  and earn income from US clients, that would be  considered  US-earned  income. Once you take out taxes on it, you could earmark that money for your retirement  investments. Related: Find the latest travel deals now at Expedia.com Maximizing your income abroad Negotiate your compensation package Theres usually room for  negotiation  during the hiring process and you certainly want to take advantage of it.  Inc.  columnist Bill Stewart wrote that he was able to get private school  tuition  for his kids as part of his compensation package while working in London. Live like the locals When I first arrived, there was just one  KFC for restaurants and little in the way of entertainment. I ate out at tiny hole-in-the-wall joints where a meal for two cost $5-8 and spent weekends meeting with friends, reading or watching movies at home. I kept my  itsy-bitsy  $75 phone for three years before upgrading and once we entered serious debt repayment mode, we ate out just a handful of times in the ten months and I sewed my own maternity clothes. Stick to a budget Had I realized the beauty of budgeting at the time, I know I could have saved more. If you  create a budget  and stick to it, youll be able to see  exactly  where youre moneys going. Plus living in a cash dominant society meant that I could feel my wallet getting lighter with each purchase. Send back money  regularly This part can be tricky, but if youre going to be paying off debt with a  vengeance, you need to be able to get money back to your home bank at least once a month to keep up  with  monthly payments. During my early teaching days I took the money back during summer break. The third year, I got a check from a local bank and sent it to my bank. This is a time-consuming process, taking a whole month from start to finish. Recently I  discovered  that Western Union works pretty well. We had some glitches learning the ins and outs, but its currently the best option. Before you leave, do some  research  about which banks might  operate  in both countries and set up  online  banking accounts so that  transactions  go smoothly. Finding opportunities to work abroad Before you get too excited and book a ticket, you do need a job and a work visa to legally  work abroad.  Asian countries are  always  looking for native English speakers and  Daves ESL Cafe  is a trusted resource among the EFL community. If your current employer has an office  abroad, you can tell your boss that youd like to be considered if any openings occur. You can also check out  Nomadic Matts  post about finding a job overseas, and check out Forbes  Seven Simple Steps to Finding A Job Abroad. Would you ever consider taking a job abroad if it meant being able to reach  financial  goals faster? Where would you go? Read more: Need help paying off your student loans?  Here are  some resources to help you out: Whats the smartest way to repay your student loans? Student loan refinancing calculator Dont fall for these 8 myths about student loans Editor’s note:  This article was originally published  in October  2014. It has been thoroughly updated for relevance and accuracy before republication.