Moving Money Between Countries as an Expat

Well, it’s official. We sold our flat in Prague! (“Kafkaesque Paperwork” post coming)

Last month, I said we flew to Prague to sign papers to sell our flat. We did, we have, and it’s done. Yes, we no longer own property in the Czech Republic. (Yeah!)

Owning foreign property these past 9 years has been a good adventure for us. And selling it was a great move for us. To best understand why the timing was good, read the end of the last post.

The Problem: What To Do With This Money?

We now have a new “problem.” Lots of money in Czech Koruna. And this money sits in a bank account in Prague. But we want that money in the form of Canadian dollars, in our local (Canadian) bank account. How to get it there?

The Money Shot
Dramatic money shot. This is only 50,000 CZK, worth about $2500 US.

I’ve talked about moving money before. But the amount I have to move now is (by far) the most I’ve ever moved. Before, the most was when we bought our Prague flat – I wired US dollars to Prague for our down payment. That was just a down payment, for our flat’s purchase 9 years ago.

Today, we’re talking about the full balance of the flat sale, after years of renters paying down the mortgage. Yup, a big money move. Taking a bad approach can mean the difference of thousands of dollars vanishing in fees or a poorly executed exchange.

Below, I’ll first cover the choices I have. Then how they differ (easier said than done). Finally, we’ll end with my choice. On to the show…

Let’s Talk Choices

Like I said above, we have choices. We could use a local bank, a mega-global bank, an online payment company (rhymes with “SaySal”). And there are countless boutique foreign exchange (“forex”) middlemen.

Hell, CNN even wants to exchange your money…

There's money to be made
Go home CNN, you’re drunk.

 

In the end, the best thing we can do for ourselves is research and compare. And your research starts with our research.

PayPal

Let’s talk about PayPal first. They’re an easy target. PayPal will wire money for you (their fee is just under 3% if sending more than $125,000). That seems small at first, but later in the “rates & fees” section, I’ll show why it’s not a smart choice. If you trust PayPal with this much money, you’re a more forgiving person than I.

Banks

Okay, moving on to the banks. We have a choice between our local Czech bank and other banks. There are small-time, “local” Czech banks and there are the mega-corporate European banks.

Either way, our money will have to go through one or more intermediary banks for the exchange. Each bank, each step, will include fees and/or a marginal “take” for themselves. Trading this way reminds me of a jail rape, with a few unseen prisoners between you and your cellmate, all getting in on the action. And all leaving you with a gap where your money should be. (wow, that got way more graphic than I intended.)

ATM?

When people ask what’s the simplest way to exchange money for a tourist trip, I always recommend the ATM — at the destination. Decent rate, small fee. But can I do that? Hell no; my daily limit would have me visiting a our bank machine for years. And the little “convenience” fee amounts to a lot when so inconvenienced.

ForEx

Decentralised but regulated, you have ForEx (foreign exchange). A trading post that essentially exists to trade money for money. These guys have one job: to route money from one account to the other. Their overhead costs are next to nothing, unlike real brick-and-mortar banks. The negative is, you can’t just choose one that sounds good. Do your research to know which is the right one for you.

…the best thing we can do for ourselves is research and compare.

Now, Let’s Talk Rates & Fees

I appreciate you’re not all bankers and money traders. So, let’s get clear on the terms.

Fees

When I say “fee,” I’m talking about a deduction from your total sent. Let’s pretend you want to send US$500 to the country Balonia (yes, made up).  To send $500, your bank will charge a fee to handle that transfer. Now, you’re in effect sending $450-$475. The intermediary bank(s) might also take a little, so you’re sending $440-$465. And the receiving ‘Balonian’ bank will show the balance in their currency, Baluns. And you check your Balonia bank account balance every hour for the next 3-5 business days – finally finding most of the money you sent.

Rates

Let’s pretend a US$:Balun exchange rate of 1:1000. You saw the rate on the Internet, so you expected 500,000 B in your Balonia account. Instead, you see 452,345 B. Why? Where did that 10% go?

First, spoiler alert: for every exchange, there is not one rate. There are two.

Exchange rates, coming or going
Coming or Going – choose your rate!

Depending if you’re coming or going, you have a Buy/Ask rate and you have a Sell/Bid rate, respectively. Give me a few more words and pictures, this is easy.

If you’ve travelled, this picture should look familiar. Every airport has a kiosk offering money exchange. A short list of flags, two columns of rates. If you’re carrying “home” money, looking to buy local money, they will take your money (foreign to them) and give you the local cash.

Back at the airport, any leftover vacation money, you can sell back to them to get your “home” money back. In both directions, you can expect them to offer you a rate that favours them. It’s business.

Good Rate or Bad Rate?

Every airport kiosk, bank, etc – I ask the same questions: is that rate a total rip-off?

TIP: don’t pay attention to the rate. Pay attention to the spread. The difference between the Buy & Sell rates? That’s the spread.

Sure, I get it – everybody who deals with money has to cover their costs. But the spread doesn’t have to be a total gouge. Check out this asshole kiosk guy:

Feat_valuutavahetus
Click to expand for gory spread details

I’ve been to Tallinn, Estonia. Lovely city. And an amazingly progressive country. But having rate spreads of 35%-45% is nothing short of criminal.

Finally, Let’s Talk What I Do

I gotta stick to my principles.

Principle #1: pay as little as possible for someone else’s overhead. = ForEx.

Principle #2: choose the best rate and most reputable = Research

I’m a fairly transparent guy, so you can probably guess what I do.

My limit of research is understanding the terminology and doing due diligence. But I know my limits. I do my research, plus consult with others, then I get quotes to be sure.

For ForEx research, I turn to these researchers on foreign exchangers.

Selling Our Prague Flat, for real this time

Tomorrow we fly to Prague. All of us!
Needless to say, WE’RE EXCITED!!!

Prague

Business or Pleasure? Both.

businesspleasureMy wife and I are taking our 2 kids (8 & 10 years old) for a vacation.
But the trip is also business: we fly there to sign the sale of our Prague home.

I had started to sell it back in 2012. But the market and exchange rates make it a poor choice. Good thing, too, as I gained a better understanding to what’s really at stake in selling a home abroad. (more on that below)

Background

In 2006 we moved from the United States to Prague, Czech Republic. Back then, it was my wife and I, and our infant daughter.

That was a whirlwind adventurous move, done in just 3 months! We sold our car, our house, quit our jobs and moved to Prague. And for many of my clients since, that’s the adventurous move of choice.

It took us 3 months from “Hey, wanna move abroad?” to “And here’s our new home.

In 2007, just a year later, we bought our flat. A beautiful location, in downtown Prague 6, between two major parks, quick walking distance to Old Town Square. That was home for 3 more years.

In 2010, we moved to Canada. With a loss of my work permit, and a second child, we made the smartest decision: a month long RV trip. (Full part 1 and part 2).

After our RV Parkers-turned-Griswolds trip, we made a choice between New York City, US and Halifax, Nova Scotia. Given a growing family, we chose Halifax. yeah!

Meanwhile, our Prague flat was rented – and stayed so for the past 6 years. Our long-term tenent has been itching to buy it these past few years. Finally, game on.

Business Talk for Those Interested

Taxes and exchange rates cannot be ignored. When timed right, exchange rates play very well in your favour. In 2012, I backed out of selling the flat because I finally appreciated what can happen if you have poor timing.

I listened and learned from our guru accountant. I patiently watched the exchange rates between Canada/US/Czech Republic. This time, we’re selling at a great time. Here is why:

  • The Czech housing market is a “Seller’s market,” so an opportunity to sell.
  • The Czech crown is stable, hence a reliable ride from decision to signature.
  • The US dollar is stronger than when we bought. So to the IRS, our sale is a “loss.”
  • The Canadian dollar is slightly weaker, so the sale is profitable, but not too much.
  • With a weaker Canadian dollar, our Czech proceeds exchange into more for us.
  • We owned the flat for 9 years, so no capital gains tax (over 5 years).

Now, I know this is just a bullet list thrown at you in a blog post. I’m sure you know there is more not explained here. But this really is the big picture.

Everybody’s scenario is different. You may be in different countries, so different rates & timing. But the understanding is the same and should “translate” well.  🙂

exchange rates can help or suck

In Summary

We’re going to Prague!

We’re going to have fun, to see his “hometown” as our 8 year old proudly calls it.

And we’re going to make some hard-earned money.

And I’d be wrong to leave out we feel a bit of sadness, too, to be finishing the Czech chapter in our lives.

If you have a quick question, feel free to contact me.

If you want the full blow-by-blow of how this process works, I plan to write it up next month in the Gone In One Year program.

Timeline to a New Life

Below is a post I first wrote in November 2009. (Whew, how time flies!) I figure it might help a few others with the same questions I had back then.

expat man jumping shipIf you’re thinking about starting over completely new, you may wonder “How long it will take?

Fair question – and here’s my answer: 3 months. Three months is all it takes to drastically change your life, self and all that’s around you. And that’s assuming you have a house, job, perhaps even family as we did. Even as “settled” as we were, it was just 3 months from wondering about getting work overseas to all moved and working overseas.

Continue reading Timeline to a New Life

Non-Verbal Communication

My wife is outstanding at knowing what I’m thinking. She’ll tell me what I’m thinking. In fact, sometimes I didn’t even know I was thinking that. (Sound familiar?)
She knows what I’m thinking because my face reveals a lot while we’re talking. My eyes, especially my eyebrows, how my mouth is formed, where I’m looking – all communicate my feelings at the time. And as I write this, I understand this is probably why my friends enjoy playing poker with me. They watch, they know – they win.
The value of recognizing and reading non-verbal communication is obvious. If you can “read” people’s non-verbal communication, you’ll win. Much more than at poker, of course.
What made me write this? I was writing messages to include in month 6 or 7 of the “Gone in 1 Year” program, and it hit me how non-verbal communication really affects home and poker life. So helpful to be aware of our own face and posture when speaking with others.
Have a great day everyone!

Gone to Canada in 10 Months – Trump edition

Thanks to Super Tuesday results, it’s pretty certain Trump will be the candidate.
And possibly the next President of the United States.

Your Next President? It's Looking that Way
Your Next President? It’s Looking that Way

Do you really want to be there when this happens? …I didn’t think so.

As of today, I’m tailoring my current Gone in One Year program. I’m building for one person: for the American who want to get out of the US, and move to Canada.

What’s the Gone in One Year program? It’s a 12-month (obviously) long set of e-mails, homework, videos and tailored help to get someone living abroad. I’ve lived abroad several times; now I teach others. It’s great.

Faster, Shorter, Uncut

Because moving to Canada for Americans is easier than say, moving to Costa Rica or Czech Republic, this program is faster. It’s 10-months, not 1 year.

It’s also “uncut” and less generalized. When I know you come from X country and want Y country, I can give clear-cut, direct help. In this case, it’s US —> Canada.

Read more on the “US—>Canada” and other 2 plans here.

 

Backpacker Tax – What You Need to Know

A fairly easy “gap year” option for university students is to get a Holiday Work Visa, fly down to Australia and do temp work. Common work is the restaurant/bar scene, farm work or other short-term work. If you’re extremely lucky, work might pop up somewhat related to your degree. The best part of working down in Australia is you earn your wages tax-free. Well, for now…

AUS money

Continue reading Backpacker Tax – What You Need to Know

I’m Calling It: Bernie vs Trump. But, Seriously?

Four years ago, I wrote about Romney vs. Obama, and international poll results for the 2012 candidates. Basically, The Whole World, save one country, overwhelmingly chose Obama. (Revisit the old post to see who chose Romney)

Fast forward four years and we’re at another election. It’s still early, long before the primaries are all done. Plus, I don’t inject myself with the media hype 24×7 (a mental health choice). But from what I gather, there are still a few viable candidates on either side.

That said, if Americans’ frustration is the deciding factor, then the final fight is between the only two anti-establishment candidates:

Bernie vs Trump

So, yeah, I’m calling the final fight. Good bye, good ‘ol girl, Hillary. Good bye, long list of Republican has-beens and never-will-bes. The final fight is between the Vermont Socialist and the Center of His Universe.

Contest: putting my money where my mouth is

If you think I’m wrong, throw in your pick for the final fight (comment below).

If it turns out you pick the correct two (and I’m wrong), then I’ll gift you a full year’s subscription to “Gone in One Year” — free.

Get your popcorn – the bet’s on! This gets decided when both conventions decide their pick.

Who is the Typical Expat (Client)?

There is no “typical” expat. But I can share who is the typical Expat Yourself client.

Since I created “Gone in One Year” program, I fell in love with building info graphics. Info graphics are those colourful pages of icons and one-liners that speak volumes. Well, here’s a quickie that illustrates my typical consulting client.

 

Sail Away From the Safe Harbor

It’s time.

Every so often I write a very simple post. Like this one today.

It’s time for you to sail away from the safe harbour. As Mark Twain is often cited, with his full quote overlaid a pretty picture here:

Sail Away Mark Twain
Become an Expat Yourself – Sail away from your safe harbor

Interaction is Key

I’ve been promising to write a “how-to” guide for you for ages. The trouble is, an “info-book” is not really helpful, not like real interaction. (In fact, I know someone selling such a book – but it turns out to be just a “how to make money online” guide, in a “travel anywhere” wrapper. Little smarmy in my opinion, but that’s his gig.)

Info-books do not help, as real interaction does.
That’s why consulting works well. However, consulting is pricey ($150/hour) for some folks. Finally, I fixed the price problem!

The solution: general consulting, in e-mails. New material sent every few days. Packaged in a full 1-year program: Step-by-Step Expat Consulting. Very cheap monthly fee (Trying it out – will likely raise down the road)

Sneak Peek

Yes, you, gone in 1 year, guaranteed or money back. The 12-month program is called “Gone in 1 Year” (heehee!)

Here is a sneak peek at it.

Interested? I’m officially launching in a few days, but sign up is open now.