Immigrant Finances #1: Small Budget Retirement

Immigrant Finances #1: Small Budget Retirement

Being an immigrant has its own challenges, and I was curious to know from other immigrants how they were dealing with their finances. I wanted to find out the unique challenges they were facing and how they dealt with them.

I am very happy to present the 1st guest of the interview series, the blogger behind Small Budget Retirement. He is the father of 4 kids, a school teacher who is optimizing savings, earnings and investing to reach FI in the next 10 years (2029).

I had a great time interviewing him. I Hope you like this interview as much as I did.

1. Can you tell us about yourself? Please include any details you feel comfortable sharing about how long you’ve been in the US, what you do for a living and your income range.

I am originally from South America. I came to the U.S. in 2001 with intentions of improving my English skills, as I was going into my last year of college, for languages ( English- Spanish- German).

Didn’t have enough money to afford an airplane ticket. Didn’t have any credit cards I could use to hack my ticket either. But thanks to a friend working with American Airlines I was able to buy a ticket for barely over $100; which in my country was equivalent to several months of work.

Not only was my experience phenomenal but I also met my wife on that trip, thanks to that decision. We went back and forth until 2002 after I finished school and I moved to the United States permanently in 2002. I came to this country with $800 in my pocket. That was the result of selling my dearest assets: A surfboard and a 1974 Range Rover.

After getting married and being able to work legally I worked with a couple of camps in Indiana for room and board. I moved to Illinois to work with a family member maintaining some rentals and with those construction skills I learned I found a job with a contractor in the Chicago west suburbs; finally making $10 an hour!

Didn’t want to brave the winters working outside and found a job as a teacher aide for $15 an hour. Life was great! I had everything I could have hoped for in my home country. I was able to pay rent, eat out, buy clothes as needed, have a car, and get any credit card I wanted. I was truly blinded by how much buying power I had.

Six months after working as a teacher aide, I earned a provisional certificate to work as an ESL teacher making 34K a year. The same year I got myself into a state-funded program and obtained my master’s degree three years later. That gave me a huge bump in my salary!

We are a family with 4 kids and a dog, and a grandmother that lives with us occasionally. Currently, my salary is very close to 100K.

2. What was your relationship with money during the early days of your life? How did it influence your finances?

Since I was a kid I have always had that spark in me to make money. At nine I was washing cars on the street with friends, mowing lawns, get my neighbor’s groceries for a little cash, plus later many other endeavors that worked out just for some time; from a tourist guide to kids party decorator, and even artisan vendor.

I left my country of birth in my late 20’s. In those years, I witnessed and experienced a booming economy that succumbed year after year to the point where food and shelter became the main priorities to survive. I have been through two coups ‘e tat, stood in line to buy food and feared for my life a few times.

All these experiences make me think of how important it is to have always a plan B, C and D. Situations change, economies fluctuate and if you are not prepared it can be catastrophic for your family. I never take anything for granted. Even when my job as a school teacher, and having a Union, is relatively secure I don’t take it for granted. I feel like I always need to know what I would do when misfortune strikes.

Migrating to the United States has changed my mindset. I went from thinking about someday having my own place to live and providing for my family to now, thinking about the opportunity of becoming financially independent and freeing up myself so that I can spend more time doing what I want.

In a sense, I feel like I am pairing up the frugality I was used to back home with the unlimited opportunities I have access to in the U.S.

3. Do you discuss money with your friends, family or colleagues? How do they react when you bring up the topic of money? Is this a taboo subject?

I talk about money with very few people. There are a couple of people I get together with and we bounce ideas off each other sometimes.

I think I am pretty open about my finances although I don’t disclose the same information I disclose through my blog. I don’t mind sharing how much I make particularly with coworkers. Ultimately, if you want to find out a teacher’s salary you can just look it up; so there is no mystery about how much the principal makes or your classroom neighbor.

I do think that money is kind of taboo with most people though. In a sense, I guess I understand why the apprehension. After all, I write my blog under an anonymous account so that I can be more open about my finances. Otherwise, some people may get the wrong idea and start asking you for money or be part of deals you really don’t want to be part of.

Related:  Immigrant Finances #9: Little Seeds Of Wealth

I am always willing to give information if I feel it can help someone in making a life or financial decision. For example, recently I had a student teacher shadow me for a few days; someone who was my student. Well, we had a long conversation about the risk of sinking thousands of dollars in a career that will never take off if she does not have a legal status to work in the country. It was hard for me to do this, but at the same time, I wanted to help her.

4. What are some money mistakes you have committed? What lessons did you learn from it?

My biggest money mistake was to buy into American consumerism. It wasn’t crazy spending but I should have saved more. To an extent, I think it was a necessary phase that I needed to overcome though. When I first arrived, I just couldn’t believe that I could simply go and buy a bike, a pair of shoes or a nice shirt and still have money to cover my basic expenses.

I couldn’t believe that banks wanted me to take their credit cards; I never had one of those back home.

But then from there, I fell in the trap of lifestyle inflation. We bought a house; just like everybody else around us did. We got kids and things got complicated. Again, never crazy spending but we were always tight. The credit card became the emergency fund, and tax returns a breath of fresh air.

Later on, we came around though. I have been blessed with an amazing wife that easily adapts and is always willing to make things work with a smile. She is the one finding opportunities for our kids, finding stipends for them, managing our grocery expenses, etc.

With frugality and creativity is how we have been able to afford my wife staying home to take care of our kids; the best decision we have ever made.

5. What is your view on debt? Do you carry any form of debt? Has it ever been a source of stress in your life?

Absolutely, debt is a tremendous stressor. At times we have been trapped in a cage of improvised expenses and we saw the credit card as life-line when in reality it was more like an anchor. Credit cards are a dangerous dance. They can easily get you on a deceiving loop of buying frivolous things or making that minimum payment for years without making a dent on your real debt.

For a long time, we lived paycheck to paycheck. Our credit cards would fluctuate between 5-10K. By December we would be gasping for air and couldn’t wait for the tax return to pay off the credit card. We would pay most of it, and then the cycle would repeat. A broken muffler, hot water tank or any other monthly misfortune and there it goes. Without an emergency fund, you see no other option other than the credit card; big mistake!!

There is no way around. If you want to be debt free you gotta be a stickler with your money. You need a budget and you need financial goals. What is it that you want or need to accomplish? Pay a credit card? A mortgage? Anything is possible but you need a plan; that’s your financial GPS.

We started our plan in January 2018. We finished the year with no debt and we are currently on a track to wipe off a 22K student loan my wife had, by 2020. We were also able to invest +7K in my 403B plan. For the very first time, we had no credit card debt and we also saved a decent amount of money.

Besides the dying student loan, we just have two mortgages. One is for our rental property, which was our first home. The other mortgage is for the house we currently live in.

6. How is your money invested? Does being an immigrant have any influence on your investment decisions?

Our net worth is mainly comprised of the equity we have in our properties. Besides that, we just have my 403(b) halfway to the first 100K, which is invested in a very simple way through Fidelity. I have 2 index funds, one total stock market fund and the other one is an S&P 500 fund. I follow the Boggleheads principles and J.L. Collins. I just put the money there and don’t worry much about it. My portfolio is 90% equities; stocks. I have FSKAX, FXAIX, FXNAX.

Because of my age, it will be unlikely for me to rely on my market investments to afford early retirement. Therefore, I am relying more on real estate. We currently own one rental property and are planning on getting one or two more.

Based on my experiences, I think that real estate is a great way to diversify your portfolio. I also think that properties can hold on to their value more than cash. Even in the case of a downturn as long as you don’t sell you should do okay.

Besides, not only do you get some cash flow every month but you also get tax benefits and build your equity along the way.

7. Do you have any specific money situation as an immigrant (e.g. supporting an aging parent or family overseas) that influences your finances?

This was a big challenge in 2018. My mother came to live with us and it was not easy. Our expenses increased so did the stress on our family’s dynamics. But we managed to stay together and helped her acclimate as much as we were able to. I could not have done this without my wife, who is a beyond amazing human being.

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There were a lot of decisions to be made. Insurance to figure out, which helped me navigate some things that were new to me since I am not at that stage of my life. There were a lot of tensions and conversations that were difficult, but overall I think we had a terrific year despite the situation.

As of now, my mother is back home and plans on coming back but we are not sure when. We just take it one day at a time and take the opportunities we have to keep on thriving financially.

8. Are you aware of the FI or FIRE movement? If yes, where did you hear about it? Are you pursuing (or have you reached) financial independence?

My first contact with the FI community was through the MadFientist. One day my wife and I were trying to figure out how to get ahead of our expenses on the couch. I was complaining about how my salary keeps going up but we seem to be in the same situation every year. She had been watching some Dave Ramsey videos and wanted me to watch. I watched it and I got interested in the topic of getting out of debt. As the video finishes something popped up about financial independence that took me to MadFientist. I listened to all his Podcasts, some of them more than twice, and never looked back. One of his guests was Paula Pant at Afford Anything, and she really got me thinking. I had many Aha Moments! I also listened to all her podcasts; over 144 of them. Of course, that led me to Mr. Money Mustache and before I knew it I became acquainted with most of the FIRE concepts, and I was able to put together my sort of survival frugality from back home with the smart frugality of the FIRE movement.

I am on a plan to retire in ten years. 2029 should be my year. I am planning on doing this with a combination of my pension and real estate investment.

In 2020 after we finish paying my wife’s student loan we will redirect those funds to snowball pay our rental’s mortgage. I calculate we will achieve that in about 5 years; maybe 4 and a half. After that, we will have a great source of income, which we would like to use as leverage to buy two more rentals in the same area.

That will help us offset some tax liability as well as keep accumulating wealth. We would also like to help our kids along during their college years; which we have a plan for that too.

9. What are some of the apps or tools you use to manage your finances?

We use Mint for quick snapshots of our monthly expenses. Although I also have a spreadsheet with a detailed budget. We use that spreadsheet about once a month to debrief how we did in the month. For long term analysis, I like to use Personal Capital.

10. Are there any specific books, blogs or podcasts on personal finance that you’d recommend to others?

My favorite sources are Mad Fientist, J. Money, and Paula Pant at Afford Anything. I will be forever thankful for all the content they put out for free.

Although now that I am more active through Twitter I get to read just wonderful articles from hundreds of bloggers and it’s truly inspiring. Some ideas resonate with me more than others but, here is the thing, my strategy might not work for everybody but there may be something that might help you or that you can tweak to fit your needs. That’s what we have to keep in mind. So I read everybody and take what I can.

Everybody has been super helpful and nice to me.

11. What money advice do you have for new immigrants who arrive in the US?

I would say don’t forget where you came from and the obstacles you have overcome. Use that drive to push yourself and snatch the many opportunities still available in this country. Don’t get blinded with consumerism. Define your priorities and find out what’s important to you. How does happiness look like to you? Don’t settle for less. Don’t be afraid to try new ideas and fail with a calculated risk. It’s better to try than doing nothing and let time slip away.

12. How can people connect with you on social media?

You can visit me at smallbudgetretirement.com or find me in Twitter @smallbudgetret1


Immigrant Finances - Interview Series
Immigrant Finances – Interview Series

Are you a first-generation immigrant in the US? If yes, would you like to be part of this interview series? This series will focus on personal finance for first-generation immigrants and the unique challenges they face.

You can check out my page Immigrant Finances – Interview Series for more details on how to participate in this series.

3 thoughts on “Immigrant Finances #1: Small Budget Retirement”

  1. Interesting stuff, and a truly great personal story! I hope he does well on his journey to FI. It certainly sounds like he’s on the right track!

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