As part of our Financial independence, temporary retirement dream, our family of five moved to Norway in July of 2019. Now, Norway has a lot of things to love: fjords, mountains, great people, excellent social safety net, playgrounds to die for, and a ton of other things. But the cost of living is NOT one of them. We recently splurged on two packages of boneless, skinless chicken breasts that were on sale. Total cost for just over 3 lb of chicken? Almost $20. Did I mention they were on sale? So planning to move to Norway with kids with almost no guaranteed income was a huge challenge. But almost a year into our 2 year odyssey, we are doing great. While no one can predict the future, it seems as if our financial planning has worked better than we could have imagined, even with the unplanned chaos of a global pandemic.
If you’d like take a peak at how a normal family plans to move to one of the most expensive countries in the world with no income, read on.
Saving money – a starting point
When we decided to move to Norway, I was building my micro-business, World of Wonders. We were living 100% on my husband’s salary because all of my income went back into the business. By chance, I got a job offer from the school where I had previously taught. #pikeproud Although I loved my business, it was just starting out and there was no way that I would be able to make the amount of money we would need to save. Plus, in a stroke of luck, they were offering me my dream job – teaching English as a new language to newcomers.
So step one was increasing our income. Now just earning more isn’t helpful if you don’t keep any of that money. So even though our income increased by about 40%, our lifestyle didn’t. The same day I filled out my paperwork at the corporation, I went to a new bank and started a savings account. My check was direct deposited and never even hit the accounts we paid bills from.
That means we were able to ENSURE that we were saving money. Using any of the money from my salary had to be a conscious choice. Because all of that money was at a different bank, there was no way to lose track or make a mistake and spend more that my husband’s salary. To get to that money, we had to KNOW we were dipping into it.
(Over-) Estimating costs
Once we had some savings going on, we needed to have an idea of how much money we needed to save. I used a lot of resources to estimate food, housing, and transportation costs. But the most important thing here was to OVER estimate them. In other words, I always added about 30% to what our thought our costs would be. I planned $2000 per month for housing, $1500 for food, $700 for utilities. Those were our upper limits. I knew if we stayed below those numbers we would be OK. If we went above in any category, we had to make it up elsewhere.
Another variable we had to consider was the exchange rate. When I was planning, the exchange rate hovered around 8.5 Norwegian Kroner (NOK) to the dollar. I planned everything on the basis of 8 NOK to the dollar, giving us another bit of cushion.
Savings, meet costs. Costs, meet savings.
So now, it was time to get those two numbers to meet up. $6000 per month seemed to be a budget that would cover our expenses if we lived carefully. Although we didn’t have jobs, I had a little income, about $1500/mo. after taxes, from my rental properties That meant that we needed to save $4500 for each month we were living there. But once again, I added a bit more cushion and decided to go with $5000 as a goal. As anyone with a calculator can tell you, that meant that to live in Norway for 1 year, we would need $60,000. For two years, we would need $120,000.
Note: That did not include the expenses to actually move to Norway, which we planned to cover in large part from the sale of our cars (which we were not planning to replace in Norway) and other household goods that would be downsized.
After the first year of saving, we were woefully short, ending with about $70,000 in the bank. (We had started with about $30,000 from an emergency fund and my take home pay was about $40,000 for the year.) Had we gotten accepted into a Masters Degree program, we would have moved to Norway, but I would have hyperventilated a lot over money. As it turned out, we did not get accepted, so our plans were pushed back a year and we had another year to save.
During the second year, we discovered that my husband could put money in a 457 account. (If you want more info on what that is and how it could literally change your life if you work in the public sector, check out my blog post here.) That allowed us to put some money away pre-tax instead of post tax and sped our savings up a bit. I was also able to save more of my income from the investment real estate.
By the last pay check of my job, we had approximately $120,000. We knew that barring massively bad luck, we would be ok.
What we did NOT cut
We were super fortunate to be in a position where we didn’t have to cut to the bone in order to make this happen. Although we cut a LOT of stuff that a lot of middle class families don’t think twice about spending money on (kids birthday parties were simple, we drove 10+ year old cars, didn’t go out to the movies, bought clothes second hand), we did keep a couple of splurges that meant a lot to us.
The first splurge we kept was our cleaning service. First of all, it was way under market price and we had had them for several years. Second, my husband and I both had other priorities, and it was not the time we needed to put the effort into training the kids to do a better job. Robb was focused on traveling more at work to create and sustain a network that would hopefully help him re-enter the job market after 2 years out.
I am a cooker, not a cleaner. I spend a ton of time making homemade meals, freezer meals, and cheap snacks for the kids. I didn’t do the numbers, but I felt like if I tried to do the cleaning, we would eat out more and we wouldn’t end up saving much money in the end.
The second splurge was a family trip to Florida. We did this for many reasons. First, we had never taken a big trip with my parents and we didn’t know when we might have a chance to do so again. Secondly, my parents offered to cover a large portion of the cost, so our outlay was minimal. Third, our family hadn’t been to Florida in almost 10 years, and our two youngest had never been to Disney OR seen the ocean. We wanted my parents to be able to have those memories with the kids, especially since we were moving their only non-adult grandkids to a different continent.
Putting our money where our plans are
Even with a budget of $5000 per month, we knew we would have to watch our expenses carefully in Norway, especially if we wanted to splurge on family trips. And -duh – we were living in Europe, so of course we wanted family trips. Part of the reason we were moving was to create memories as a family.
Our first piece of luck came in the fact that we had planned for the possibility of Oslo prices (which are unbelieveably high). But we actually ended up going to Stavanger, where prices are currently cheaper. So our 16,000 NOK budget ($2000) for housing turned out to be only 14,000. YAY! Win. We could have chosen a bigger place, but the basement apartment where we live is clean and safe, with big windows and a ton of playgrounds in the neighbourhood.
The next piece of luck for us, is the fact that the exchange rate was actually a lot better than we planned for. We figured everything at 8 NoK per dollar just to be safe, but by the time we were over here for a few months, we were getting 9.5 NOK to the dollar. That means that everything we bought was about 15-20% cheaper than we had planned. Again, a little bit more room in the budget. Our rent went down to less than $1500 for every month we paid at that rate, saving us $500 from our budgeted amount.
But the big, huge, magnificent bit of luck was the fact that I actually found a part-time teaching job. In September, a local international school posted a job for a teacher of English language and literature. It seemed perfect for me because it was 70%. In other words, I would have 1 ½ days a week off and teach 3 ½ days each week. At Christmas, they asked me to work an extra half day, so I’m at 80%. My take-home pay turned out to be about 28,000 NOK a month, enough to cover our rent, food and a little extra.
What we didn’t account for
Less money for our stuff
There were several places where our planning missed things. First of all, we planned on earning enough from the sale of a lot of our furniture to pay for our plane tickets over, as well as the cost of a shipping container for the furniture we planned to take. Unfortunately, we were so busy just clearing things out, that we didn’t have time to list things online. We ended up giving away almost everything, except our car.
Again, our car didn’t bring what it was worth. I had planned to sell one car about a month before we left, and rely on one car for the last month. However, things were so hectic we really needed both cars until the very last minute. That meant that 48 hours before we flew out, we were sitting in a car dealership signing the papers to sell our car. I thought we could get at least 8K out of it if we sold it ourselves, but there just wasn’t time. We ended up getting less than 5K.
Cost of carrying the house
In my perfect dream scenario, we would have had our house on the market by the beginning of June. In reality, we had to hire someone to clear out the last of the furnishings AFTER we left. And we didn’t have time to do the little things that needed to be done to get it ready for the market. We ended up spending about $6K for those things. We also had to pay for ongoing care, such as lawn care, after we moved. We paid more than we normally would have because we found a local handyman who was awesome and we really trusted him. His prices were a bit above market, but the security of knowing that he would do an outstanding job and let us know if there were any little things that needed to be taken care of was 100% worth it.
Luckily, it was only about 3 months before our house sold, but that could have been a huge drain on our reserves if it had been on the market longer. (FYI – the money we made from the sale of our house is not included in our living expenses. That is set aside for when we decide to purchase another house. All of the living expense calculations assume that we will NOT use that money for day to day expenses.)
Other ‘at home’ expenses.
The little things we forgot that we would still have to pay for from the US. Life insurance, a cell phone plan so we could call our families, a few online subscriptions and donations (Doctors without Borders and such). It adds up to about $400 a month, which is manageable for us, but could put us in trouble if we hadn’t put so much leeway in our budget.
The big picture
Overall, we feel really good about the state of our finances heading into the 2nd year. I am not a detail-oriented person, so I don’t do a huge by-the-penny budget. But I would estimate that my job covers about 75% of our living expenses.
We are still frugal. For the first 4-5 months, we didn’t eat out at all. We’ve loosened up a bit and splurge a couple of times a month on take-out Chinese food. We eat less meat, and our entertainment is walking to the beach.
We also don’t have a car. I use public transportation to get to work, and my husband bikes to the university. It does make life a lot harder at times, but when we ran the numbers, we just didn’t feel like it was a good idea. Consequently, transportation costs run under $150/month instead of probably $1500/month if we had a car.
There is one other big, BIG thing we did to save money. We sold our house in the US. This was a heartbreak for my husband, who literally saved it from eventual decay. We had to make some sacrifices, and that was one of them. As we mentioned above, it was pretty expensive to keep it up, and even if we could have rented it, we would have had the worry of making sure things were in running order. That’s much harder from another continent.
I never thought that I was financially independent – even temporarily – until a co-worker (also interested in FIRE) commented “Wow! You’re really doing it. Financial Independence, retire early. Moving to Norway. Congrats.”
I paused for a minute, stunned, and then realized, “Yeah. We are.” Maybe not forever, but for at least a couple of years. And we are doing it in one of the most expensive places in the world.
So if you are wondering if it could work for you, I think in most cases the answer is yes. We earned good salaries, but not huge ones. We were out of debt and lived below our means. But most importantly, we chose to believe that it could be done, and spent our time working toward making it happen instead of thinking it never would. I believe that if you are out of debt and have a healthy savings, it can be well within reach if you are willing to do the research and then plan and save accordingly.
I am a personal finance nerd. If you have been reading this blog for any length of time at all, you probably know that. But I realized recently that I haven’t really explained much about multiple streams of income and why I am totally committed to this idea.
What does multiple streams of income even mean?
Multiple streams of income became kind of a buzz word during the 1990s when Robert Allen published a series of books on different angles of this concept. The basic idea is that people who are wealthy often don’t rely on a single income source. They might. For example, a family in which there is one high income-earning spouse who brings home income and the other spouse does not contribute to income earning at all. However, in order to TRULY not have more than one stream of income, they would have to have no investments in dividend earning stocks, no income real estate, absolutely no other sources of income. That is actually pretty rare.
On the other hand, a family that had 2 income sources would be a family in which both spouses earned income, OR one spouse earned income AND they had some other source of income, like an apartment they rented out, or a bedroom they used for AirBNB.
It has been over 15 years now since I have truly had only one source of income, and it’s pretty clear I’ll never go back.
Why I love multiple streams of income.
In two words: freedom and security. I know those are two words that are often used as opposites, but if you have multiple streams of income (and you have chosen them well), you get them both.
First, multiple income streams can provide security that no single income source can. You’ve heard the old saying about putting all your eggs in one basket? Well, that’s what you are doing if you have only one income source. Unfortunately, if that one source goes away, you have no income.
A lot of people who thought that their jobs were incredibly secure before the Corona Virus pandemic have lost their income because their job can’t be done without face-to-face contact and it is not considered ‘essential.’ While it is true that a lot of people’s side hustles have taken a huge hit, as well, having multiple sources of income means that the chances that you will still receive SOME income are greatly increased. And the more sources of income you have, the more likely that one of them will not only survive, but THRIVE during downturns.
So, security. Big, hairy, wonderful reason #1.
Freedom
Who doesn’t dream of freedom? Hopping from Greek isle to Greek isle sipping – well – whatever wonderful things they sip on Greek isles?
And if that is REALLY what you want, then absolutely, go for it! I’m cheering you on!
But freedom comes in many different flavors. Even an increase of $10K a year can give you so many more options. Options of where to live, where to eat, where to vacation. So yes, definitely short term, it gives you more freedom to have more income, and that is a great thing.
But it can also give you more freedom long-term, as well. My side hustles over the years (paired with other financially responsible decisions) put me in a position to grab my own personal dream when it came along. I’m writing this from Norway, where I now live with my family and teach part-time at an International school. In a couple of minutes, my train will run along the fjord, and I’ll be able to see the mountains on the other side of the sparkling water. Yup. To borrow from McDonalds, I’m LOVIN’ it!
But whether your long term dream involves Greek isles or Norwegian fjords, or just staying home with your own kiddos for a few years, multiple streams of income really increase the chances of you making those dreams a reality.
BUT, you must remember this.
So I’ve painted a pretty rosy picture of this multiple streams thing. And, that’s not hype. I totally believe that the more solid income streams you have, the more freedom and security you will built into your life. But there is a catch.
Some income streams actually LIMIT your freedom and security if you don’t use them well.
When I started my language teaching business, I forgot this rule. I saw an opening in the market because I knew that American parents wanted their preschool kids to learn Spanish. So I focused my energy there. My business was growing. But just about the time it started to really take off, my husband and I started seriously considering an overseas move. Since my business was location-dependent, I had to make a choice. And since I’ve already told you I’m writing this from Norway, I’ll bet you can figure out what the choice was.
As you think about multiple streams of income and how they can play a part in your life plan, remember: You’ve go this.
“Financial freedom” (also called financial independence) and “teacher” aren’t words that most people associate together. Not trying to brag on us here or anything, but “overworked” and “underpaid” are often more the go-to images of an educator than “working because she wants to”. Financial freedom for teachers is just not a trending phrase, despite the desperation of many teachers to get out of the classroom, either temporarily or long-term.
And yet, in some really important ways teachers are in a really, really good position to gain financial independence. So don’t let people tell you it’s impossible. There are more teachers out there who have achieved financial freedom than you may believe, and I’ll be highlighting some of them in a future post. Right now, here are some of the reasons why teachers can indeed achieve financial freedom.
NOTE: this post doesn’t deal with the insurance issue. I’m still researching how insurance fits into the picture. If anyone has decent insurance options, please feel free to comment below. I would love to hear them.
What is “Financial Freedom for Teachers”?
Before we get into the reasons, though, let’s make sure we are all on the same page. What is financial freedom for teachers? Almost every personal finance blogger will have a slightly different definition, so I’m going to just go with mine. When I talk about ‘financial freedom for teachers’, I mean the ability to know that you can teach or NOT teach without money being the deciding factor. So I’m not actually talking about you and your spouse being able to move to Tahiti (although that could be YOUR definition of financial freedom). I’m talking about either temporarily or permanently deciding to go without your teaching income and doing so knowing that the bills will still get paid.
What could cause you to walk away from a job you love? Here are a few things that I can think of.
You have 2 kids under age 3, a husband who travels for work and something’s got to give. You just can’t do a good job of being a mom and a teacher both at this exact moment. (This one happened to me.)
You just had a baby and have only 4 weeks of sick leave saved, so at the end of that time, you have to either go back to teaching or go without income. (This one happened to me.)
A family member becomes seriously ill and needs more help than you can give while teaching full time.
There is a job change that makes teaching miserable.
You are put in a position where standing up for your students or for what is right will put your job at risk. (This one happened to me. Do you see a pattern emerging here?)
You have the chance to move to your dream location and have the adventure of a lifetime, but you don’t know if you will be able to find a teaching job there. (Ahem, you guessed it. This one happened to me.)
And the current winner: Your state and/or district are forcing teachers to return to on-site classes during a global pandemic and it is JUST. NOT. SAFE.
All of these examples have a real impact on your family life and your mental health. And while you might know that you love teaching and you want to return to it someday (Yep. This happened to me!) – or not – financial freedom is the ability to leave the classroom if you need to.
So, with that, here are the many reasons teachers are actually in a great position to achieve that.
Low salary
Yep, you read that right. One of the reasons that teachers CAN achieve financial freedom is that they have a low salary. That sounds TOTALLY counter-intuitive. I imagine you’re thinking, “So you are telling me that it is EASIER to become financially free with a low salary than a big one? Well, Jill, we need to review basic math and basic logic. Which one would you like to start with?”
OK, you have a valid point, but low salary also means teachers don’t have a ton of income to replace. If a doctor wants to quit work, she often has to replace $150K+ or more per year. But the bonus of the low average salary we teachers earn is that many teachers would have to replace only a third of that – $50K or less to replace their income.
(Not) Keeping up with the Jones
That’s not news to any of us, but another aspect of that might be one that you haven’t thought of. Because pretty much everybody knows that teachers aren’t raking it in, they don’t have the same pressure to keep up with those crazy Joneses that people in other professions may.
Let’s go back to that doctor/teacher comparison, shall we? Let’s say a teacher chooses to drive a modest used Toyota Camry. That’s pretty much standard for teachers, so chances are no one would even notice. On the other had, let’s say our doctor – a surgeon – drove the same car. Don’t you think they might feel out of place parking next to their colleagues’ BMWs, Audis, and Saabs? Now, I know I am relying on stereotypes here. There are teachers who drive BMWs and doctors who drive Camrys. But I would say that isn’t the norm.
And cars are only one aspect of it. What about private school? Ski vacations? Family trips to Europe? Those are just part of what most people assume a high-income earner will do. Teachers, while they may choose some of these more expensive options, aren’t necessarily assumed to be tightwads if they opt for cheaper alternatives, either.
Think I’m making this up? No. In The Millionaire Next Door Thomas Stanley and William Danko, who spent years researching millionaires, came to the same conclusion. If you haven’t read it, you’ve got to. It’s one of the best personal finance books I’ve ever read.
Summers
Final thought: summers. I know, you are sick of people saying, “Why do you complain about what teachers make? You get summers off!” But those summers , besides being an essential part of recharging our batteries so we can go back at it the next year, are a valuable resource to begin closing the gap between your income and your expenses.
Say you decide to start a side hustle during the summer. Something you actually enjoy doing, but can also get paid for. And you spend about 20 hours a week on this side job for about 6 weeks of the summer for a total of 120 hours. (For info on side hustles that can earn you some serious money, check out my posts on VIPKid, pet sitting, indexing or other side jobs that bring in great money.) You start up slowly because it takes a while to figure things out, but that first summer, you earn about $2000 dollars, which is absolutely do-able. That works out to between $15 & $20/hour. Not great, but not so bad, either.
Summer numbers – had me a blast
Now that you’ve got the hang of it, you decide you are going to continue it during the school year, but only about 5 hours a week. After all, you chose something you actually enjoy doing, so why not? But now you are better at it, so you earn an average of $20/hr. That’s $100/week, or an extra $400 a month. Let’s say you skip back-to-school month, and two other months during the ten-months of the school year. That’s still an extra $2800 at the end of the school year. You have earned $4800, and you are now almost $5000/year closer to being able to quit teaching.
And if you have used that money to pay off some debt, your monthly expenses might even be going down as your income is going up. You can start to see how this whole thing could actually work. It won’t be easy, but it could definitely happen.
Bottom line is this: if you are determined to find reasons you can’t have financial freedom, you’re right. On the other hand, if you are determined to find reasons you CAN, you’re right, as well. To a large extent, what you believe is possible will actually influence what is possible.
Even if you honestly believe that leaving teaching is impossible for you in your current situation, there are loads of things you can do to make it a viable option in the not-too-distant future: investing in your retirement funds, paying down credit card debt, buying used cars when an upgrade is necessary, and doing more cooking at home, shopping at nice consignment stores instead of. Little things mean a lot, and even more importantly, they put you on a path you want to follow long-term.
