The Money Curse

You know, it didn't seem like we spent a lot of money in Argentina, but apparently I was the only thing keeping their economy going. In the picture, the blue arrow points to my departure date. Since leaving the exchange rate has gone from ~20 pesos to the US dollar, to at-time-of-writing 39, largely due to devaluation of their currency (rather than the dollar increasing in value). In retrospect, we did inject a lot of money into the local economy in the form of empanada and medialuna purchases...

This is actually just part of a long chain of me getting "screwed over" when it comes to money in this job. (I use "screwed over" loosely, because realistically I am paid exceedingly well.) When I went to India, the hardship differential pay decreased from 20% to 15% about 3 months before I arrived. It increased back to 20% the week I left. No worries, I was arriving in Buenos Aires with a hefty 42% Cost of Living Adjustment (COLA)... which dropped to 30% the week I arrived. Prices went up steadily for 2 years, with a incomparably small change in exchange rate... just waiting for me to leave, and now BOOM! All my old coworkers are living the exchange high-life. 

Comically, when I started writing this Post, I was going to include coming to Iceland... where (despite being one of the most expensive places in the world) the COLA is a ridiculously low (35% when I arrived, just barely more than Argentina!) Since we arrived, it's actually decreased three times and is now down to 20%... however, that's because (finally) the exchange rate is helping us out! When I bid on Iceland, the exchange rate was 108 ISK per 1 USD. When we arrived it was down to 103. However, in the last month the krona has tanked, leaving us with a current 124 ISK per 1 USD. That's an effective 20% increase in our spending power since arriving, hard to argue with that! Maybe the curse is broken! 

Post Allowance

I've spoken before about the various ways we get paid while overseas in the Foreign Service. Today I'm going to focus on the Post Allowance portion of our pay. Here's a quote of what it's meant to cover.

"Post allowance is a cost-of-living allowance granted to full-time employees officially stationed at a post in a foreign area where the cost of living, exclusive of quarters costs, is substantially higher than in Washington, D.C."

When we arrived in Chennai, we were receiving a Post Allowance of 10% (which is a made-up number based on some weird charts the government publishes). HOWEVER, conveniently, the percents for my current pay and family size equate approximately to US dollars per day. So, when we arrive in Chennai we were receiving $10 per day. Now we're not ones to use name brand products and don't have any brand loyalty. In Chennai, the only expensive items were American branded versions of things, so we were, in essence, making out like bandits. Of course as the rupee inflated (or the dollar deflated) our post allowance eventually disappeared.

Fast forward two years and we arrive in Buenos Aires with a 42% Post Allowance. We kind of assumed it would be the same situation. Of course, 6 days after arriving the allowance was lowered to 30%, but hey, I can live with that. It stinks, but it's probably fair. However, I now understand why we get this allowance. Sure, we've noticed our food budget has quadrupled, but we expected that moving from India to Argentina. What really stunned us was when we were at a baby store, looking at strollers, when my son picked up a toy, and we noticed the price. I don't have a picture of the specific toy he picked up, but it was a plastic airplane that would run for $15 in the US. It was ARS750 or $53. That's when we started noticing that imported products in Argentina are insanely more expensive than in the US. That's why we hadn't really noticed with food items.

Long story short, we're very thankful for our Post Allowance (as well as our access to Amazon and other US mail). I don't envy people who are here with companies that don't provide similar allowances, as some purchases could get very expensive!

The toys shown are ARS 1500, 1000 and 855 ($106, $71, and $60), respectively!

PS: The irony that my last post got a 5% raise (increased hardship differential) my last pay period and my new post got a 12% PA reduction my first pay period, is not lost on me!

The Trials and Tribulations of a Pet Owner

This isn't my cat, but I think mine would hate this just as much.

Just a quick reminder, if you've been thinking about getting a pet while in the Foreign Service. Go ahead and don't do that. We love our cat, but... she won't be replaced when she eventually passes. Transferring our cat between posts has been a challenge.

Vet in Chennai: $40
Quarantine office expediter in Chennai: $200
Pet in cabin fee for flight to US: $150
Vet in US for vaccine + health certificate (two visits): $150
Pet in cabin fee for flight to BA: $125

That's $665 to move the pet, which isn't so bad. The real pain came from the side consequences.

Since I was travelling with the cat, we didn't want to take Consultations at the beginning or end of home leave (cat-hotel-fees are often vary expensive and would be a hassle), so we agreed to cost construct our flights to take my consultation days in the middle of home leave. What we didn't realize (at the time) was that choise locked us in to flying to post from DC (or cost-constructing our flight based on that value). We've since learned that it costs half as much for the government to fly us from DC to Buenos Aires as it does from our home leave location in Florida. Cost construct flights would have cost us almost $550 extra per person, on top of the $55 fee for doing so. Looking at $1700 to split the fare from Florida to Buenos Aires... we decided to book our own flights. I mean heck, for $2000 we could fly direct on Areolineas Argentinas (which we couldn't do using government tickets, due to the Fly America Act). It sucks to shell out for our own flights, but maybe in some twisted way it'd be worth it to cut our flight time from 15 hours to 9.5. Or so we thought. Unfortunately, that airline (and almost every airline) doesn't allow pets in cabin to travel to Argentina. Cargo travel is notoriously bad for animals, so we're back to looking at 15 hour connecting flights. The only saving grace was that we were able to use credit card points to book our flights (90,000 Chase Sapphire points, transferred to United + $250 for taxes). That's slightly cheaper ($1150 dollar value, since the Sapphire points could have been redeemed for one cent each of cash).

Running total: $1800

Now, some of that cost is obviously due to my mistake and lack of understanding how my flights would work if I split my home leave... Still, it never would have come up, if I hadn't had the cat, because we would have scheduled our consultations at the end of our home leave, thus negating the problem all together. As I said, we love our cat... and although transferring and home leave have been stressful for all of us, she's the only one that has no understanding of what's happening or why. (Not that our three year old fully grasps the concept either.)

Great (Pay) Expectations

When I joined the Foreign Service, I expected to take a fairly substantial pay cut. I was making 6 figures at my last job and figured I would start as a low FS-5. That being said, I've been (pleasantly) surprised by my actual compensation. In my initial guesses, before getting hired, I really didn't understand how overseas pay was calculated. Here's a breakdown of my current pay modifiers:

All Foreign Service Officers, while overseas, get "Overseas Comparability Pay" (OCP) of 16.14%. In Chennai, I receive 15% "Hardship Differential." In addition, I get a 5-10% "Cost of Living Adjustment" (based on some wonky math, so it ends up being 4-8%).

This changes my original belief of making $43,378-$63,702 to $60,369-$91,881. That's a pretty substantial difference. In addition, I was also fortunate to qualify for a much higher step than I'd expected. Throw in free housing and utilities,  drastically lower expenses ($5/month for a cell phone plan(!), $20/month for high speed internet, et cetera) and things are much better than I'd expected.

Other's mileage may differ, certainly many countries have lower hardship differentials (or none) and are much more expensive than the US (Hi, London!). That being said, we've actually been saving more in Chennai than we ever did living in the DC/Baltimore corridor, despite the lower gross pay. I've heard more senior officers say that you save money while overseas to be able to afford going back to DC (where you don't get free housing, differential, or COLA). I could definitely believe that.

Of course there are a lot of "quality of life" differences as well, both good and bad, but I'll save those, and how my benefits have changed, for another post. (Hopefully? Soon).

Note: Why oh why did they discontinue these AMAZING one rupee coins? Eeeeeeeeeey!

Closing Day

Who has two thumbs and no longer owns a house? THIS GUY. It took around 6 months, but we finally closed on our old house in Maryland. It was a good house, and we would have been alright continuing to live there, but there was really no sense in keeping it once we moved overseas (it wasn't even close enough to DC for commuting... as I learned in the Spring). 

Bye, bye "Home" category in Mint.

One of the downsides to the Foreign Service, is that it's very difficult to plan ahead. I mean, you rarely know where you'll be living in a few years, so you're always in a state of flux. This starts pretty much from day one, since you don't know when or even if you're going to get the job. This can lead to some unfortunate housing situations, as happened with us. We ended up selling our house at a substantial loss. The market hasn't been great and rental values aren't really amazing (not to mention the incredible unreliability and headache involved with having renters), so we were pretty much forced to sell, when the market was flooded with houses. 

We're not the only ones; I know of people who have sold houses they've lived in for around 18 months or even worse, who literally got their offer letter for the Foreign Service on closing day for buying a new house. Of course the nice side of this, is that we can look forward to not having to pay for housing in the foreseeable future.

 

Indian Bank Scheme: Pradhan Mantri Jan Dhan Yojana

The first we heard of Prime Minister Modi's new "banking scheme" was when our "all 'rounder" Harriet, asked for most of a day off to go to the bank an open an account. Bank accounts are something we take for granted in the US, since the minimum balances are so low that pretty much everyone (that wants one, at least) has one. This isn't the case in India, where minimum balances and monthly fees make bank accounts unobtainable for huge portions of the population. It's estimated that less than two thirds of Indian households have access to banking services. Harriet is a prime example; she makes much more working for us (probably twice) than she would performing a similar job for a local family, and she still couldn't (or wouldn't) afford a bank account. That's one of the reasons gold is so popular here, it's a way for people to store wealth.

Anyway, getting back on topic, the Prime Minister announced a plan to allow people to open bank accounts with zero minimum balance and much looser identification requirements. To encourage people to do so, he sweetened the pot with free accident insurance and life insurance. The new bank accounts will also allow for microloans after a set period of good standing. The goal of this scheme is to break the current dependence on usurers and ponzi schemes for loans and investments (respectively). It also may help reduce burgulary rates, by giving people an alternative to storing cash (or pawnable jewelry) in their houses.

The government has a lofty goal of 7.5 crore (or 75 million) new bank accounts by the end of the year. Numbers like that always put into perspective the amount of people in India... that's more than 20% of the population of the United States. Harriet left our house yesterday in time to get to the bank before it opened. Even so, she ended up waiting at the bank for 6 and a half hours to register for her account.

The Hindu Business Line Article
ZeeNews Article
Reuters Article
BBC Article

I can't help but notice that the American news companies either didn't notice, or didn't care to write about this topic. (And the comments on BBC and Reuters exemplify how most Westerners just have no concept of the impact something like a bank account can have for someone living on a few dollars per day.)