Expat economics

When I first moved here to England, I tended to convert every amount from pounds into dollars. This worked well at the exchange rate that I arrived at (£1 = 1.87US dollars) and generally life was good. My current salary was, when converted into dollars (at 1.87 or even the high of 2.11 last summer) was approximately equivalent or only somewhat less than what my American colleagues were making. Suddenly the pound has crashed without warning, and I am making a fraction of what my US colleagues are making in dollars. Even with (pound) wage increases that were substantial, my income in dollars has dropped by about 5k US from when I started here nearly 2.5 years ago, and as noted I’ve had several wage increases in that time (again in pounds). Thoughts I have about this situation: Starbucks coffee now looks quite cheap. I have no choice but to stay here for the moment as my savings are worth almost nothing in the US. Should I invest in real estate since the economy is so bad, or wait until it appears to have fully tanked? Thank goodness I have no car and a corporate apartment/flat that is not digging into my savings. Maybe a mortgage is a bad idea. What do I do about charges made on my US credit card in the summer for which I have been lazy about submitting reimbursement requests? (I suspect I’m screwed there!) But in the grand scheme of things, this sort of change in the exchange rate really does make a person wonder about the fundamental meaning of money. I don’t understand how it works, and the dramatic change in exchange rate in such a short time just confuses me. Talk about worries one never has when living and working in a single country (and likely that of one’s birth)… exchange rates only became part of my regular thinking on moving here in better times. Now I don’t know what to do, nor do I understand why Britain seems to be doing worse than the rest of the world when its general problems have been based on the US!!!

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14 responses to “Expat economics

  1. On the bright side, what a great time for your American friends and relatives to visit…

  2. Since I live here, I have a disadvantage no matter what the exchange rate is. When it’s low–as it is now–going to the States is an expensive proposition, but when it’s high, my US accounts are suddenly worth fewer UK pounds. I just wish it would stabilize a bit.

  3. I know how you feel. Exchange rates are a thing of mystery and I suspect that they stay that way because they just don’t affect that many people, at least not on a day to day basis. No one really thinks about them and I certainly didn’t until I got up and moved to Spain. Suddenly everything my family had saved up just wasn’t worth that much any more.

    If I were you, I would stay local for now. Keep up your savings and when you want to go on vacation and such, explore the rest of the UK as opposed to other countries (unless said countries also use Pounds, like Gibraltar, for example). Don’t think so much about Pounds vs Dollars, just stick with your Pounds and the psychological effect will be lessened a bit. And whatever you do, don’t even consider retiring in the Eurozone any time soon!

  4. As a person who has done the move from the UK to the US at a great time in the economy where I sold my house for a lot of money bought something in the US that “should” have made me very happy. I now find that I am going into foreclosure even though I put every penny I made into paying down my mortgage and am moving to New Zealand with no penny to my name. Its all about how your life has changed and the experiences you have taken along the way. Always wondering “what if” and comparing something you have to something it might be only makes you jealous.
    Looking at what you have right now – a fantastic position in a top schoool, a life altering experience of a new culture and a true view of how other people live, the ability to live closer to countries you can and do visit easily.
    Suddenly the economy and its turbulent ways seem insignificant when compared to the richness of the memories and experiences created.
    Stop thinking about it and live your life to the full 🙂

  5. It’s only money, and likely the exchange rate will change in a few months in your favor.

  6. Hi – I have your questions but nowhere to send them. You can reach me through my proper web site (www.rulesbritannia.com).

  7. Oh I understand and like you have always converted as I spent. I recently came in to some money in the UK, right about the time the pound crashed!! So instead of paying off my car over here, we have left it in savings there and are hoping for a return to the good days! However, this really might not be a bad time to buy a reduced home over there.

  8. > Britain seems to be doing worse than the rest of the world

    Really? What figures are you using for the comparison?

  9. Howard, I said “seems” which clearly demonstrates it is my impression, which I formed without ‘figures’.

  10. > Howard, I said “seems” which clearly demonstrates it is my impression, which I formed without ‘figures’

    Okay, that seems fair!

    In your scientific work, do you publish many results on a whim? On caprice? Without data to support your conclusions?

  11. Howard, are you attacking my scientific credibility based on a blog about my experiences living in a foreign country? Seems strange. Blogging is not scientific publication. This blog is not peer reviewed nor is it edited. Those safeguards although imperfect generally protect the integrity of the vast body of technical literature. This web diary, however, is my hobby, and I write about my opinions and impressions. If you don’t like it, don’t read it.

  12. > Howard, are you attacking my scientific credibility based on a blog about my experiences living in a foreign country?

    No.

    I am asking what standards of reasoning you bring to your everyday thought and blogging. If these are less rigorous than the evidence-based standards of scientific investigation, why is this?

    > Blogging is not scientific publication.

    True.

    But I believe that every opinion one expresses (even in a blog, or perhaps *especially* in a blog) should be founded upon the best evidence available: one should strive to be not illogical, inconsistent, careless, lazy in the collection of evidence, narrow-minded, blinkered … oh, and 101 other things that have blighted human development since language and reasoning began.

    I do not necessarily accuse you of any of these things, but from time to time you have said things that do not ring true to me: then I have questioned you, and when possible presented counter-arguments and contrary evidence.

    Though this appears to have angered you often — guessing from the tone of your answers to some of my comments — nevertheless you have always published them, and I honour you for it.

    Everyone has a right to her/his opinion, but the value of the opinion is tested by questioning and examination, and the validity of any opinion is judged by those observing the debate. This is the ‘western liberal’ way.

    Now, after this excursus, perhaps back to my question? What gives you the impression that “Britain seems to be doing worse than the rest of the world”? I am dying to know to know what exactly you mean by it, and what evidence you have for it!

  13. Hello my fellow expat, notfromaroundhere!

    Can I say, toward no one in particular, that all us expats should band together and ignore any individuals that ‘stir’?

    This is directed at no one in particular…

    Any relation between this comment and anyone you might know of is strictly coincidental…

    I swear 😉

  14. Howard,
    To answer the question you pose NFAH: “What gives you the impression that “Britain seems to be doing worse than the rest of the world”?

    The IMF seems to think the UK will be hit worst – though this is disputed by the UK government. There is also the collapse in the value of the pound against the euro,dollar and yen.

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