Hi, Helaine: My partner and I are both in our mid-40s. He earns about half what I do. Almost all our monthly income goes toward paying down our debt: There's the mortgage, two newer cars, a $40,000 401(k) loan, a $9,000 student loan and $16,000 in credit card debt. About half his monthly income goes to child support and will for one more year.
Now I've been offered an exciting position with my company, and it includes a transfer to Spain (when the current crisis is over, that is), and it will likely be for five years. The salary is in euros, but of course the debt is in U.S. dollars.
We'd really love to make this move for the European experience. I am considering taking on a five-year personal loan to pay off the student loan and the credit cards. We can break even keeping our home as a rental and sell the cars. My company's Spanish entity won't do 401(k) from my paycheck, so it will be reported to the IRS as an early withdrawal and incur taxes and penalties.
Given all this, I expect we will have very little money left over at the end of the month, until he can find a job and child support ends. Making the move seems like a poor financial decision, but an opportunity that may not come again. What would you do? -- Eager Ex-Pat
Dear Eager Ex-Pat: This is a tough one. I totally get the urge to travel and to take advantage of what might well be a once-in-a-lifetime opportunity. But I need to be honest: A move to Spain sounds like a financial catastrophe waiting to happen, and sooner rather than later.
You've no guarantee your partner will be able to find another job. You will run up a huge tax bill unless you take on a personal loan large enough to pay down the 401(k). And, to be even more honest, your financial house is not in order, and it sounds like that's been true for quite some time.
There's a joke about traveling when your life isn't going well: same troubles, different location. I'd make an addendum for you: worse troubles, different location. It sounds to me like you can't afford to take this opportunity.
I suggest you ask if you can revisit the offer in a year and use that time to both see how the world economy shakes out and attempt to get your own financial affairs in order. I'd recommend sitting down with a debt counselor from a nonprofit service who can review your bills and your income, and make suggestions on how to budget to pay off the debt.
And if this is a one-time offer from your employer, I'd suggest adding one more task to your agenda while paying down the debt: brainstorming other job options abroad -- for when you can afford to do it, that is.
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