Budgeting for a Massive Life Change – I’m Moving to Amsterdam!

I have a big announcement to make. 

I’m moving. Again.

To Amsterdam.

If you’ve been following the blog, this might come as a shock, as I just finished a coast-to-coast move. Although I thought I would be sticking around in Santa Barbara for the next four years, things changed. Life demanded a pivot, so I decided to do something a little wild and move to a new country.

Why I’m Moving Abroad

I don’t know exactly how to explain what happened in the last few months. Readers might remember that last year I got engaged to the man I thought I’d be spending the rest of my life with. Then one day everything turned (dramatically, unexpectedly) on its head. The story is new to me, but it’s a tale as old as time. I won’t go into details (not yet) as I’m still processing everything that happened. 

Suffice it to say I feel like a magician’s assistant during a magic trick gone wrong— expecting magic, having practiced the trick a thousand times, but in the end sawed right through. I imagine it’s a surprise to the audience, yet no one is more shocked than me, bleeding out on the table.

Well that got dark…

Alright, I indulged a little there with the macabre, but let’s move on. Here’s the good news: with really really terrible life events, there is often an opportunity for growth. I wondered, Hey, if I’m not going to be tied to Dr. Ex-boyfriend, what would I do? One answer came to me immediately. In the last two years, I watched two of my best tech friends move to Amsterdam, thinking How cool is that! I would totally do that if Dr. Ex-boyfriend hadn’t signed a contract to work in Santa Barbara! well… there was my answer.

Yet it’s more than just a reactive move. It is an important time to take stock of my life and work. I always knew I wanted to live abroad. I just figured because I was dating someone going through med school, it might take a little longer before it was an option. Though I’ve spent 6 months each living in Spain (semester abroad) and the UK (work assignment), each of those felt temporary. In contrast, Amsterdam will be a bigger move and a step towards the nomadic style of life I’m planning to pursue.

The Pros and Cons of Moving Abroad

Of course, there were a lot of things to consider when it came to moving abroad. First, I decided to pick a few places to focus on for job hunting. I was open to moving to Australia, New Zealand, or Europe. However, having too many options made the task feel much more daunting. I mostly focused my efforts on job hunting in Amsterdam to keep it simple and because I had friends who had been through the process before.

Next, I made a pro-con list. The primary things I considered were pay vs. time off. Tech salaries in Europe are nowhere near as high as in the U.S., so I would be taking a pay cut. We’re talking a big one– about 40%. On the other hand, my new offer includes 25 days of vacation not including bank holidays. Making lists like the one below helped me with my decision to go abroad:

The Big Con

Last year I saved over $100,000. With my new projected costs of living abroad, I will only be able to save about $25,000.  My velocity to FIRE will slow significantly. With my focus this year on self-care, it’s possible that I may end up saving even less.

In fact, I considered using this year as an experiment in saving $0, but I’ll get to how that’s possible later in the post.

The Big Pro

Out of all of the “pros”, I’m looking forward to a culture where work doesn’t reign supreme. There’s something to be said for taking a break from a culture of workaholism and detoxing in a new place.

I definitely feel myself succumbing to “one more year” syndrome, wondering if I should stay in the U.S. and take advantage of my current high salary in my early earning years. However, ultimately I have enough to start building a life I love. As Mary Oliver says, we have only one wild and precious life. When you dream, do you dream of work? I certainly don’t, so I want to start building a life I love now.

Whats your dream job? I do not dream of labor
Cartoon by bestofmathclass

There are lots of good reasons to take this opportunity for growth and move abroad. However, the big pay cut thing did give me pause. I am on the fast track to financial independence, with a salary that helped make me a half-millionaire by the age of 27. If I move abroad, I will almost certainly slow my progress.

Will it be worth it? 

The Impact of CoastFI

What’s really cool is that I have much more flexibility due to my focus on financial independence early in life. I have reached “CoastFI.” This is when you save enough that if you never contributed another penny to your portfolio, due to the market’s growth, you could still retire comfortably at the regular retirement age. 

Coast FI  = FI Target / (1+Expected Growth Rate)^Years Until Retirement

My CoastFI Number is = $1,200,000/(1+0.05)^37 = ~$200,000

With my current savings (~$600k at the time of writing), I’m well past CoastFI, even with a conservative projection of a 5% growth rate. 

If I don’t touch my portfolio— never withdraw from it, but also don’t contribute— it could grow to be $3.6M by the time I am 65. That is much more money than I need, but a very satisfying projection of what it can look like when you save a lot early on. 

Another application of CoastFI is that if I don’t contribute to my portfolio at all, I could reach my FI number of $1.2M at the age of 42. This means I can spend 100% of all of my future paychecks and still be able to retire comfortably in my 40s. If you want to run some of your own numbers, check out this CoastFI calculator.

This opens up some interesting possibilities. For some people, it might mean quitting a stressful job and finding something that covers just enough to pay the bills. You could work at the local Trader Joe’s or become a ‘ski bum’ if that’s your jam. I seriously considered going the ski bum route while deciding what I should do next. Rent an apartment in a little mountain town and balance working from home with hitting the slopes… It was certainly tempting, but Amsterdam won out.

What it means for me is that I can take a pay cut while moving to a foreign country. I decided to stay in a role as a software engineer because moving abroad and changing careers seemed like too much change, at least for now.

Applying for Jobs Abroad

I started sending out feelers for jobs in November and December. Almost all of the companies had the same multi-step process:

Step 1: Talk with a recruiter about the job, role, and see if it’s a good fit.

Step 2: Do a ‘takehome’ project where you build an app. These generally take 6-8 hours depending on the number of features and testing required.

Step 3: Personal interview with the manager of the team and/or the tech leads.

Step 4: Technical interview where you either add functionality to your app, code a solution to a problem from scratch, and/or discuss technical topics in depth. 

Step 5: Meet the rest of the team for personality fit.

I started with my connections who are already working in Amsterdam as expats and sent an application to my friend’s company. I was optimistic about it, even though it was the first job I applied to. I made it to the final round, where they usually would fly me all the way to Amsterdam for an all-day in-person interview (due to COVID, it was remote instead). Unfortunately, I received a rejection after the final stage, so I began sending out more applications and résumés.

I received interest from more companies and began the interview process with two of my top picks. The effort paid off when a couple of weeks later I received offers from both companies. Having options made it easier to negotiate, and after some back-and-forth both companies upped their initial quoted salaries by €10k. After hours and hours of building apps, interviewing and researching, I finally accepted and signed an offer for a cool start-up in Amsterdam. 

COVID-19 Considerations

The Netherlands isn’t letting in anybody outside the EU, but there are certain exceptions. Those with a “highly skilled migrant” visa are still allowed across the border. Thankfully software engineers are considered highly skilled (they clearly haven’t seen my code from the early days) and after a couple of COVID-19 tests, a mandatory quarantine, and lots of paperwork, I will be able to make the move.

Budgeting for a Massive Life Change

Though my salary is quite good for the Netherlands, it’s still a pay cut. In order to make sure I stay on target for financial independence, I’m going to create my first ever budget. That’s right, even as a finance blogger, I have never made a budget. I was frugal enough that my strategy of generally not spending and choosing lower cost options was enough for me. However, budgets are useful when you are trying to make big changes in your financial life, whether trying to save more or figure out if you can afford to take a dream job in a different place.

Expected income, taxes, budget, and savings numbers!

After doing some research, I created a flow diagram of my expected income and expenses. My friend generously sent me her pay stub so I could get an idea of the deductions I could expect. She also gave me a breakdown of her utility bill and other expenses.

Income

According to the Centraal Planbureau (CPB), in 2021 the median gross income for a person working in the Netherlands was €36,500 annually or €2,816 per month. Even though I am taking a pay cut moving from the U.S. to the Netherlands, I still appreciate that my salary is relatively quite high. 

I am considering freelancing on the side for more income, as it would be highly rewarding to start coaching clients who want to get their financial lives together. I would be honored to help people have the same kind of freedom to leave toxic jobs, start their own businesses, or move into their dream house. (If you’re interested in being an early client, please contact me!)

Taxes In The Netherlands

The Netherlands is a socially-conscious country with comparatively high taxes. Some high earners can expect to be taxed all the way up to 50% of their earnings.

Luckily for expats, there is a 30% ruling, where employees with specific skills qualify to have 30% of their gross annual salary free from income tax. This rule will save me ~€900 a month! Though I tried my best to estimate taxes using TheTax.nl., I wouldn’t be surprised if they end up being a bit higher than projected here.

Budget Estimates

I did some research on how much I should expect to spend in each category while living in Amsterdam. My overall estimated monthly spending comes to €2,969 or ~$3,220. This is about double my average spend over the last couple of years. This is partly due to being single, my choice to live alone rather than with roommates, and because I’m planning on spending a little more on myself!

Here’s the flowchart:

Rent

After years of sharing my home with (mostly) delightful roommates, I decided this time I will get a place just for myself.

A map of the Netherlands, including the towns I’ve considered living in like Haarlem, Utrecht, and The Hague.

I have been scrolling through house hunting sites like Funda and Pararius to get an idea of what a one bedroom in the city would be.

It turns out that living in Amsterdam will likely cost more than living in Santa Barbara!

From my estimation, if I want to live alone I can expect to pay between €1,200-€1,700 (at the current exchange rate = $1,300 to $1,800) for a fully furnished one bedroom apartment. This is a big difference than sharing, which would run me €600-€800, or about half. It is also possible to live in nearby towns (like Haarlem and Utrecht) and commute into work, so I’ve been hunting there as well.

Cost of Living & Travel

For other expenses, I used a Cost of Living Calculator for Amsterdam. I used most of their default estimates with some small adjustments. I added therapy, decreased my food budget, and included some extra padding to entertainment in hopes of joining some gyms, clubs, or starting up a new hobby.  

One category that I may end up spending more on (hopefully!) is travel. Fingers crossed that vaccinations roll out swiftly and I will be able to travel as soon as possible. Paris is just a 3.5 hour train ride, and Belgium and Germany are right next door. 

Savings

Whatever is left over, I will save. I did wonder about trying an experiment where I spend my entire salary for the full year. This way, I would be able to calibrate my future expenses to be focused on abundance rather than a set frugal limit. However, the idea is simply too far out there for me at the moment. Saving, even if I’m saving less than usual, is a big comfort. My approach will just be to not stress if I dip into my savings numbers for fun activities or other things that bring joy to my life. As long as I’m not going in the red for this venture, I don’t have to worry too much about stashing away money.

Zuinigheid met vlijt

When I have options, I tend to choose the more difficult one. I have been going through a really challenging time, but I am so excited to move to the Netherlands and be intentional about building a lovely life. 

The Dutch have a saying, zuinigheid met vlijt — Thrift and diligence. Be frugal, work hard.

The frugal choices I’ve made in the past allowed me to take big risks like this one. Because I focused on saving in my early earning years, I now have the freedom to take a massive cut in earnings and move abroad. By working hard, I set myself up to be able to land international job offers. There is power in that. 

It won’t be easy, but most things in life worth doing never are.

Get Posts Delivered Straight To Your Inbox!
Subscribe
Notify of
guest
30 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Michelle @ Frugality and Freedom

What cool news! Very exciting. Amsterdam and The Netherlands are lovely. Ooh, I have some cheese shop recommendations for you. Plus (all going well), the Fringe and Theater Festivals in September are great fun. I have fond memories. Maybe I’ll have to visit in 2022? Best of luck.

David @ Filled With Money

Congratulations!! What a big life change. I’m sure you’ll do great and amazing things over in the Netherlands.

I too wonder what life would be like living in a country where the work culture is more lax. I used to work for a European bank and they used to take the entire month of August off!! What!! An American company just couldn’t understand that.

Good luck!! We’re all excited for you.

Mistress of Home and Finance

Sorry to hear about the ex-boyfriend! 🙁
Take your time processing.

Good luck with Amsterdam though~
My sibling & their partner are aiming at moving to Europe too, and one of the reasons they picked Amsterdam was because of tech.
That and jobs in my sibling’s relatively niche industry.

I’m looking forward to hearing more about what fun stuff you do with this new startup! Hopefully it’s got a mission you believe in.

ZJ Thorne
1 month ago

I’m so proud of you and excited for you!!

El_lobo
El_lobo
1 month ago

We just lived in Amsterdam for two years. I think you are underestimating the costs – especially Euro 150/month for food and 65 for travel. I think you’d want to live in Amsterdam first and enjoy city life before you decide to move to a suburb, though Haarlem and downtown Utrecht are both cute. You are right about difficulty making local friends, but at least it is a very international city. You will have to force yourself to learn dutch, as everyone speaks english.

Chris@TTL
1 month ago

Ok, I have many thoughts 🙂

1) TWO COMPETING OFFERS?! From places in another country!? Great job! Seriously, *pat on the back* that’s awesome. Good on you. Ride that confidence because I’m sure it’s going to be rough trying to get a feel for things at the new gig when you’re ALSO second-guessing all the cultural differences around you.

2) If I were you, I’d really focus on this (at least initially)—”a step towards the nomadic style of life I’m planning to pursue”. Things could go south, you’re taking a bit of a gamble with a huge change here. But it’s OK if it’s difficult or blows up in your face because the goal doesn’t seem to be to become a Dutch citizen—the goal is to experiment with your life with you as the subject. It’s a test for yourself. You know, don’t tell the employer that (“this is my dream job!”), but acknowledge that *any* result is a good one because you’re seeking an answer to a question—not a specific outcome.

3) On reduced income—”My velocity to FIRE will slow significantly.”: Think of it more like you’re paying for something. And that’s for this big change/experiment. You’re not losing income as much as you’re trading it for this new lifestyle/opportunity. I remember leaving my $60K/year job at 25 for the Peace Corps (with a measly stipend around 1/10th that). But it wasn’t something I look back on now and think about the opportunity cost of not having a higher income for that period of time—at least not without also accounting for the experience I “bought” in exchange.

4) In terms of the long-term effect on your income/FI timeline… it could wind up being beneficial in unexpected ways! You’re going to make totally new connections—with people, but also in life—you’ll have a new source for creativity, a wider network. That might mean that down the road you greatly surpass your previous income trajectory with your new insights.

5) 150 eur/month on groceries?! Double it! Your entertainment/restaurants (bar?) budget seems low too even though you said it’s higher than average. Not knowing many (any?) people at first, you’re going to want (need!) to get out there and do stuff to make connections. Don’t let a budget stop you from those experiences (within reason!), at least until you get yourself settled in this new life. You’ll still be saving plenty with this budget AND you’re already coasting remember?!

Beyond everything else, you’re building a life here. That’s just about the best investment you could make.

I’m super psyched to see how this goes for you and follow along. You might have some visitors down the (not too distant) road!

Revanche @ A Gai Shan Life

That is huge!! Congrats on landing the job and getting the ball rolling on this adventure. It sounds really exciting and I hope you’ll keep sharing ex-pat life.

Saar
Saar
1 month ago

Good choice! When one door closes, another one will open. Welcome to our beautiful country. If you need help with anything, please let me know!

Andrea
Andrea
1 month ago

Long-time lurker here. Happy to see that you are taking the leap and moving to Europe.

I moved to Amsterdam ~6 months ago and it has been a great experience! You will like it, I am sure about it. I also work as an employee while freelancing in tech… Ping me if you have questions, happy to help!

J. Money
1 month ago

Wow!! Exciting times ahead!! Life is so wild and you’re totally embracing it! 🙂

Jackie
1 month ago

Oh that’s such an amazing place to be moving to! Please write more about the process if you have a chance 🙂

Crista A Wathen
1 month ago

Not to mention that your healthcare costs will likely drop in comparison to that of the U.S.

Your FI number should drop considerably.

Welcome to Europe from a fellow American in Stockholm

Crista @ richfulthinker.com

Not to mention that your healthcare costs will likely drop in comparison to that of the U.S.
Your FI number should drop considerably.
Welcome to Europe from a fellow American in Stockholm

Janice
Janice
1 month ago

Amsterdam is great! What happened to the fiancé? You just wrote about the engagement in October!

Matt
Matt
1 month ago

Another long time lurker wishing you well in your travels and Amsterdam! Hope to hear more of your expat life in updates to come.

Fixitlady
28 days ago

It is ironic really that having a huge pay cut comes with a focus on time off and potentially a better work/life balance. Suddenly the move seems very sensible when you consider this aspect. Good luck on your travels!

Dave @ Minimalism and Your Money

What a great next step for you! I can’t wait to read all of your posts about travel and adjusting to a new culture! One thing that stood out to me is just how important it is (and how fortunate we are) to have a strong financial base. The fact that you were able to save so much money throughout your early twenties really opened up this possibility for you. It goes to show how smart money decisions can really provide options.

EmKay
EmKay
28 days ago

You may be earning less, but you’ll be getting a lot more paid time off and much less expensive healthcare – I think things will even out. I remember reading The Year of Living Danishly and thinking how dreamy it sounded to live in Scandinavia, or even just Europe in general, with subsidized healthcare and education, and the emphasis on work-life balance. You may not want to come back!

El_lobo
El_lobo
6 days ago
Reply to  EmKay

The work culture in Amsterdam is a little more like the US than Scandanavia (don’t forget the dutch practically invented modern capitalism). Also, the social benefits are a little lighter. We also found the quality of doctors lacking and you practically have to convince them you’re about to die to get a drug prescription from them.

Bob Haegele
1 day ago

Well, this is obviously super cool. Part of me still wants to do the same, but I don’t have friends in any particular area, so I guess I have less pulling me in any one particular direction. Not to mention not having a “real job” is still making that tough. But maybe one day…