You don't have to choose between world travel and paying off your student loan debt. How working abroad was the best thing that ever happened to my money.

Do you wish you could move to another country to travel, work and experience a different way of life?

Maybe you feel that you can’t because you’ve got a pile of debt. For many people, debt holds them back from  traveling, taking a new job, going back to school or even starting a family.

But what if you could have your proverbial cake and eat it too?

Well, it’s totally possible, especially if you find a job in an area with a low cost of living, such as China, Korea, the Philippines or India.

How I paid off $14,000 of student loans in three years

During my senior year of college I decided to go to China to teach English for a year. I knew the pay—$500 a month—was higher than the average Chinese teacher’s salary, but I’d still be making much less than my classmates who got teaching jobs back in the States. Well-meaning friends advised against it. But I wanted to experience life abroad and figured, at the very least, I’d keep up with my payments. In the end, it was a great decision because several factors helped me to pay off my student loans in just under three years.

Since my employer provided a decent apartment, which was pretty well furnished by the previous foreign teachers and included water, electricity and gas, the expenses that my roommate and I had were quite low.

Our main costs were:

  • Food/household products: $100 to 150/month
  • Landline: $5/month
  • Cell phones: $15/month (each)
  • Internet: $10/month

After basic living expenses, and setting aside cash for travel, most months I was able to stash away at least $250. When I returned home the first summer I made a lump-sum payment of over $2000.

During my second year I maintained similar habits, enjoying my life and travel opportunities, while saving as much as possible. I made another lump-sum payment and worked all summer to have cash on hand to make payments throughout the year.

At the start of my third year I married a local guy who hated the idea of me having so much debt and suggested we pay it off as soon as possible. To do this we lived on his income, which was lower than mine, saved my travel bonus, and I started tutoring kids on the weekends to earn extra cash. By June we had enough in savings to pay off the entire loan. We converted the yuan to dollars, got a check and sent it to my bank. By this point I was so close to getting rewarded for my three years of on-time payments that I paid off all but the amount that they’d credit me. Once the credit posted to my account, I was just a couple dollars away from being debt free and paid it off promptly.

Related: Student loan refinancing calculator

Financial benefits of working abroad

One reason that working abroad is lucrative for US citizens is the Foreign Earned Income Exclusion makes us exempt from paying taxes on the first $97,600 (per the 2013 IRS rules) earned each year. Of course your employer probably has taken out local taxes, so you are taxed, just not twice.

Some companies even give bonuses if you choose to work abroad. The Japan Times reports that U.S. State Department employees get “hardship differential” pay which varies depending on how difficult the circumstances are where they’re working and The China Daily says that Coca Cola is giving their Chinese-based employees a 15-percent “environmental hazard” bonus so that they can buy high-quality air purifiers for their homes.

The only downside is that you can’t use the money to contribute to a Roth IRA since that has to be funded with income earned in the United States. But if you are freelancer and earn income from US clients, that would be considered US-earned income. Once you take out taxes on it, you could earmark that money for your retirement investments.

Related: Find the latest travel deals now at

Maximizing your income abroad

Negotiate your compensation package

There’s usually room for negotiation during the hiring process and you certainly want to take advantage of it. Inc. columnist Bill Stewart wrote that he was able to get private school tuition for his kids as part of his compensation package while working in London.

Live like the locals

When I first arrived, there was just one KFC for restaurants and little in the way of entertainment. I ate out at tiny hole-in-the-wall joints where a meal for two cost $5-8 and spent weekends meeting with friends, reading or watching movies at home. I kept my itsy-bitsy $75 phone for three years before upgrading and once we entered serious debt repayment mode, we ate out just a handful of times in the ten months and I sewed my own maternity clothes.

Stick to a budget

Had I realized the beauty of budgeting at the time, I know I could have saved more. If you create a budget and stick to it, you’ll be able to see exactly where you’re money’s going. Plus living in a cash dominant society meant that I could feel my wallet getting lighter with each purchase.

Send back money regularly

This part can be tricky, but if you’re going to be paying off debt with a vengeance, you need to be able to get money back to your home bank at least once a month to keep up with monthly payments. During my early teaching days I took the money back during summer break. The third year, I got a check from a local bank and sent it to my bank. This is a time-consuming process, taking a whole month from start to finish. Recently I discovered that Western Union works pretty well. We had some glitches learning the ins and outs, but it’s currently the best option. Before you leave, do some research about which banks might operate in both countries and set up online banking accounts so that transactions go smoothly.

Finding opportunities to work abroad

Before you get too excited and book a ticket, you do need a job and a work visa to legally work abroad. Asian countries are always looking for native English speakers and Dave’s ESL Cafe is a trusted resource among the EFL community.

If your current employer has an office abroad, you can tell your boss that you’d like to be considered if any openings occur. You can also check out Nomadic Matt’s post about finding a job overseas, and check out Forbes’ Seven Simple Steps to Finding A Job Abroad.

Would you ever consider taking a job abroad if it meant being able to reach financial goals faster? Where would you go?

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Need help paying off your student loans? Here are some resources to help you out:

Editor’s note: This article was originally published in October 2014. It has been thoroughly updated for relevance and accuracy before republication.

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About the author

Total Articles: 5
Charlotte Edwards is a teacher-turned-freelance writer living near Beijing, China with her husband and two young children. Her work has appeared on Capital One's We the Savers blog, The Penny Hoarder, Incomes Abroad and International Living.