Reader Case Research: Screenwriter + Software program Engineer + Child in Munich, Germany

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Jane and her husband Kurt live in Munich, Germany with their six-month-old son, Oskar. Jane works as a software engineer and Kurt is a screenwriter for a popular German television series. The couple love living in Munich, save one fact: Jane is American and her family all live across the pond. Thus, they’re contemplating a move to the Northeastern United States in order to be closer to Jane’s family, in particular, her parents with whom she and Kurt are both very close. Let’s hop over to Germany today to help Jane and Kurt analyze this decision!

What’s a Reader Case Study?

Case Studies address financial and life dilemmas that readers of Frugalwoods send in requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight and feedback in the comments section.

For an example, check out the last case study. Case Studies are updated by participants (at the end of the post) several months after the Case is featured. Visit this page for links to all updated Case Studies.

The Goal Of Reader Case Studies

Reader Case Studies intend to highlight a diverse range of financial situations, ages, ethnicities, locations, goals, careers, incomes, family compositions and more!

The Case Study series began in 2016 and, to date, there’ve been 72 Case Studies. I’ve featured folks with annual incomes ranging from $17k to $200k+ and net worths ranging from -$300k to $2.9M+.

I’ve featured single, married, partnered, divorced, child-filled and child-free households. I’ve featured gay, straight, queer, bisexual and polyamorous people. I’ve featured women, non-binary folks and men. I’ve featured transgender and cisgender people. I’ve had cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, Spain, Finland, Germany and France.

I’ve featured people with PhDs and people with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.

The goal is diversity and only YOU can help me achieve that by emailing me your story! If you haven’t seen your circumstances reflected in a Case Study, I encourage you to apply to be a Case Study participant by emailing mrs@frugalwoods.com.

Reader Case Study Guidelines

I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn.

There’s no room for rudeness here. The goal is to create a supportive environment where we all acknowledge we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.

A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. 

I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.

With that I’ll let Jane, today’s Case Study subject, take it from here!

Jane’s Story

Jane and Kurt’s wedding

Hi Frugalwoods! My name is Jane, I’m a 29-year-old American, my German husband Kurt is 30, and together we have a son, Oskar, who is almost six months old. We live in Munich, Germany where Kurt is a screenwriter for a popular television program and I’m a software engineer for a small e-commerce company. We’re also both pursuing master’s degrees, fully-remote and part-time, at present: computer science for me and political science for Kurt.

I’m currently on maternity leave with Oskar until next fall! Kurt and I have been together for six years and got married in 2019. I’ve been admiring the Frugalwoods from afar for several years now and am honored to have the opportunity to receive advice from Mrs. Frugalwoods and her readers as my husband and I plan a move to the U.S.!        

Jane’s Upbringing

Although I’ve been living in Germany since I graduated from college, I grew up in a suburban town on the southern shore of Long Island where I had a wonderful childhood. My parents were both teachers, and owing to our identical school schedules, my siblings and I enjoyed a considerable amount of quality time together with them when we were growing up. In the summers, we would venture out on my parents’ boat for weeks at a time, and we often spent our winter vacations skiing in snowy Vermont. I went to college in Boston where I studied computer science. On a whim one semester, I took an introductory German course, and I enjoyed learning the language so much that I spent a summer, as well as a study abroad semester, in Munich. After graduating from college, I decided to take a job as a software engineer in Munich, hoping to spend a year or two exploring Europe some more before returning to the States. Those plans changed soon after I met and fell in love with Kurt!

Jane & Kurt’s Life in Munich

A Christmas market in a town near Kurt’s home village

While neither Kurt nor I would define ourselves as “city people,” we love living in Munich and find that it fits our lifestyle pretty well. It’s said that “Munich is the largest village in Germany”–all of the buildings in the city need to be built lower than the Frauenkirche (the cathedral in the city center)–and the traditional Bavarian culture courses through the city.

If you were to be randomly dropped somewhere in Munich, it’s likely you wouldn’t know that you were in one of the largest metropolises in Europe! Although we live only a twenty-minute walk from the city center, our historic old neighborhood is quiet and clean, and we are only a couple hundred yards away from a park and the refreshing, sea-green Isar river. Just minutes away from our apartment we have access to a beautiful trail for running, cycling, and cross-country skiing.

We love Munich’s proximity to the Alps too. The mountains here seriously fulfill all of my childhood Sound of Music dreams! Pre-pandemic, we could easily buy a cheap partner day-ticket for the trains and ride an hour south to go for a hike or trail run or cross-country ski. This is something we’ve missed the past two years as the cost of a rental car makes these activities prohibitively expensive to do at the frequency we did them before.

Jane & Kurt’s Hobbies

Besides the aforementioned outdoor activities, some of my other hobbies include reading, film photography, knitting, cooking, baking bread, and listening to and playing classical music. Kurt’s favorite pastime is reading in various forms–newspapers, magazines, literature, and non-fiction–and he also watches a lot of soccer, baseball, and winter sports. He is also an avid language learner; in addition to his native German, he speaks English and Dutch, and is beginning to learn French. We both enjoy spending time with our friends here–playing board games, watching films together, and visiting beer gardens on balmy summer days. Pre-pandemic, my parents–now retired and whom we are very close with–would spend a couple months a year with us, and we often traveled with them quite a bit throughout Europe.

Baby Oskar!

Jane and Oskar picnicking at a nearby park on a warm winter day

This past summer, we joyously welcomed our son, Oskar, into the world. It’s a delight for us to watch him grow and observe how he is beginning to interact with, and learn about, the world around him. The quiet moments are the ones we cherish most right now–cuddling with him in bed in the morning, discovering new ways to make him laugh, and suppressing our own laughter when he gives us an adorable pouty lip!

The first couple months of his life were not without challenges though. Shortly after he was born, our midwife discovered that he had a cleft of the soft palate, and he was whisked away from us and transported to a different hospital with had a NICU. We were so overcome with emotions–joy over his arrival, distress about the sudden separation, and extreme concern about this condition we knew so little about. As we soon found out though, a cleft palate makes it difficult for Oskar to eat properly; it would be sort of like if one had to drink from a straw with holes in it.

The condition is routinely managed and relatively common (about 1 in 700 babies are affected with cleft lip and/or palate); however, we were not without many, many conflicting opinions at the start (“He can only eat from a bottle!” / “There is no baby that cannot learn to breastfeed!”/ “He needs a feeding plate for his palate!” / “A feeding plate won’t help at all!”). It took us some time to figure out how to feed him, but essentially, he needs a special needs feeder, and I have to pump all of his milk. He will need to have surgery in the spring to close his palate, and in the next several years, we will likely need to work with a multidisciplinary team of health care professionals to monitor his nutrition, hearing abilities, and speech. 

What feels most pressing right now? What brings you to submit a Case Study?

We feel so grateful for the life we have here in Munich.  There is, however, one huge piece missing for us: proximity to my family. While some might understand this as relocation out of obligation to aging parents, this is only a small part of it. Most importantly, we truly consider my parents to be among our best friends. Really! No one seems to believe me when I say this, but one of the things I love most about my husband is the relationship he has nurtured with my parents.

Hiking with Jane’s parents in Bavaria

It’s for this reason that we’ve experienced decision fatigue for years now about whether we should relocate to the U.S. to be closer to my parents. Prior to the pandemic, it wasn’t so pressing–my parents had the wherewithal post-retirement to travel often to Europe and visit us for extended stays. During the height of the pandemic, we felt a great deal of sadness about being separated from them and also anxiety (especially before they were vaccinated) about them becoming seriously ill from Covid-19 and us not being able to be there at the drop of a hat. I personally experienced a lot of feelings of guilt over the choice to live so far away from them.

There are several other reasons why we feel that now might be the right time to try out living in the States. While we don’t plan to saddle my parents with childcare responsibilities, now that Oskar is here, we would appreciate having more help with him when we occasionally really need it (and Kurt and I would love to have a date night one of these days!). We’d also simply like to give them the opportunity to spend more spontaneous and informal time with their grandson.

We are also experiencing some growing pains with our current apartment, so a move is likely on the horizon in any case. Our tiny 645 sq. ft. two-bedroom apartment has a pretty unbeatable rent for its location in Munich, and it is perfect in many ways; however, once Oskar is moved into the second bedroom, we won’t have room for my parents to stay with us when they visit. This would make it very expensive for them to visit for extended periods of time, plus we enjoy when they can stay right with us in our apartment. Ideally, we’d want one more bedroom, but this would likely mean we’d have to look for a place further outside the city and pay higher rent by several hundred euros.

Finally, moving now (we think) would be easier before Oskar is in school at which time we would be less flexible to do such a move. We see this move not necessarily as a permanent decision, but as an opportunity to try out what our life would look like in the States and to spend more quality time with my parents and my siblings’ families.

Jane and Kurt making homemade perogies

For a long time, we thought we might like to move to my hometown, but when we visited this past fall for several weeks, we really tried to see it through the lens of what our life might be like living there. Long story short, although I loved growing up there, we don’t think the suburban lifestyle is for us, and we don’t have the impressive nautical skills my parents have to enable the memorable excursions of my childhood. Besides that, we find the prices of homes to be simply exorbitant. We want to move somewhere that would be less expensive and would better fit our lifestyle while still being within reasonable driving distance (let’s say, less than seven hours).

Right now, we’re most interested in rural (but not remote) locations in Vermont, western Massachusetts, and possibly New Hampshire and upstate New York (the latter two seem to me to have a lower cost of living). My parents have a vacation property in northern Vermont, so we have some familiarity with this part of New England, and we think it could be a good fit–it’s forested and mountainous, has four seasons, is liberal, and the people seem kind and down-to-earth. I also love so many Vermont products! Cabot cheese, Ben & Jerry’s, maple syrup, King Arthur flour, Green Mountain diapers, Darn Tough socks, did I mention maple syrup? And as any good residents of Germany, we love beer. Judging from Mrs. Frugalwoods’ blog, it seems like we’d find a lot of good beer in Vermont.

We applied for Kurt’s Green Card this past fall, but we expect it could take till 2023, at least, until it is finalized. Therefore, we want to use the next year to think thoroughly through the move from all angles, especially the financial aspects, which is what brings me to submit this Case Study! I’ve never lived and worked in the U.S. as an adult (beyond college, that is), so it’s not entirely clear to me how our budget would translate across the pond. It’s important for us to be fairly certain that we can maintain our financial health and goals after moving costs and life in the States.

What’s the best part of your current lifestyle/routine?

Many things:

  • A cake to celebrate Jane and Kurt’s second wedding anniversary

    Quality time at home. We both worked primarily from home during the pandemic and, although there were some social drawbacks, we experienced a lot of benefits to this style of work. We are introverted homebodies, preferring cozy time at home with ourselves or with close friends rather than going out to noisy restaurants and bars or socializing with large groups of people.

  • Great work-life balance. We have six weeks of vacation and we rarely, if ever, work overtime. I appreciate that people’s lives don’t revolve around their jobs here.
  • Outdoor lifestyle. We love recreating outside in all four seasons!
  • Walkability, cyclability and excellent public transportation. We can easily walk or cycle (now also with a baby in tow!) to most places within Munich, and there’s great public transportation when we need it. Neither of us enjoys driving, so this is one of the things we will definitely miss most if we no longer live in a city.
  • A society valuing (mostly) free childcare, generous parental leave policies, (mostly) free healthcare, immigration, and reasonable working and living conditions. Okay, this is a generalization, of course, and Germany certainly has its own challenges, but in broad strokes, I find it to be true.

What’s the worst part of your current lifestyle/routine?

  • No family close by. As mentioned, my family all live in the U.S., and Kurt’s parents live about seven hours away by car or train and are still working, so we cannot easily call upon them for help.
  • Jane on the first stage of a cycling trip to Italy

    Feeling like we can’t settle down. In the apartments we’ve lived in, we’ve always had the feeling that it’s not going to be the one we live in in five years’ time. We’d really love to give our children the stable feeling of “home” we both enjoyed growing up. But perhaps this is the tradeoff for letting our children intimately experience both cultures. We hope by doing this experimental U.S. move that we might have a better idea of where we’d like to base ourselves.

  • Living in the city. I know I’ve just sung Munich’s praises at length, but Kurt and I would like to live in a more rural setting. A lot of the appeals of the city–nightlife and plentiful shops, bars, and restaurants–are not a major draw for us, and while we enjoy the cultural attractions–museums and concerts–these won’t be high on our agenda while Oskar is still young. Kurt grew up in a rural village ensconced in woodland beauty, and we also imagine our children growing up surrounded by nature rather than large buildings and busy streets.
  • Lack of community. We have some truly dear friends and kind older neighbors here in Munich, but we often feel like we are lacking a larger community. It’s easy to feel anonymous in a city, and my feeling is that it is more difficult to break into established social circles here in Germany.
  • Not having many friends with kids. I have only one friend with a baby, and we would love to have more opportunities for exchange with other young parents. The current lack of Covid-19 vaccination access for young children has made this understandably more difficult.

Where Jane & Kurt Want to be in 10 Years:

  • Finances:
    • We’d like to keep saving at a rate of at least 40% of our net income (during times we are not on parental leave) and preferably more. This felt very doable for the past several years without any feelings of deprivation. What this total amount of savings will look like will likely depend on where we’re living.
    • We want to have the option to take potentially unpaid parental leave for the first year of our potential future children’s lives.
    • We’d like to be financially independent by age 50.
  • Lifestyle:
    • Jane’s frugal breakfast–homemade Bircher Müsli!

      We’d like to try to have one or two more children. I would also love to have a dog and Kurt would like a cat named Sebald. I’ve so enjoyed following the adventures of the Frugalwoods family’s chickens, so maybe we’d want to have some chickens too!

    • Kurt and I would like for our children to spend a significant amount of time in both the U.S. and Germany. It’s important for us that they spend time with both sides of our families, feel they belong to both cultures, and are confident in both languages.
    • We want to live in a location that gives us immediate access to nature. We don’t want to have to get in the car in order to go for a walk or run in nature. We’d like our children to be able to go outside for hours for safe, unstructured, independent play.
    • I’d love to have time for my current hobbies, but I could also imagine them evolving depending on our location and our children’s interests. Activities like gardening, camping, sailing, sewing, pottery, painting, learning new instruments, woodworking, fishing, kayaking, and birdwatching are all appealing to me. A dream of mine would be to play in a community orchestra again one day!
    • We’d like to spend a lot of time with our families and friends, and we would love to be active in a larger community through our neighbors, our childrens’ schools, clubs, and volunteer work.
    • We want to continue traveling domestically and internationally.
  • Careers:
    • An attempt at recreating NY-style everything bagels from scratch

      Jane: In order to move to a more rural location and avoid an unpleasant commute, I’ll need to find a fully remote job, which shouldn’t be too difficult in my field. There are, however, other checklist items for my dream job. The best part of my current job is hands-down my kind, quirky, smart, and unpretentious colleagues. A huge negative for me, however, is that I don’t feel connected to the work the company does. I’d love to be working for a company in an industry more closely related to my hobbies or doing some kind of positive work in society–health care or education, for example. Additionally, it would be ideal if I could work from both Germany and the U.S. to give us some location flexibility even if it means just spending the kids’ summer vacation in the other country. Finally, it would be amazing if my job would have options for parental leave and part-time work. Sigh, this is probably too much to hope for, right?

    • Kurt: Before Kurt was a screenwriter, he was a sports journalist and podcast host for several years, mostly covering soccer, for a large newspaper. He found the work stressful due to the erratic hours and quick deadlines, and as he was contemplating resigning, the newspaper serendipitously offered a buyout to all employees as they downsized their workforce. He then studied for a semester full-time for his master’s in political science (he will graduate in 2022) before taking the screenwriting job this past fall. He enjoys the creative writing and predictability in this job. What he will do for work in the U.S. is still a big open question for us as finding a remote job with his skillset might not be quite as easy. While he’d love to still be writing and dreams of writing novels one day, he’s pretty open to different kinds of work in the meantime and has even flirted with the idea of becoming a history school teacher in the U.S..

Jane & Kurt’s Finances

Income

Item Amount Notes
Kurt’s net income $3,314 Kurt’s net salary minus taxes as well as compulsory insurances for pension, unemployment, long-term care, and health care. He’s earning (net) about 1.5x as much in this new job compared to his former one!
Jane’s parental leave allowance $2,032 The federal tax system pays 67% (capped at $2,032) of one parent’s prior net salary for 12 months. My previous net salary was $3,795, and when I return next September to work at likely 80%, I will earn $3,121.
Child allowance $248 The child allowance is given to all parents in Germany, regardless of their income.
Tax refund $170 This is what we’ve averaged the past few years with our yearly tax refund.
Monthly gift from Kurt’s grandparents $90 Kurt’s grandparents generously give us money each month.
Monthly subtotal: $5,854
Annual total: $70,248

Debts: None

Mortgage: None

Vehicles: None

Assets

Item Amount Notes Interest/type of securities held/Stock ticker Name of bank/brokerage Expense Ratio
Brokerage Account $84,202 All investment income (capital gains and dividends) over $1,808 in a given year are taxed at a rate of 28%. Deutsche Kredit Bank charges us $1.70 per execution (we currently invest about $1,700 per month, every month). FTSE All-World UCITS ETF – Distributing Deutsche Kredit Bank 0.22%
Roth IRA $40,820 As a nonresident with a nonresident alien spouse, I take the Foreign Tax Credit, file my taxes with the status married filing separately, and use the Backdoor Roth IRA option. I have made max contributions yearly since 2017. VFFVX (Vanguard Target Retirement 2055 Fund). It’s currently at 90% stocks and 10% bonds. Vanguard 0.15%
Kurt’s Checking Account $31,316 Kurt accepted a buyout last year which is why this account is so high. With the arrival of the baby and some open questions about our portfolio, we had put off investing this money. $11 fee per month Stadtsparkasse N/A
Savings Account $20,363 This account is a German savings vehicle called a “Sparbuch” which German parents traditionally open for their children when they are born and contribute to regularly thereafter. We realize it’s on the higher side, but since it’s primarily a gift from Kurt’s parents and they are somewhat skeptical of the stock market, we simply consider this money to be our emergency fund. Earns 0.03% interest Stadtsparkasse N/A
Private Pension Fund $12,823 Our employers match (mine at 10% and Kurt’s former employer at 100%) our monthly pre-tax contributions (capped at $276) to this pension plan offered by a private German company. The plan is somewhat complicated, but basically each month’s return (positive returns capped at a measly 2.7%) are added together to determine the yearly return. EURO STOXX 50 Allianz I’m honestly not sure about this, so I’m asking Allianz straightaway!
Jane’s Checking Accounts $8,304 No fees, no interest ING, Deutsche Kredit Bank, Teachers Federal Credit Union of Long Island N/A
Jane and Kurt’s Joint Checking Account $6,585 No fees, no interest ING N/A
High-Yield Savings Account $3,902 I opened this account to “park” my Roth IRA savings for the next year and gain some interest. It used to offer a great rate, something like 2.20%, but the rate has dropped precipitously the past few years. Earns 0.50% interest Ally N/A
Total: $208,315

Expenses

Item Amount Notes
Rent $1,308 Includes heating and utilities.
Groceries $500 Includes household supplies. This increased quite a bit since the start of the pandemic as we’ve treated ourselves to more delicacies.
Baby $375 This was very high due to some big-ticket one-off expenses like birth prep classes and cloth diapers but also because we naturally didn’t hesitate for a minute about spending money after Oskar was born figuring out how to feed him and keep him safe, e.g. breastfeeding tools, lactation consultants, pumps, a blood-oxygen monitor, every bottle on the German market.

Oskar’s health is our number one priority, so we’re so thankful we didn’t have to be concerned about spending this money! These expenses should go down considerably in the next year as we don’t anticipate many ongoing expenses besides clothes (which we buy secondhand) and food.

Flights to the U.S. $125 Prior to the pandemic, we travelled to the U.S. twice per year. We only went once last year, but I imagine we will go back to twice per year (likewise for traveling to Germany should we live in the U.S.).

We fly Lufthansa mostly and are terrible about participating in any sort of miles program–although we do get rewards with our Chase Sapphire card–so if anyone has advice about maximizing travel benefits, we’re all ears! (affiliate link).

Car rental (local transport) $125 This was very low pre-pandemic, but we opted to get around the city by car last year when I was pregnant due to Covid-19 and my ineligibility for a vaccination at that time.
Travel $115 Includes car rentals for travel we did to recreate in the Alps last year. This is normally double to triple in years without a pandemic, pregnancy, and newborn.
Home furnishings and repairs $103 Includes things like kitchen tools, new sheets, furniture, and decorations. I’d like to reduce here next year.
Subscriptions $88 Includes yearly expenses (prorated monthly) like a frequent traveler discount card for the Deutsche Bahn train system ($9), a car-sharing service ($13), MLB TV ($10), Spotify ($11), Down Dog Yoga ($1), Board Game Arena ($2), Google Photos ($2), HP Instank Ink ($4), The New York Times ($15), The Wall Street Journal ($11), The Washington Post ($2) and You Need a Budget ($8).
Clothing, shoes, and accessories $85 This could probably go down since I bought quite a bit of maternity wear last year, and Kurt bought a few nicer outfits for his new job.
Insurances, advising, and other fees $84 Includes yearly expenses (prorated monthly) like a tenant association ($10), tax advising ($33), travel health insurance ($2), dental insurance ($11), personal liability insurance ($7), and a compulsory public broadcasting fee ($21). 
Bicycle trailer for Oskar $79 This was a big expense, but we can safely transport Oskar by bike with this trailer. Plus, we can use it for jogging, hiking, and cross-country skiing too.
Christmas, birthday, and special occasion gifts $75 Kurt and I don’t exchange Christmas gifts and birthday gifts are kept small. We’d like to pare down some on Christmas gifts that we buy for my many family members.
Miscellaneous discretionary $75 All the other little things we treat ourselves to.
Visa and bureaucratic $74 Includes my passport renewal, Oskar’s passport and Consular Report of Birth Abroad, and the I-130 Petition for Alien Relative (the first step of Kurt’s Green Card process). This will likely remain the same next year with the remaining steps of the Green Card application. 
Dining out $64 We don’t often go to restaurants, but we do love visiting beer gardens in summer, indulging in coffee and baked goods at cafés, and occasionally ordering takeout.
Train costs to Kurt’s parents’ residence $56 We visit about three times per year.
Medical expenses $56 This is normally low (Oskar’s birth, e.g., cost only $34 total), but we opted for some services not covered under insurance here like prenatal testing, an IUD for birth control, and some travel vaccinations for Oskar. This should be around $20 in a normal year.
Internet $34
Running shoes $28 In order to preserve our knees, Kurt and I buy new high-quality running shoes twice a year.
Tuition $28 The cost of tuition for Kurt’s remote master’s program in political science. He only has half a year left in the program.
Books and periodicals $25 We have a hard time resisting buying new books, and Kurt loves to pick up an old school print newspaper on the weekends. Unfortunately, the library system here doesn’t offer much selection for books in English.
Phone $20 For data and calling on both of our cell phones.
Bicycle maintenance $20 This is our main mode of transportation!
Adult education classes $18 Kurt took classes last year in Dutch, French, and Croatian at our local adult education center.
Knitting $18 I love to knit! Realistically, I’ll have less time for this in the new year, and I’ve promised myself not to buy more yarn until I’m done with Oskar’s baby blanket.
Cards and stamps $14 We like sending out birthday, Christmas, thank you, etc. cards.
Haircuts $11 I get a haircut twice a year, and Kurt’s hair is cut by me every six weeks!
Bank fees $11 Kurt has a bank account which charges a fee per quarter. It kills me to throw this money away! He prefers going to a physical branch to handle his banking matters, but I’d really like to close this account and exclusively use free online banks.
Donations $8 I donate small amounts to my alma mater and my hometown library each year. I would also like to start donating to a cleft palate organization, so if anyone knows of one that is reputable, please let me know!
Public transportation $7 This will likely be higher in 2022 now that we feel safer taking public transport.
Child care $0 I’m just adding this in here because we will have day care costs starting next September, probably around $184 per month for up to 9 hours per day of day care. We’re aware this will be much higher in the U.S.!
Monthly subtotal: $3,629
Annual total: $43,548

Credit Card Strategy

Jane’s Questions for You: 

  1. How might our budget translate if we were to live in the U.S.?
    • There are some additional expenses we’re anticipating like gas, child care, and medical, but I’m not sure what these amounts might look like. Additionally, can we economize on any of our current expenses? While I’m thinking that our expenses will likely be higher in the U.S., I also think my earning potential as a software engineer will be higher; on the other hand, it is entirely possible I might be the sole breadwinner for our family for some time.
  2. A traditional log cutting ceremony at Jane and Kurt’s German wedding celebration

    We imagine our perfect home being 3-bedrooms, 2-baths, surrounded by nature, but within a 30-minute (ideally less) driving distance to grocery stores and medical services.

    • We realize the housing market is not favorable for buyers right now, and if there’s a possibility we might move again after, say, five years, we wonder whether renting rather than buying a home would make more financial sense.
    • On the other hand, home ownership has its appeals for us, and we’re wondering what a reasonable upper budget for our home search might be. What are your thoughts on us buying a home with the possibility of it becoming an investment property if we moved back to Germany?
    • One consideration we had was looking for homes near college towns so that there would be a steadier market for renting out our property.
  3. Should we invest in a 529 plan?
    • If Oskar wants to study at a university in Germany, he would be able to do so for (basically) free; however, if he does not attend high school in Germany and/or if he prefers to study in the U.S., then Kurt and I need to factor in saving for his college expenses. 
  4. When we move to the U.S., I think we might want (and possibly need?) to transfer our German brokerage account to the U.S.?
    • Every time I look into the legal and tax aspects of transferring or keeping an investment account in the country we would not be residing in, I feel like I am going down a rabbit hole.
    • If anyone has any insights here about having a foreign brokerage account while living in the U.S. or vice-versa, I’d be so appreciative!
  5. The total amount of money in our checking accounts is on the high side.
    • Were we to stay in Germany, we’d probably invest most of this money in the stock market; this is because we’re not so risk-averse living here thanks to a lot of social safety nets and a rather large emergency fund.
    • Should we invest this money now and continue to invest our monthly savings? If we keep investing here, should we add more bonds to our portfolio? Or should we instead keep most of the money in cash?
    • We’re pretty sure my parents will be able to give us a no-interest loan should we want to make a down-payment on a house in the U.S..
    • Otherwise, we’ll definitely keep enough in cash for moving costs plus some for buying a car in the States.
  6. We’d love to hear your thoughts on how we might go about the search for our next home since there are certainly some overlaps between our search and the Frugalwoods’ homestead search!
    • We will likely start out living with my parents for an indefinite period of time while we search for a place of our own.

Liz Frugalwoods’ Recommendations

Jane cross country skiing up to the Gramai Alm in Austria

Way to go, Jane and Kurt! With no debt and sizable investments, they’re in a fantastic position at a young age. I know this move question feels overwhelming to them, but they should take comfort in the fact that they’re making the decision from a position of financial strength.

By continuously saving, investing and living below their means, Jane and Kurt are able to approach this choice with their lifestyle desires top of mind–not their financial imperatives. This is a great example of how frugality gives you options.

Jane and Kurt don’t know precisely what they want their lives to look like, but they’ve given themselves the financial ability to have options because they’re not backed into a corner by debt or overspending. Kudos!

Top Line Reactions and Questions

Before diving into Jane’s specific questions, I want to propose that she and Kurt do a bit more imagining around their lives.

As I read Jane’s story, the immediate response that popped into my mind was:

Would Jane’s parents be interested in moving to Munich?

If I’m understanding Jane & Kurt’s desires correctly, it seems they already have their ideal lifestyle in many ways, minus Jane’s parents. Since Jane mentioned that her parents are retired, healthy and enjoy traveling, I wonder if this is something they’ve discussed? Or, if they might consider living in Munich for half of the year? Perhaps renting an apartment or AirBnB in Jane & Kurt’s neighborhood? I realize this may be a total non-starter, but it struck me as one potential avenue to explore.

The other two reasons for a move that came across to me were:

  1. A desire to live in the United States
  2. A desire to live rurally

I encourage Jane and Kurt to examine these three reasons to see if there’s one that’s driving their decision-making process the most. I encourage this because they could, potentially, live rurally in Germany with Jane’s parents, for example. Just an invitation to imagine broadly here!

Germany = The Ideal Place to Birth Children?

In light of the fact that Jane and Kurt have a baby and plan to have more children, I want to highlight the absolutely incredible family benefits of life in Germany: 

  1. A romper Jane knitted for Oskar

    A long, PAID maternity leave!!!!!!!

    • This is unheard of in the US. One would be VERY lucky to receive 12 weeks at either partial or no pay.
  2. A generous monthly child allowance!
  3. Free (or cheap) healthcare!!!
  4. Very, very, very inexpensive childcare!
    • Jane noted they’ll pay circa $184 per month for full-time daycare for Oskar.
    • For full-time care in the US, you’re looking at something in the neighborhood of $2,000 to $3,000. Per month. Per child. More if the child is an infant, which if Jane and Kurt have a second baby in the US, will be the case unless one of them becomes a stay-at-home parent (see note above on the US’s abysmal parental leave policies/total lack of regard for parents).

I’ve chatted with a lot of parents since becoming a parent myself six years ago and every single parent I know would give their left hand for a long, paid parental leave and affordable childcare for kids under age 5. I don’t mean to hit the nail on the head too hard here, but these benefits are outstanding and Jane and Kurt will not experience anything even close to this in the US.

Hence, another question for Jane and Kurt is if they’ve considered birthing all of their kids in Germany and then moving to the US? Granted, this could be more difficult from a schooling perspective–if Oskar is in elementary school, for example–but it’s something worth mulling over.

Jane’s Career

Another salient factor is Jane’s earning potential. In the US, it’s a software engineering gold rush right now. If Jane’s very good at her job (and I assume she is), she might be able to land a US job at circa $150k-200k/year. This level of income could enable Kurt to be a stay-at-home parent, which would negate the need for the outstanding German baby benefits discussed above. But this is also a question of lifestyle, not just of income. Would Jane be happy working longer hours for a higher salary? Would Kurt be happy as a stay-at-home parent in a new country? There’s no right or wrong answer, just many different considerations and options.

I polled my husband (a former software engineer and hiring manager) and he advised that, to increase her chances of commanding a high salary, Jane should:

  1. Practice code interviews (you can do so at LeetCode).
  2. Learn technologies that are often used for modern, remote software companies, i.e. React on the front-end, Python/Ruby on the back-end.
  3. Develop a level of comfort with Cloud Ops.

In his opinion, if Jane can do those three things, she’ll increase her likelihood of getting a high-paying job at a US company. Since Jane and Kurt are not ready to move yet, I suggest Jane use this time to level up her skills and find a higher paying position as she’s employed in one of the most highly remunerative positions on the globe. From an earnings perspective, it makes sense for them to focus on her career potential.

The other note here is that large tech companies in the US offer some of the best parental leave policies in the US (although they still probably won’t be as good as Germany’s).

Moving From Urban to Rural

I hear that city life is not Jane & Kurt’s ideal, but I will point out that they value a lot of urban amenities that most US cities–and particularly anything rural or suburban–lack: excellent public transport, walkability, cycleability, easy access by train to other regions/parts of the country, quaint beer gardens, etc. Not to say that they wouldn’t love rural living, just a note that it’s a drastically different lifestyle.

Jane on a trail run between Lake Schliersee and Lake Tegernsee in Bavaria

My husband and I made the urban to rural move six years ago and I have a few posts reflecting on the monumental differences between the two lifestyles:

In terms of location, I’m wondering how they envision seeing Jane’s parents with frequency if they’re not living in the same town/area? Jane noted they’d like to be within seven hours of driving, which is still a hefty distance if they’re hoping to have her parents available for date-night babysitting and frequent interaction with Oskar. Something to mull over is the fact that they stated that neither of them likes to drive, but this would necessarily enshrine quite a bit of driving into their lives.

To be clear, I’m not down on this idea and it’s true that a seven-hour drive is a world closer than an international flight. But, it’s not quite the same as being able to ask your parents to pick your kid up from school because you need to stay late at work. Just an encouragement to think through how the logistics would play out in practice.

It also seems like it’d be a great idea for Jane and Kurt to rent in their desired area prior to buying. This would give them the chance to determine if it’s the right spot for them, if they like rural living, if they like living in the US. Renting = maximum flexibility.

House Hunting From Afar

Since Jane and Kurt are pretty clear on what they’re looking for in an ideal location, one approach they could take is to narrow their search down by map. Before looking at any homes, Jane and Kurt could combine the following:

  • A map of colleges in New England
  • A map of voting in the 2020 Presidential Election 
  • A map of relative housing prices
  • A housing density map

…and then crosscheck it with areas that have high-speed internet access.

This would probably give Jane and Kurt a very good sense of specific regions/towns they might want to explore. I have a series on the process of searching for our Vermont homestead that might be helpful: The Frugal Homestead Series Part 1: Why The Woods?

Let me try to answer a few more of Jane’s questions:

1) US Budget versus German Budget?

Jane and Kurt sailing with Jane’s father on the Great South Bay

Jane is spot on that they should anticipate adding childcare and car expenses (purchase of a car, registration, maintenance, taxes, insurance, repairs, gas, tires, etc). Beyond that, it’s tough to say without knowing where they’ll be living. I imagine their grocery costs will increase once their child(ren) become full eating members of the household (I know ours did), but that’ll happen regardless of location. And I agree with Jane that as noted above, she likely can command a higher salary in the US.

2) Rent versus Buy?

This is another tough one to answer without specifics. In many rural areas, the rental market is pretty slim, but, if Jane and Kurt don’t think they’ll be living there for more than five years, it could be really tough financially to buy a place and sell it again in short order. Perhaps the home could be turned into a rental, but again, if they’re truly looking at rural properties, those are typically not hot rental markets. Additionally, if the home is on a septic system and has a well and a long driveway, that’s a lot more upkeep and maintenance than a city rental.

Jane’s idea of situating in a small New England college town could provide a great rental market–both for them to rent in and to potentially one day become landlords. That would be a less rural option, but might be more tenable for renting. It’s hard to say what housing prices will do post-pandemic, but they’re certainly not favorable for buyers right now. 

3) 529 Plan?

Again, I don’t feel like I can answer this adequately at this stage. 529 plans are administered by each individual state and some states offer a tax benefit while others don’t. For more detail on how 529 plans work, check this out: How We Use 529 Plans To Save For College.

4) German brokerage transfer?

I suggest Jane find an ex-pat online forum to steer her in the right direction on this one. I recommend starting with the Mr. Money Mustache forum and going from there. This is one of those things that’ll be best advised by folks who’ve done it recently.

5) Lots of cash in checking account?

Fairytale mushrooms spotted on a forest trail near Kurt’s home village

Between their various checking and savings accounts, Jane and Kurt have $70,470, which I agree, is hefty. If they wanted to think in terms of an emergency fund, they’d multiply their monthly expenses ($3,629) by three, which would be a three-month emergency fund, at a total of $10,887. And then by six for a more robust, six-month fund: $21,774.

By that metric alone, yes, they are overbalanced on cash, which means they’re potentially missing out on leveraging that cash in an investment (it’s an opportunity cost to hold so much cash). However, since Jane and Kurt are at a pivotal moment and on the precipice of change, I think holding cash makes sense. Anytime you’re planning a major life event–a move, a new baby, a marriage, a retirement, a career change, etc–having extra cash on hand is a good thing.

Jane and Kurt’s unknowns and possibilities include:

  • Moving countries
  • Purchasing a home
  • Going down to Jane’s income only
  • Needing to pay for childcare
  • Needing to buy a car
  • Having more children

All of these variables are exciting and new and will cost money. At this stage, I think it makes sense for Jane and Kurt to enjoy this extra cash cushion. Once things settle out in terms of their potential move, career changes, a change in their monthly spending, a new car, a new baby, etc, then they can consider a more mathematically advantageous outlet for their cash. Jane is correct that their cash isn’t doing anything for them by sitting there, but I think that’s a problem for a future year. When they’re ready to start investing, I recommend the superb book, The Simple Path to Wealth: Your Road Map to Financial Independence And a Rich, Free Life, by: JL Collins (affiliate link). I love that book.

Credit Card Strategy

Jane mentioned that they aren’t using many travel points, but they do have one of the best travel cards available, the Chase Sapphire Preferred. I agree with her that if they’re going to continue traveling internationally every year (which I assume they will), it’s going to make sense for them to have a sophisticated travel rewards approach. They’ll want to dig into the best points value cards for the type of travel they do and possibly open another card in addition to the Chase Sapphire. For this research, I recommend the website Card Ratings because they make it easy to search and read about a ton of different cards (these are affiliate links).

Summary

My summary today is a bit different because most of the next steps–as I see them–are questions for Jane and Kurt to discuss. There’s not really a financial “right” or “wrong” for them to follow, more of a discernment process to walk through together.

  1. Is the missing link Jane’s parents? If so, is it possible to discuss having them move to Munich?
  2. Or, is the missing link living in the US? Or rural life?
  3. These are three different potential reasons for the move and I encourage Jane and Kurt to discern which one is driving their decision making.
  4. Would it make sense to remain in Germany for the baby-having years to take advantage of the country’s fantastic baby and parent benefits?
  5. Or, is Jane interested in pursuing a higher-paying position in the US, which would enable them to pay for childcare and a car, and etc?
  6. How does Kurt feel about the possibility of being a stay-at-home parent in the US? Could this approach be used to offset the loss of the German baby benefits?
  7. How often will they realistically be able to see Jane’s parents if they live a seven-hour drive away? Will this actually enable more frequent interactions with Oskar/future children? 
  8. Jane and Kurt, go forth to discuss and know that you’re in a wonderful position. You’ve been careful with your money and now you’re able to make a decision because you want to, not because you have to. I wish you luck and I can’t wait to hear what you decide to do!

Ok Frugalwoods nation, what advice would you give to Jane? We’ll both reply to comments, so please feel free to ask questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) your brief story and we’ll talk.

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