Friday, October 30, 2020

Buying Our First House (on TDY!)

I'm excited to share that we just bought our first house! And we did it all on TDY (temporary duty) training status!

To be honest, our first time home buying experience was a complete rollercoaster. Our first week of house-hunting, we were convinced we were going to get this beautiful, recently renovated townhouse. And then we were outbid by someone who showed up with $600,000 in cash! If you know anyone who is buying a house in the United States right now, especially in a hot market like the DC area, you've probably heard that competition is fierce. We can vouch for the fact that it is as wild and fast-paced as everyone said it was right now. We looked at some properties that sold the same day of their open house. Interest rates are low and savings for some are at an all-time high, so it's a great time to be selling real estate.

In our case, we've considered buying a property for a while and were pushed over the edge by the low interest rates and the fact that we have no idea when we'll be back in the United States. It is possible to purchase a property back home while serving overseas, but we love the peace of mind that comes with checking the place out for ourselves. M brings the analytical eye and experience with remodeling to spot flaws or where maintenance work is needed, and I like to think I bring an intuitive sense for what kind of property has broad appeal for renters with good taste (what I call "the vibe").

Our biggest advice to would-be homeowners is to explore all your options first and make sure you do your research. We talked to mentors, financial advisors, multiple realtors, multiple lenders, and multiple property management and real estate advising organizations to decide which market to focus on and whether real estate made sense for us. Once we decided we were going to go for it before we moved overseas again, every weekend became a real estate whirlwind. We'd make a shortlist of properties that met our requirements, hit all of them over the weekend, make offers on our favorites right away, and try again the following weekend. Almost every property we saw was sold within days. But luckily, we finally won a bid on a beautiful townhouse in a great area and we're thrilled with the final settlement. (Speaking of which: closing costs and closing paperwork are no joke! The stack of paperwork on top of countless DocuSign forms was enormous, as you can see at the end of this post.)

Because the Foreign Service is such a unique situation, we highly recommend you talk to people who know the ins and outs of our lifestyle, needs, and eligibility before you purchase a home for the first time as a diplomat. For example, some make a point to include things like pandemic or disaster clauses in their renter's agreements so that in the event of an emergency their family deployed abroad would have a home to come back to in the United States on short notice if needed.

For a more general (i.e., not necessarily Foreign Service) audience considering real estate as an investment, here are some of the things we learned:

  • If you're just looking to maximize your ROI (return on investment), your hometown may not be the place to buy. There are real estate investment strategy planning companies that can help you identify the rental market where you'll get the biggest bang for your buck (multiple folks told us Texas has a number of cities with excellent ROI right now, for example).
  • When you're researching the rental market for an area, don't just look at rent prices but also how long it's taking comparable landlords to find tenants. (A realtor who specializes in investment properties can be a huge help.)
  • What's your investment priority? Your real estate preferences could look very different if you're trying to maximize monthly income (in which case you just want the biggest difference between your mortgage and the rent checks) versus build equity (where you might be willing to break even or closer to even each month but the expected appreciation of that house is the real selling point).
  • Condos are almost never worth it for purely investment. They may seem tempting because of the lower maintenance, lack of a yard, and nice affordability-quality ratio, but we heard from so many people who lost money on them because of high condo fees, restrictions on renters and subletting, and other things that they as the owner couldn't control.
  • Read the fine print on your loan (assuming you have one and didn't just buy the property outright), and make sure there is no penalty fee for paying off your mortgage early. We listened to this sage advice from those who successfully made higher payments than required on 30-year mortgages and paid them off in 15 years. (This strategy can be better than just getting a 15-year mortgage even if you qualify for one because of the peace of mind that comes with having the option to fall back on the lower minimum payment each month if circumstances change.)
  • Always have an exit strategy. Some people really sour on real estate after purchasing a property that turns out to be a money sink, but if an investment isn't working for you then it's time to back out and reinvest elsewhere. Having a backup plan will help you swiftly execute a shift in a crisis instead of scrambling.
  • At the end of the day, (like all financial decisions) real estate decisions are personal. We have resources and access to local knowledge in our home state that made us more predisposed to investing there, even though it meant taking a lesser ROI. That trade-off is worth it to us, but it might not be for you.

I hope this post was helpful for anyone in or out of the Foreign Service considering jumping into real estate for the first time! We're happy to join the homeowners' club and are so grateful to all the mentors, advisors, friends, and family who gave great advice along the way. And if you're looking for an amazing realtor in the DC area who knows a ton about real estate investment (and has the Foreign Service background), we highly recommend Tanya Salseth at Keller Williams!.

Friday, October 23, 2020

Life Insurance as Retirement Investment

As a follow-up to my previous, very broad post about financial management in the Foreign Service, I thought it might help to share something M and I only learned about relatively recently: life insurance as an investment. Like many other government employees, Foreign Service members have access to robust retirement options. For example, I have the combination of Social Security (though I had plenty of public school teachers tell my generation not to count on this one), a pension, and an IRA through the Thrift Savings Plan (TSP, the U.S. government employee retirement plan).

But what if you have more disposable income and would like to invest that in more diverse sources to build wealth for the future? There are so many options out there. A popular avenue with Foreign Service Officers is real estate, which I'll address in a future post. But another strategy involves life insurance. I first learned about this method attending financial education webinars for Foreign Service members, and after that M and I did a deep dive into how this mysterious new world works.

We ultimately decided to purchase permanent life insurance. Unlike FEGLI (Federal Employees' Group Life Insurance), my new life insurance plan is tied to me as an individual and not to my job. In other words, if something unexpected happens and I need to leave government service, I'll still be covered. This advantage alone probably would've been enough to convince us to make the switch, but there were other reasons, too.

At the risk of sounding morbid, I have to say that not too long ago, I thought life insurance only mattered if you die. Turns out, there are plenty of plans that go far beyond this. One thing I like about the plan I ultimately selected, for instance, is that it will pay out a stipend even prior to my passing if I'm diagnosed with a serious illness or suffer a major accident. That security and peace of mind is well worth our investment. Moreover, because I chose a permanent life insurance plan instead of a term life insurance plan, I can collect that savings tax-free with compound interest as a boost to my income in retirement. (Term insurance is cheaper than permanent insurance but is designed to provide coverage only within a specified timeframe. Make sure you hear both sides of the debate, though; some prefer term life insurance plans or say to skip life insurance entirely.) Because I'm starting the process at a young age and in good health, life insurance is much more affordable.

If you want to learn more about life insurance as a retirement investment, I highly recommend you check out The Purpose of Money, a podcast and online resource for personal finance and investment run by our friend and colleague Acquania. You can even contact her through her website and she will do customized financial advising for you and offer helpful advice on your retirement savings plan, no matter where in your investment journey you are. (I should add that we're not getting any kind of referral bonus or kickback for sharing information about her financial advising services; we really just think they're that good!) We especially hope this post was helpful to other investment newbies looking to diversify their savings and build some financial security for the future. If you have investment tips, please feel free to comment them below.

Tuesday, October 13, 2020

ConGenerally Speaking...

I know, it's been I while since I threw a pun in the title of a post. I hope this one got at least a few of my readers groaning and rolling their eyes, the mark of every truly great pun.

This is a bit of a victory post: after a year of delay when our Baghdad assignment was cancelled, and an additional four-month delay due to the pandemic, I finally started ConGen! ConGen is the common name for Consular Tradecraft training. It was required for me to be able to do my next job in South Korea, which could include adjudicating visas and helping U.S. citizens abroad.

Let me be clear (because some have already asked): I will not be giving out visa advice or coaching anyone, even people I love, on how to increase their chances of getting a visa. All I'm going to say is apply early, organize all your required documents and trip information, and be open and honest. You can find all of the publicly available information on visas at Trying to give people I know special treatment is the type of thing that could not only cost me my job but compromise the integrity of the process (not to mention national security). So please do not pressure the Consular Officer in your life to give you advice!

It's often way too much information for one person to try and remember it all anyway. The best we can hope for is to memorize where to go find information. Every day brings new tests of our resourcefulness and judgment. I'm also becoming much more intimately acquainted with certain sections of the Foreign Affairs Manual (FAM) and Foreign Affairs Handbook (FAH), the compendia of regulation and policy information we need to do our jobs. To my dismay as a stickler for rules and clarity, I came across a poorly written part of the FAM during ConGen. The people I first complained to brushed it off, but then I found the people who write the FAM and suggested that they change it, and they actually agreed! They're working on it now. I love it when nerds and rules enthusiasts band together. (Unfortunately, I can't share the portion that is getting updated here because it's sensitive but unclassified, but suffice it to say I am very proud of myself.)

One of my biggest takeaways from this course is just how important local conditions are. Everything from the most common types of cases, pitfalls to watch for, and statistics on refusal and admittance rates vary widely from post to post. Moreover, certain programs and special requirements have a big impact on circumstances. For example, we have a visa waiver program in place with South Korea, so a lot of the most common tourist visas don't need to be issued at all in my office.

At the same time, worldwide travel demand has decreased drastically as a result of the pandemic. Consular work probably looks very different now than it did even just a year ago. I'll just have to wait until I get to post to see what it'll look like for me!