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One Divorce You'll Never Get

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Some people are worried about the future of the U.S. dollar and they believe that moving from the States is a way to distance themselves from its possible decline.

Well, yes and no. While diversifying your asset holdings by currency is often a wise move, the truth is that if you're a U.S. citizen you'll never be able to walk away from the dollar completely -- even if you move overseas. Likewise if you're a Canadian or citizen of any other country -- it's hard to totally divorce yourself from your national currency.

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Here are two reasons why...

One. You can't divorce the tax man... no matter how irreconcilable your differences. If you're a U.S. citizen you are obligated to file your annual tax returns, no matter where in the world you choose to live or work.

If this means you'll owe money to the IRS then you'll need to pay that nut in good old greenbacks. If you're lucky enough to get money back, it will be sent to you in good old greenbacks.

(You can't have it directly deposited to a foreign account -- only to bank accounts located in the U.S. For information about getting your Social Security payments sent to you outside the U.S., read this. And Canadians, this is for you.)

Two. If you rely on credit cards... even if only for emergencies... it may be difficult to get one in a foreign country unless you have an established credit history there. So when you move overseas you'll want to hang on to your U.S.- or Canadian-issued credit cards. And, of course, you'll need to pay those credit card bills with your national currency.

Most expats we know maintain a bank account at home for just these reasons. They may not leave a lot of money in it, but enough to pay debts like credit cards, taxes, life or health insurance policies, etc. For emergency purposes, you may want to have a debit card attached to this account.

When you're preparing to move overseas it's a good time to assess your personal financial situation. Decide if your current bank and current credit cards are the best for an expat.

Here's what to consider: many banks issue debit cards that come with a hefty "foreign transaction fee" or "foreign currency exchange" fee. Same with credit cards. These fees can add up. Withdraw 3,800 pesos in Mexico or 150,000 colones in Costa Rica, for instance -- about $300 USD -- and you may end up paying $15 or more in fees.

The solution is obvious: look for banks and credit card companies that don't charge these fees and move your accounts there before you leave home. (We've opted for Capital One.) And remember to choose financial providers with easy-to-use online banking interfaces.

If you're planning to move to a foreign country, managing your personal finances is a critical issue. And, of course, there are other issues you'll need to address: like taking your pets or household goods with you... the best residency visa for your personal situation... how to find a job, open a bank account, etc.

But don't worry. You'll find lots of the information out there to help you make your overseas move as enjoyable and pain-free as possible.

And the best advice is to always ask questions -- and if you get an answer you don't like, ask someone else. You'd be surprised how many rules, regulations, rates and fees are open to interpretation and negotiation.

Earlier on Huff/Post50:

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