Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.
Buying a house is a major milestone that can be both scary and fun — getting a mortgage can be complicated, but there's a lot of joy in owning your own place. But buying a house in another country takes this experience to a whole different level, as you navigate new financial systems and different laws and real estate customs.
Expats Amon and Christina Browning know the highs and lows of this experience first hand. The couple moved with their children to Lisbon, Portugal in July of 2019 to enjoy early retirement and life overseas — and a year later they bought a home there.
The Brownings rented an apartment for a year, while they searched for the perfect home and learned the ins and outs of establishing residency in their new country.
This summer, they found what they were looking for: A two-story, move-in-ready house on 1 acre of land with a garden and covered terrace.
The Browning Family house in Portugal.
Photo courtesy of Christina and Amon Browning.
Step 1: They committed to a long-term goal
To many, the Brownings' life seems idyllic. Yet, the couple stresses that achieving their dream would not have been possible had they tried to keep up with the expectations of others.
Instead of trying to compete with "the Jonses," the couple wrote a fictitious break-up letter to those imaginary neighbors: "The Brownings will no longer be keeping up," reads the letter they posted on their blog. "We have more important things ahead of us — like financial independence and retiring early."
For the past decade, the couple didn't drive expensive cars or buy designer clothes, even as their income increased. Instead, they saved up $2 million, which they stashed in a variety of accounts, including an Ally Online Savings Account, a money market account and various brokerage accounts.
By age 40, they had saved enough to fund their expat life without having to borrow a mortgage or use credit cards (except for their rewards). This was their definition of financial freedom.
For eight years, the couple embraced what others might consider sacrifices to reduce their cost of living. Looking back, the Brownings don't see their choices as a hardship, but rather decisions that align their goals.
Step 2: They increased their earnings with side hustles
Though the Brownings had stable government jobs with healthy salaries and good benefits, they found additional ways to increase their monthly income.
They lived in the Bay Area, where the rental market was profitable, and since they love to renovate houses, the couple got into house flipping and rented out rooms on Airbnb.
They also started a blog and a YouTube channel to document their process, then sold courses on how to invest so others could learn from them.
Step 3: They cut costs so they could save up to 70% of their income
Most Americans carry some form of debt, such as a car payment, a mortgage or student loans. Then there's your typical monthly expenses like rent, groceries, and gas. Not to mention additional costs like clothing, entertainment, dining out and the general spending that goes with having a social life.
But while the average consumer allocates a good portion of their money to the above costs, the Brownings found ways to put as much as 70% of their income toward saving and investing.
First, they used profits from their house-flipping side hustle to pay off what they owed on their mortgage. Then they avoided taking on new loans so that they could keep saving. They even drove an $800 car. The Brownings also found clever ways to "house hack," or reduce housing expenses, by renting out extra rooms in their home.
By cutting down on the costs they didn't care about, the Brownings saved up $2 million to help them achieve the goals they cared about most.
Step 4: They saved and invested in diverse accounts
With all their extra income, the Brownings had to make smart choices about where to put it. They kept their emergency fund in a high-yield savings account, so they were able to earn more interest on their cash.
The Brownings keep over two years' of expenses in their emergency fund, but you don't have to save that much before you start investing (consider this 3-step checklist to see if you're ready to invest). As they built their emergency fund, they also put money into a money market account, CD ladders and brokerage accounts.
You don't have to be an aggressive saver to get started. Transferring just $40 per week from your checking account into a high-yield savings can earn you $2,000 per year. Over time, you can increase the amount you save. The Brownings suggest increasing your savings percentage by 1% every month or every year. Stay focused on incremental progress, and soon you may be motivated to make bigger changes to your budget, like downsizing your wardrobe or deciding against a new car loan.
When you're ready, choose a no-fee savings account, such as the Marcus by Goldman Sachs High Yield Online Savings. It is simple to use with easy mobile access.
Marcus by Goldman Sachs High Yield Online Savings
Information about the Marcus by Goldman Sachs High Yield Online Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Goldman Sachs Bank USA is a Member FDIC.
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Annual Percentage Yield (APY)
-
Minimum balance
None to open; $1 to earn interest
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Monthly fee
-
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
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Excessive transactions fee
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Overdraft fees
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Offer checking account?
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Offer ATM card?
Pros
- No minimum balance (just $1 to earn interest)
- No monthly fees
- Up to 6 free withdrawals or transfers per statement cycle
- Easy-to-use mobile banking app
- Offers no-fee personal loans
Cons
- No option to add a checking account
- No ATM access
- You can't deposit a check via the mobile app
For a higher APY, the Varo Savings Account is a good option. However, it comes with more requirements than the Marcus savings account: Earn up to 2.80% APY when you make a minimum of five purchases using their Varo Visa® Debit Card, have direct deposits totaling $1,000 or more each month and keep a savings account balance no higher than $10,000 all in the same month. There is no minimum balance and no monthly fees.
Varo Savings Account
Information about the Varo Savings Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Bank Account Services are provided by The Bancorp Bank, Member FDIC.
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Annual Percentage Yield (APY)
0.81% (with option to earn up to 2.80% if meet requirements)
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Minimum balance
-
Monthly fee
-
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
-
Excessive transactions fee
-
Overdraft fees
None up to $50; anything greater, Varo would decline the transaction
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Offer checking account?
-
Offer ATM card?
Yes, if have a Varo checking account
Pros
- High APY and option to earn even higher
- No minimum balance
- No monthly fees
- Up to 6 free withdrawals or transfers per statement cycle
- No penalty for overdrafts up to $50 (anything greater, Varo declines the transaction)
- Option to add a checking account
- ATM access if you have a checking account
- Offers 2 programs to help automate your savings
Cons
- Overdrafts over $50 will cause transactions to be declined
- Cash deposits are only available through third-party services, which may charge a fee
Step 5: Get your financial ducks in a row
Before they could become homeowners in Portugal, the Brownings had to establish residency. This involved each of them getting a NIF (a Portuguese tax identification number), opening bank accounts, applying for a fixed residency visa, work visas and eventually becoming permanent residents.
Portugal offers a golden visa, which is a type of permanent residency given to individuals who buy property and/or invest a certain sum of money into their new country. So while you may not have to establish a credit score when you move abroad (different countries have different rules), it helps to have your financial ducks in a row. Having ample assets and an ability to invest money and/or create jobs in a new country makes you more desirable when applying for a visa.
As of 2019, 20 of the 27 countries in the European Union offered golden visas, though the practice has been under scrutiny.
Aside from legal paperwork, the Brownings also had to adjust to daily life in Portugal. They researched health insurance providers, found private schools for their kids and enrolled the whole family in a Portuguese language program.
They also had to make a budget based on their new cost of living and get used to spending a new currency.
The Browning family in Portugal.
Photo courtesy of Christina and Amon Browning.
Step 6: They rented for a year and learned the market
The Brownings budgeted for a year of renting in Lisbon before they found the perfect home. This gave them the opportunity to submit their required residency paperwork, meet with realtors and learn the market. They searched for months until they found the right home. Building a buffer into their timeline and budget allowed them take their time with the decision and not rush the process.
Step 7: They bought their dream house
In August, the Brownings closed on their home, located on Portugal's silver coast only 15 minutes away from the beach. It was originally priced at €250,000 (approx. $291,000 USD), but it dropped to €212,000 (approx. $247,000 USD) just before the Brownings made their offer.
The couple offered €180,000 and ultimately settled on a price of €190,000, or about $221,000 USD. They were able to pay for the house in cash as they had started saving for their house years before they left the U.S.
Don't miss: This 3-question checklist will help you determine when you’re ready to invest your money
Information about Marcus by Goldman Sachs High Yield Online Savings, Ally Online Savings Account, and Varo Savings Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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