R&R Cost-Construct

Cost-construct doesn't follow common sense. It follows government negotiated rates for some routes, perhaps some influence from consumer demand, and apparently a bit of good fortune when the cost-construct gods smile on you. I've learned it pays to at least ask.

The R&R point for Caracas, Venezuela is Miami. There's heavy demand for those flights, so prices are generally high. We wanted to cost-construct R&R to Stockholm, Sweden. I asked. The surprising answer was that a flight to Stockholm via Paris on Air France was a little cheaper than going to Miami. Who would think?!? No money out of pocket! Yep, R&R is in Stockholm. :-)

Strange Things Afoot - Inflation

2 1/2 months at post and "strange things are afoot at the Circle K." (Circle K is a convenience store chain founded in Texas and referenced in Bill & Ted's Excellent Adventure. Be excellent to each other!)

It's already hard to find some items like milk, sugar, toilet paper, deodorant, or other various imports people actually need for a normal life. Regardless of their lack of Circle K stores, I have a feeling strange things are afoot here. Prices are all over the place from really cheap to expensive when I compare them to home.

There's 3 different exchange rates at play. It makes it harder to understand why anything is priced the way it is. I'm sure a lot of the pricing troubles are caused by these various exchange rates.

Home Leave and Taxes

Some of my new hire classmates pointed out that home leave expenses are tax deductible. We need to keep all of the receipts as supporting documentation for this. It still seems odd that driving to visit family, eating, and staying in hotels would be tax deductible (only for the employee) but that's what the IRS says:

The amounts paid for travel, meals, and lodging while on home leave are deductible as travel or business expenses subject to the rules and limits discussed earlier. You must be able to verify these amounts in order to claim them. Amounts paid on behalf of your family while on home leave are personal living expenses and are not deductible.

IRS: U.S. Foreign Service Employees

The AFSA Tax Guide is another good resource for this information with tips about keeping a travel log.

Home Leave Finances

Home Leave Spending

Spending patterns don't just change because we live in spare bedrooms and hotel rooms during home leave. I didn't need a car in Sweden but will need one in Venezuela, so I bought a cheap used car when I arrived in the U.S. to ship to the next post. I wonder how many car changes will be needed over the years as import restrictions and opposite side driving changes vehicle requirements from post to post. Well, at least I have something for all of the road tripping I've planned for this home leave. I'm sure next time it'll need to be a rental car for this part so that'll be another budget item next time.

I've heard some people hate the required home leave because it's an expensive forced vacation. However, I love to have more free vacation and we all know it's coming so it can be budgeted for like any other expense. It's also another area where you need to expect the unexpected. I had to take an eye test to fix my driver's license in Texas and discovered I need glasses for driving. There's a few hundred dollars more I didn't plan to spend on glasses.

Advance of Pay

Even if you haven't saved up enough money for home leave, there's another way to tap your future pay besides credit cards. I found someone's blog post from 2008 about Advance of Pay and it also talks about the Foreign Transfer Allowance. They wrote: "Within 45 days before and 60 days after arriving to post, you can get up to 6 paychecks up front. You should take this loan in ALMOST EVERY CASE." I would add it makes sense if you're going to a high differential pay post where you may not be able to spend your money as easily and/or need to buy consumables and a car like I do. I'd pay off those expenses from future pay anyway so why not pull some of that pay to the present? If I was going to a higher cost of living post or a post with little or no extra allowances then this may not be a good financial tool. Either way it's good to have this option for an interest free loan of your own money.

An update to their instructions is to just fill out one JF-55 and scan it to the PayHelp email address. They were quick to add it to my paycheck and after another paycheck they started taking out the repayment, so be ready for reduced pay during home leave if you do it before leaving post. That's on top of losing any allowances you may have at post that don't get paid during home leave. I didn't request too much of an advance since it's a big chunk of a paycheck to take 6 paychecks and pay them back over 18 paychecks. But hey, I'm going to a 30% differential post so I can use a bit of that in advance.

Edit 2021: This request was migrated to the DS-4315 form in myData.

Mindful Spending

The other thing I'm thinking about is just being mindful about my spending. A thought keeps creeping in that I don't know when we'll be back to the U.S. for this or that unique thing or food. It's tempting to just go crazy and do whatever we want. I have some broad budget targets in mind for home leave so I'm going to try to stick to that as much as I can. I don't usually have the consumer Christmas financial hangover like many Americans experience so I'll probably be good in this area. 

Foreign Service and Personal Finances

One big thing I look back on at the end of the year is personal finances. This year I'm sharing something about that since it was a big transition year. One thing we debated for a long time was if we could afford to take the plunge into the Foreign Service. We had great paying Civil Service jobs in the DC area, but our pay was offset by the great sucking expenses of DC area living. It made us wonder if it was truly worth it to stick with those careers.

I heard from many of my new hire classmates that it was a pay cut for them to join the Foreign Service. This was true for me and very true for my wife as she became a "trailing spouse" and quit her job. I knew she could eventually get some sort of embassy employment but nothing like she was making before.

The pay you may see on the job advertisement isn't the only consideration for this kind of career. The Foreign Service has many monetary benefits to ease living overseas. We get a cost of living allowance in high priced countries like Sweden and there's other pays to offset hardship conditions in other countries so each tour is financially different.

They provide us housing and utilities while living overseas. I don't mind not choosing our housing but that trade-off isn't for everyone. We're also not building equity in a house since we sold ours. I think it's worth it since we don't have the headache and expenses of renting out a house from overseas.

I knew I couldn't compare working in DC to working abroad because our spending patterns would change. Overall, the added benefits and changes in spending have worked out as I expected. Here's a peek at that in case someone else is grappling with the same decision.