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20% COLA on 70,000USD salary

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egad24
10/14/2008 09:59 EST

My husband and I are moving to the UK for 6 months for an extended business trip.

My current salary is 70,000 USD, and the company has offered a 20% COLA, which works out to $7,000 over 6 months. I will continue to be paid in USD.

Although the company is paying directly for housing and utilities, according to my calculations this COLA is not enough to "make us whole."

I estimate that we currently spend about $13,000 every 6 months on groceries, transportation, clothing, entertainment, etc. These are expenses that will not be covered by the company in the UK.

Assuming that we spend an equivalent amount in the UK, we would get an extra $7,000 to cover the currency exchange, which assumes that the exchange rate is ($13,000+$7,000)/$13,000 = 1.54USD to 1GBP.

Since the exchange rate is actually higher, I think we'll lose money on the deal. What do you think?

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pallega

From: United Kingdom
10/14/2008 14:19 EST

No one can predict the FX market with 100% certainty, but we've spent a few years with closer to a 2:1 conversion rate. 1.54 is closer to 5 years ago than it is today. The interbank rate today was 1.72. The cash rate is at least 4% higher than the interbank rate.

If you live in NYC, then you're pulling at least a 40% total tax rate. That's US 4200/month take home or around 2442 GBP/month.

Can you live on that? Is that a loss or break-even or gain? That's what it comes down to.

Depending upon your lifestyle, we think it would be tight but doable.

Here's a list we pulled from post postings. Do you know what this will cost you for each line item?

groceries
mobile
home phone/broadband
gas
electricity
water
TV licence
party money
Travelcard

Do you have to pay the council tax for the 6 months you're here?

Do you still have debts to pay in the US on top of living in the UK?

What about international health insurance?

Add those costs in as well.

Subtract expenses from income - are you better or worse off?

It's very strange to do an extended business trip in this manner, but not unheard of. If they only need you for 6 months, consider going with a hotel and all expenses and food. If they need you that bad, they should be coughing something up to make it possible for you to get the job done for them that they'd like you to do.

Moving you and the family over for such a short time is a bit abnormal. We're at a bit of a loss as to how to make proper comparisons. You really need to do your budget.

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