Cost of Living Abroad for a Family of Five

I’d like to encourage other people to do what we’re doing: living in Hungary for six months to expose our kids to their mother’s language, family and history. I’m providing our costs here as a guide to anyone who wants to do the same as we have.

Before starting, one big exception that we have is that our income is entirely generated over the internet. Traveling like this would put a major dent in anyone’s income if they have to show up at an office, school or coffee shop for work everyday. There are opportunities to work abroad – English tutor, lecturer, etc.; but I don’t know anything about these that is not ancient history by now. The last time I was an English as a Second Language Teacher, the internet was not yet in the public domain.

Our family comprises two adults and three children, ages five, three and six months. I’m an American citizen with no background in Hungarian. My wife came from Hungary in her late twenties and its been ten years since she spent any time living on her own here. The kids are, well, a handful but we love them. Besides, what else would I take pictures of for the blog?

Our biggest expense is our mortgage. Normally, for purposes of this exercise, I won’t mention costs that are the same in Hungary and the US, but our mortgage is the elephant in the room. It’s simply the biggest part of our monthly budget. We own a very modest house, in a very modest neighborhood, of a very modest suburban city in Southern California. In fact, our house pegs the median cost of a California house in most surveys. Nonetheless, the expense of our 30-year, six percent, fixed mortgage is by far the biggest single expense on our books and would be likely to shock our Midwestern relatives. It seems a shame not to use the house for six months, but if we choose to stay home only to maximize the utility of our investment then it becomes a prison. Much better to close the house, keep up the payments and pursue our goals.

Health insurance is a must for any American family, no matter where they live. There is no guaranteed medical plan for all citizens, it is a family’s responsibility to make sure they have adequate insurance. While most Americans get this insurance at a discount rate through their employer, we’re not so lucky. We need to pay the entire cost of insuring the five of us, and it has long been the second biggest expense on our budget.

Why keep the insurance while we’re abroad? We have a very good secondary policy (Seven Corners) that covers us while traveling, but in case of extended illness or a major accident, the insurance provider really just wants to return us to the US where we are no longer their problem. Note that national insurance programs don’t generally cover foreigners.

One thing we have found is that private medical services in Budapest are far cheaper than in the US. We’ve heard this about most other countries as well. A visit to an Ear-Nose-Throat specialist here was $40, compared to $150 – $200 in the US. Dentist prices are even lower, as Budapest is a common destination for vacation dental work for a lot of Europeans.

In California, we pay a relatively high price for keeping our kids in a good pre-kindergarten school program. In Hungary, we enrolled our kids into the local, free daycare facility. Since our target is to immerse them in Hungarian, this works very well for us. Before coming here, Gabi investigated schools to find one that would accept our kids and, when we found one, it became the determining factor in where we looked for an apartment (southern part of District 5, in our case). Even with the preparatory groundwork, it took a month of daily work with the local bureaucracy for Gabi to get the kids admitted to the school. It’s hard to say if we made this part of the trip too difficult on ourselves or not. The bureaucracy involved in getting the kids accepted is not at all transparent.

Apartments. Two of them. First of all, why two? I’m used a quiet home office that I can work in. Apartments in Europe are generally smaller than corresponding ones in the US, and even if there is a room available in an apartment for conversion to an office space, it is pretty cramped quarters. Better to get a small, outside space as an office. It turned out that we also needed one to circumvent monopolistic internet practices in Hungary (see below). The better internet service (UPC) is barred from offering their service in the fifth district by the state monopoly (T-Online). We found our office space on Doheny utca, just outside the fifth district’s borders.

Apartment prices are based mostly on location, followed by size and how modern/functional they are. We’re not in the most expensive part of Budapest (that would be on the other side of the river, in Buda). The family apartment is reasonably large, well-located in the heart of ancient Pest (5th District), recently renovated and generally comfortable. The office is much smaller, barely adequate as a living space for a childless couple and should be considered on the low end for any apartment space in the city. All apartments come furnished. Finding apartments was easy – there is a lot of availability. It took us three days of looking over places to come to a decision.

We used this service to find both of our apartments – one was $900 a month, the other was $350 a month. Balazs (pronounced ‘Ba laj’) is the principal at the agency and speaks English (though I’d suggest working through email after first introducing yourself by phone – fewer chances for language problems).

Utilities are the next subject. Since we are paying directly to our landlords based on contract rates, we can’t be sure what the real utility rates are. From talking with friends living here, we’re probably paying a small premium on actual rates, but cost of electricity, gas and water are all higher on a per-unit basis than in California. During the winter months, using gas to heat the apartments ran to $300 per month. We expect to pay less as the summer approaches, as neither apartment has air conditioning.

Even though we closed the house in California, we still pay for water and electricity (our sprinkler system is keeping the lawn alive while we’re gone, for instance).

Internet access in Budapest is not on the same caliber as the US. While the media in general lauds European, Japanese and Korean internet access as far superior to the US, Hungary has been left behind by an oligarchic duopoly: UPC (the cable company – better service) and T-Online (the government phone company – worse service). Costs for a simple (advertised) 1 megabit connection with 275kb uplink can be $20 – $30 a month. Speeds equal to our California connection’s 15megabit with 2megabit uplink are unavailable at any price. Currently, we’re spending $75 in each apartment – actual measured speeds are about 2 – 3megabit download in both locations, and 500kb/1.0megabit upload.

Getting around Budapest is a joy. The subways, trams and buses go everywhere. Kids under six travel for free. The adult monthly passes are surprisingly expensive at $50 each. This compares very reasonably for the average of $250 we pay each month in California for gas for our two cars. We stored our two cars (parked in our garage). I have not included car insurance in the spreadsheet. We’re still paying it, since US insurance companies have a habit of charging a lot extra if you ever cancel them for any reason. I found this out the hard way, when I had to pay teenager rates when I returned from an extended stay abroad some years ago. Better to keep minimal insurance on the cars even though they sit gathering dust, unlikely to be in any accident.

Cost of food, drink, clothing and the like is quite a bit higher in Hungary than in the US. We’re used to shopping at Costco for most daily needs in California, while here we are stuck with smaller downtown stores which have a significantly higher markup. Even when a friend takes us to the larger shopping centers that dot the outside of the city, prices are quite a bit higher than the US. One thing that keeps the costs down is that we are only buying items for current needs rather than durable goods – a camping trip mentality. I’m not going to get a new grill for Father’s Day, for instance.

In the end, we are facing a premium of about $500 a month for choosing to live in Budapest. In fact, its more than that since we do frequent trips in the country and plan to get around to a few other places (Prague, Greece) before returning to California in August.

I hope this post helps someone else make their plans. If so, please do leave a note.

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