How to start a new life in the US

We talked about a path for legal immigration into the US recently. This post is a continuation of the journey. It picks up at the point when all paperwork is complete and you are ready to travel. We will talk about the most important things you should do to start your new life right. We will cover a place to live, banks to put your money into, government affairs, social considerations and a few more. Being an immigrant myself, everything I talk about in this article is a first-hand experience through the lens of living in this country for over a decade. You should definitely put your own check-list and use this post to make sure you haven’t forgotten anything important.

Seattle skyline

The house

Needless to say, the place where you sleep matters. As a new resident in the country, you may not have friends or relatives to stay with. You may not be able to land a job if you are tired or haven’t had a shower in a few days after a long flight. As a matter of fact, the top reason homeless people in the US are unable to find a job is that they just don’t have a place to rest, wash and groom themselves. As such, sleeping at the airport, a train station or in your car is not the path forward.

It would be difficult to find a good place to rent without seeing it first and meeting your landlord face to face. I am speaking from personal experience being on both sides of that equation. Pictures you see on the website do not accurately represent the state of the unit or the neighborhood where it is located. You may like something you see but will be shocked when you actually walk into it. Do not commit to any deals until you see the place.

On the flip side, landlords prefer people they can see and evaluate. They are unlikely to agree to rent an apartment on the spot over the phone conversation alone. Landlords will want to run credit/criminal history check on you and see positive references from previous landlords.

Employer-provided temporary housing

If you are coming here for a job on an H-1B to an L-1 visa, negotiate with your employer for temporary housing as part of your relocation package. Most reputable companies will offer anywhere from 2 weeks to a few months of stay at the corporate housing for new employees. Housing is either owned or operated by your employer directly or by another company that your employer contracted to deal with relocation matters. For example, Aboda provides such services if your employer can afford it and your position warrants it. There’s no hard and fast rule, but generally speaking, if you are making at least $150,000 a year, you should be able to get temporary housing from your employer.

Hotel

Arrange a hotel stay for 2 weeks after you arrive to give yourself time to find an apartment. You will need time to shop around the area close to your place of employment. As an option, you can book an affordable hotel in the airport area, as they are generally cheaper than downtown hotels. I would go with hotels.com or trivago.com for shopping as they have good coverage. Do not stay at a fancy place as those will be extremely expensive. The typical hotel room price per night should be in a $130$200 range.

AirBnb

A great way to grab a place for a short time is airbnb.com. Check a few other options for vacation rentals with tripping.com or vrbo.com. You don’t have to reveal to everyone that you are not on vacation – that’s none of their business. You just need a place to stay. If you shop around you should be able to find a $100 per night deal.

Hostel

As we are descending down the price range, we can look at a relatively cheap hostel to stay. I would check booking.com because they have a good inventory. The difference between a hotel and a hostel is that the hotel offers you a room, while the hostel offers you a bed. As such, a hostel will cost you approximately $60 per night. This is a perfect option for someone only starting a new life in the US.

View of a typical hostel in the US

Craigslist

As a last resort, you can check what’s available on Craigslist under “housing” or “vacation rentals”. The benefit of this site is you can find really cheap accommodation, or may even be able to negotiate for a price reduction directly with the owner if you offer to buy groceries. Unfortunately, this site is full of fraud, so be careful and don’t trust everyone. I have not had a positive experience with Craigslist, but other people have. If you feel adventurous, you may be able to find a place to stay in $30$50 per night range by pre-paying for the whole period.

Do not buy a house

I can’t stress it enough how important it is to delay a house purchase for a few years after you arrive in the US. Houses are expensive, and you are unlikely to have a pile of cash to afford it. You will probably need a mortgage. Mortgage rates are high for people with good credit, I mean 720+ FICO score – 3.66% APR is considered high. As a new resident in the US, you will have no credit history. There may be some lenders willing to give you a line of credit, but it will be an exuberant rate. Something in the ball-park of 6%-8% which is a complete and total rip-off. So you are strongly advised to defer buying a house until you’ve built up a good credit history.

Cash

Do not bring your credit cards when you arrive because you will rack up international credit card fees quickly. Bring cash instead. You can bring up to $10,000 of cash through customs without issues. If you plan to bring more, make sure to notify them in advance but you should be fine either.

Good news, you don’t need to bring that much money. You should be able to survive for 2 weeks in the US having $1,000$2,500 in your wallet, depending on how frugal you are. Since you are coming here for work, most employers pay bi-weekly, meaning you should get your paycheck in 2 weeks after you start. If you don’t have an employer, you will need more cash, obviously, to support yourself until you find a job.

Check-out lonelyplanet.com or GSA per diem rates for specific state and city you will live in.

Important to note that prices in the US are shown before taxes. It means that if something costs $9.99 on the sticker, it will cost $10.99 at check-out if the state has a 10% sales tax. Please refer to my prior post on the cost of living in the US.

One last point to consider – it is customary in the US to tip for the service. You usually tip at the restaurant, in the taxi, at the barbershop even at the coffee shop in some cases. Tips range from 10% to 20% of the total bill, including taxes. Yes, you read it right. If you are handed a $9.99 bill, you will pay $10.99 for the food and an additional $1.64 for the service which adds up to $12.63.

The car

It is not practical to live in the US long term without a car. The public transit system is not mature enough to take you everywhere you want to go. It is developed in metropolitan areas and extend in the suburbs where people live to cover the most popular commute routes. Very soon you will need to go somewhere and there won’t be a bus or a train to take you.

Drivers license

To get a car you need a license. If you’ve been driving for over 2 years in your home country, you should be able to get a US driver’s license relatively easily. You are allowed to drive with your international driver’s license for 30 days. During this time you are required to obtain a US driver’s license.

The process begins by showing up in local DOL (Department of Licensing) of your state and taking a knowledge test. You do not need an appointment for it and most offices can do it at their location. Download a driver guide (if you will live in Washington state) and study it yourself.

If you have less than 2 years of driving experience you will not be allowed to take the skills test and will be required to attend driving school. You do need to pass the knowledge test either way even to be able to drive a car at the school.

The skills test needs to be scheduled in advance. Call the DOL office to schedule a time slot. On the day of the test, you have to bring your car. Do you see a chicken-and-egg problem? To get the license you need a car, to get a car you need a license. I have seen people renting a car while on their international license and trying to pass a test that way. You have to be skilled and confident that you will pass. If you fail the test, DOL can revoke your international driver’s license and you won’t be able to drive your rental car to drop it off. You will have a bunch of headache on your hands. Of course, a way out of this is to bring your friend who has a US driver’s license so he or she would take care of the car if you fail the test.

The safer and less problematic path is to enroll in the driving school, take a few practice lessons and use their car for road skills test at the DOL. If you fail, the instructor will take the car and you can try again and again until you pass.

Some states delegate skills test to driving schools altogether. You have to enroll in the school to take the test because the DOL does not conduct them. Driving shoals have a way to post your results to DOL and you will need to show up at the office to get your license.

Buy a car

The best way to get your first car in the US is to buy it with cash. Use Kelley Blue Book to figure out what you can afford then go on Craigslist in your area or Edmunds and shop for cars. You do not need a fancy or expensive car right off the bat. What you need are 4 wheels to get around and you will be surprised what is available for $3,000 in the US. Let’s face it, your first car will have a short shelf life and will likely be recycled when you are done with it. Drive it like you stole it.

You can get a decent deal at the dealership as well, but you need to know how to negotiate. Being new to the country you will not have negotiating power over a salesperson that sells cars for a living. I would go to the dealer only if there are no reasonable cars on Craigslist.

As a last resort, you may consider getting a car loan to buy something more expensive. It is generally a bad move since you have no credit history and will be ripped off by the dealership finance department. It is estimated, that a good salesperson in finance will take over $3,000 on average from you above what you should have paid.

Before you finalize on the car, it is worth checking VIN with Carfax, to ensure it wasn’t involved in the accident.

Do not lease a car

When considering the total cost to own, the car lease is equivalent to buying a car with a 14% APR car loan. This is the most expensive way to buy a car. If you end up just giving it up after driving for a while, then you will have flushed money down the toilet.

Social Security Number

One of the first things you want to do upon arrival into the US is head over to the Social Security Administration office and apply for a number. You can’t even fart in the US without a social security number, metaphorically speaking. You will need it when opening a bank account, applying for a credit card, looking for a rental property, buying a car, even getting a cell phone service.

Social security card

As a side note, the social security number in the US is the closest thing to a national id. It was never meant to be a national identifier because it lacks the necessary security features. It is just a number that the social security administration introduced in 1936 to track who gets the benefits. There is strong political opposition in the US to the concept of a national identification number. As such any attempts to pass a national id law is a political suicide. Since lawmakers can’t create a national id, social security number has been widely adopted by various business and institutions as the closest alternative.

To get a social security number you have to prove that you have the right to work in the US. If you are a temporary visitor social security administration will not assign you a number. You will need this number before you start earning money because your employer will pay taxes on your behalf to the IRS using this number. This number will come in handy when filing your tax return next year.

Your credit score is tied to your social security card. As you do business with banks they report your payment history to credit bureaus using your social security number. Your landlord will likely track your rent payments and report them using your social security number.

The bank

Soon after arrival, you will need a bank account, two of them, to be precise. You will need a checking and savings account. Checking is used to do higher frequency transactions (like pay bills or credit cards). Savings will be your buffer of cash in case you need it a few times a year (like paying property taxes).

You will be bombarded by a slew of ads from various large banks enticing you to open those accounts with them. They will show you happy and smiley faces of young and elderly people, allegedly living their successful lives because they opened bank accounts with them. I am here to tell you that all of that is far from the truth.

You should stay away from big banks and do business with credit unions instead. The difference between banks and credit unions is substantial. Banks are “for-profit” businesses, while credit unions are “not-for-profit”. Credit unions aren’t charities, but they are designed to serve the customers who are credit union members at the same time. When you open an account with the credit union you automatically become a member. The whole point of the credit union is to offer lower rates and cheaper (or free) services to the members, rather than pay dividends to the company shareholders. Credit unions offer higher savings account rates, lower loan rates, free access to a large network of ATMs and many more features.

Let’s compare two credit unions and two banks just to demonstrate the point.

First Tech Federal Credit UnionBoeing Employees Credit UnionUS BankChase
Home page https://www.firsttechfed.com/ https://www.becu.org/ https://www.usbank.com/ https://www.chase.com/
Checking Account Fee$6.95*, $14.95* or $24.95*$12* or $25*
Checking Account Dividend Yield0.05% or 0.1%4.07% or 0.05%0.01% 0.01%
Savings Account Fee$5* or $25*
Savings Account Dividend Yield0.05% of 0.1%6.17% or 0.1%0.05% or 0.1%0.04%

* – Fees can be waived if you meet certain conditions, like minimum balance, the number of transactions, etc.

There are a lot of fees associated with these accounts which we are not going to cover in detail. Banks have more various fees than credit unions, in general. Ultimately they are “for-profit”, remember? The bottom line is that the credit union is a better place for your money than the bank.

There are a few banks that earned a bad reputation due to bad business practices. For example, Wells Fargo accounts fraud, Capital One data breach.

The credit card

Credit cards can be a great tool to build your credit history, or it can ruin your life if you treat it wrong. Credit card APR (Annual Percent Rate) is extremely high compared to even the most expensive loan terms – upwards of 19%. You should not use the “credit” component of credit card and treat it like a debit card every month. Pay off your balance every month you will build your credit history and even make money doing it.

In the US you should have at least 2 credit cards. No credit card is perfect for every occasion and not every card is accepted everywhere. To be able to pay anywhere in the US you should have Visa or MasterCard and American Express. The new credit card offers roll out relatively frequently so to get the latest insight check out thepointsguy.com.

Some of my favorite cards

American Express Blue Cash Bach
American Express Blue Cash
American Express Platinum
American Express Platinum
BECU Visa Cash Back
BECU Cash Back Visa
PurposeGood cash back without fees but is not accepted everywhereTravel pointsCash back to cover where American Express is not accepted
Annual fee$550
Points60,000
Cashback5% on gas and groceries, 1.5% everything else1.5%

One thing to point-out, you can get a credit card from any financial institution. You do not need to open a checking or savings account with them.

Health Insurance

This is a very important area to take care of as soon as you arrive. You are required by law to carry health insurance for every member of your family. If you do not comply you will face penalties.

There are two ways of getting health insurance in this country – employer-sponsored and individual. If you are in the US working for a reputable company, you should be covered through your employer. If your employer does not offer health coverage – you have to buy it yourself on the health exchange. Health care instance is expensive, so try to negotiate with your employer to include health insurance in your employment benefits. You are looking at $600 per person per month in insurance premiums if you have to pay for it yourself. Cheaper insurance is also available but coverage is poor so you’ll end up paying more after doctor visit.

Typically, health insurance covers the following aspects:

  • Primary health insurance
  • Dental
  • Vision
  • Prescription drugs
  • Wellbeing (fitness, massage, nutrition, etc.)

You get to choose among the following types of plans:

  • EPO (Exclusive Provider Organization) – you can only get coverage in specific hospitals and specific doctors, that are considered “in-network” of your health insurance carrier but in return, they cover 100% of expenses.
  • PPO (Preferred Provider Organization) – you get health care anywhere you want, but it costs less if you get health care “in-network” of your health instance carrier. Only preventative care “in-network” is covered 100%.
  • HDHP (High Deductible Health Plan) – this is a PPO plan that comes with a high deductible (can be $6,000 a year), but it comes with HSA (Health Savings Account) that your employer can contribute to and help you save for health care. You can get coverage anywhere you want, but it costs less “in-network”. The money you put into HSA is tax-deductible, grow tax-free and you can use it for medical expenses tax-free as well.

If you do not have good health insurance, you get sick and end up in the hospital – it will be very expensive. Hospitals charge high rates for everything, including small items like a bottle of water. You can easily rack-up $10,000 if you spend a night in the hospital. If you undergo surgery, it will be even more expensive. Some people who had heart surgeries were slapped with $450,000 medical bills. Do not leave it to chance.

Insurance for everything

It is probably a good time for a detour into the insurance philosophy of Americans. The cost of living in the US is high and prices are high as well. To avoid unpleasant financial damage Americans insure almost everything. You should consider covering your most expensive items as well.

  • Life insurance – in case you die prematurely, your loved ones will get a payment to sustain their way of life for some time. This is especially important if you are a major source of income in the family. This insurance is optional.
  • Home insurance – if you own a house, you would be wise to cover it in case of complete destruction. If your house burns down, insurance will pay for a new one.
  • Flood insurance – to protect your property if you live in the flood zone you should get this type of insurance. Home insurance will not cover damage if it was caused by a flood.
  • Earthquake insurance – self-explanatory. There is a separate fire insurance and tornado insurance if you live in areas where these disasters happen, like tornado alley.
  • Renter insurance – if you rent a place you want to protect all your belongings inside that apartment. Renter insurance covers everything “walls-in”. Meaning, that the walls and structure of the apartment are covered by the landlord, your stuff inside needs to be covered by you. This type of insurance is mandatory to be able to rent a place.
  • Purchase insurance – everything you buy with a good credit card is protected from damage or manufacturing defect for a period of time. If you buy something with a credit card and it turns out to be broken, and you can’t return the item, the credit card company will cover the cost.
  • Auto insurance – protects your car, yourself and people around you when you drive. It has liability coverage, meaning you are protected if you are found at fault of an accident and have to pay for damages to other vehicles. Similar to this there is motorcycle insurance. This insurance is mandatory. You can lose your license if you get caught multiple times without auto insurance.
  • Umbrella – a special insurance add-on if you already have Home and Auto insurance with the company. It increases your liability protection up to $2,000,000. This is a recommended add-on once your net worth exceeds $100,000 because people are unlikely to go after you of you are broke.
  • Disability insurance – pays you money if you get disabled and can no longer support yourself or your family. An example would be – you hit a tree while driving a car and damage your spinal cord causing your hands to shake. (I know this is a stretch, I am no medical professional). So if you can’t type on the keyboard after an accident this insurance will help.
  • Pet insurance – if you have dogs or cats you may want to consider insuring them while they are young. This insurance will help cover medical costs associated with aging pets.

There are companies that offer multiple insurance carriers but work for you. For example, First Mark Insurance. They can run the numbers across different policies and come up with a mix that gives you the most coverage at the lowest price applicable to your situation.

Obviously, covering everything would be expensive. Make your own decisions on the types of insurance you need.

Retirement account

Newsflash, in the US you have to take care of your own retirement. If you max-out your social security payments every year, then, maybe, if Social Security is still alive by the time you are 62 years old, you may be able to get $2,500 a month from the government. Needless to say, this is not enough. As such, you have to take care of your own retirement.

It the US you can save for retirement and reduce your taxes at the same time by putting your money into 401(k) or IRA. 401(k) account is sponsored by your employer. IRA (being Individual Retirement Account) is funded completely out of your pocket. 401(k) is not the limit of contributions into that account, it is a provision of tax code that allows such account to exist. I strongly recommend opening either of these accounts immediately after arrival into the US to increase the amount of money you keep in your pocket. Even if you do not retire in the US, you can still keep your accounts and access them in retirement.

Both accounts have annual contributions limits.

The topic of retirement is vast and complicated and it is not practical to cover enough in this article. Do your own research or talk to a professional for advice. My job is to inform you know that this option exists.

Children

You have a family with children then some of the decisions in this article will be influenced by what I have to share. Raising the children right is expensive in the US and has many angles to it. We will only cover the basics in this section.

Daycare

There is no publicly funded daycare in the US. If you have small children under 5 years old you will have to pay for daycare or a nanny. The average price is $1,700 for a 5-day full-time class. Check-out fatherly.com for a great price map. You may be able to get a tax deduction for these expenses if all adults in your household work. But if your wife stays home with the child, you will not be able to deduct nanny expenses.

It may be a good idea to have your kid attend a bilingual daycare. Children will pick up both languages (English and your native) and will be fluent in both. My children are attending the bilingual academy and speak English and Russian without issues. So do their peers in class. I can assure you, your concern about the delay in child development of speech is unfounded.

School

The US has a public school system and attendance is free for all children regardless of their immigration status. Your kids will attend the school that is designated to cover your home address. You may not be able to live in one school district and send your kids to a different school district, except for certain rare conditions, like school a district having bad performance all up. Where you live will define which school your kids attend. Pick an area to rent your apartment that has the best school district in the state. Check out niche.com for ratings.

Not all school districts offer the same quality of education. Usually, districts that have a higher percentage of wealthy people collect more taxes and offer better teachers and material for education. The downside of such a district is the higher cost of living because wealthy people can afford to pay more so local businesses price everything higher.

You can choose to send your children to a private school. Generally speaking, private schools offer a better education because they do not depend on the government and charge parents directly. Private schools are expensive. You can expect to pay at least $2,500 per month for a private school.

529 Plan

You have an option to save money for your child’s education in a special investment account – it is called a 529 plan. You put money into it after taxes. Investment plan custodian takes your money and invests in stocks, bonds, and other financial instruments. You do not pay any more taxes on that money as long as they are using for education purposes. It covers tuition fees, books, supplies, dorm room, etc. It is a great way to help your kid go to university without taking a full student loan. It works best if you have at least 5-10 years to let the money grow. If your child is turning 18 when you arrive in the US it may not make much sense to you.

If you live in one of 30 states that offer state income tax deduction on your contributions, you may be able to save money if you put it into this plan.

Keep in mind that 529 is not a generic brokerage account. If you withdraw a lump sum from your account, you’d have to pay a 25% tax on all capital gains in it.

Immunization

Center for Disease Control has a schedule as to which vaccines must be administered to kids at what age. If kids are not vaccinated correctly they will not be allowed to attend daycare or school. Make sure your kids are up to speed on vaccines in your home country. If they aren’t – get them up to speed when you arrive in the US.

Credit score and identity protection

I keep hearing about companies being hacked regularly in the US and the leak customer data. Equifax was breached, Facebook was hacked. Uber customer data was stolen, the list goes on. These days you can pretty much guarantee that your social security number has been stolen and someone is attempting to impersonate you online. It is a federal offense but it doesn’t stop criminals from trying.

At the same time, your credit score is a critical factor that determines how much money you keep. The higher your credit score, the lower your interest rates. If someone steals your identity and takes out a bunch of loans, you will be stuck paying for them and it will negatively impact your credit score. You may not even know if there are banks or businesses trying to run credit checks unless you are monitoring this activity. Credit checks negatively impact your credit score, even if you don’t open a new line of credit.

I highly recommend buying a monthly subscription to Equifax, TransUnion or Experian to monitor your credit account. You get to see your credit profile just like lenders do. If you spot any incorrect reporting on your profile you can dispute it with the lender or credit bureau and increase your score.

You can opt into identity monitoring where the credit bureau will search for your social security number or relevant personal information online and will notify you if your identity is leaked. They will also be able to offer liability protection if someone tries to use your identity. In the modern world of cybercriminals, these services are vital.

Community

Cost of living, school district rating, a crime rating and a few other factors influence which area you live in. While searching for a place to rent, you should consider who will be your neighbors. People with the same background or place of origin tend to cluster together. It helps them create a place like home. Over time you will assimilate and will feel more comfortable moving among communities. However, your first home should be in a place where you can connect with people.

When I speak of community I mean the following characteristics:

  • The highest degree of education – if you have a Ph.D. while everyone around you has a high school diploma, you will feel out of place.
  • Field of work – being an engineer in community of farmers will not feel right.
  • Religion – try to find community where people share your faith. Not being rejected because people don’t care about your faith and being accepted and welcomed are different things.
  • Family status – look for places that match your current family situation. If you have kids, look for a place with similarly old kids. Do not move into a retirement community or next to the frat house.
  • Financial status – stick to your class, so to speak. You will feel more comfortable in a community where people make about as much money as you do.
  • Language – America is a place of immigrants and chances are there are communities that speak your language. I’d recommend you start your life in one of those communities.

A way to find a good community to live is to look at census data or use niche.com.