Furnished 2BR in Bulgaria
I did a radio podcast interview last week where I got a question that comes up a lot when talking about living abroad. Why would your expenses drop if half by moving overseas? Specifically, which expenses drop so much that you can coast by on $2,000 a month instead of $4,000? Or live a comfortable life on one social security check instead of barely scraping by with two?
So here’s a breakdown for both expats and digital nomads.
Non-Americans won’t benefit as much from the health care savings as us Americans paying for an overpriced, dysfunctional for-profit system. But otherwise expect similar savings for anyone moving from a very developed country to one that’s not as rich. Keep in mind you have to compare apples to apples for housing though: from San Francisco to Buenos Aires or rural England to rural Portugal. You can’t always get 50% off if you’re going from a small town in Nebraska where you lived with your parents to a penthouse apartment in Bangkok, for instance.
Housing
It’s pretty tough to find something nice in a desirable neighborhood for less than $2,000 a month in a major city of the USA or Europe, especially if you need two bedrooms or more. We struggle to find anything we like for that amount in mid-sized Tampa to be in the right school district in a central area. In NYC, Tokyo, or London, you might be talking $4,000 a month just for rent or a mortgage payment.
Where I’ve lived in Mexico you can get a nice two-bedroom house or apartment walking distance to the center for $600 or less, as you can see from part 1 and part 2 of the video tours I shot . I paid $800 per month one year for four bedrooms furnished, all utilities included. You can rent our huge furnished 4BR we own now for around $1300 a month and that’s a vacation rental. (We’ll cut you a deal for a long-term stay…)
Here’s what some of the people I interviewed for A Better Life for Half the Price are paying:
- Holly in Cuenca, Ecuador: $550 a month for a 2K square feet 3-bedroom house in a prime area
- Kris & Joel in David, Panama: $385 per month for a 2BR house in a neighborhood they love
- David in Medellin, Columbia: $1,000 split between 3 for a 3BR in a high-rise with a view in the best neighborhood, including utilities
- Lisa in Buenos Aires: $700 per month for a duplex in doorman building with a pool
- Gord & Elisha in San Juan del Sur, Nicaragua: $350 for a 2BR house, cable & water included
- Michael in New Delhi, India: $247 for a large one-bedroom walking distance to work.
- Chris in Bangkok: $500 per month for 850 square feet in a modern building with a view
- Gary in Budapest: $300 a month for a 1BR apartment in the city center near the Danube
A $2.50 haircut or $15 massage
Labor Costs
Close your eyes and think of ten services you spend money on where labor is a high percentage of that organization’s cost.
Now, imagine what kind of impact it would have if all of the people doing those jobs had their pay cut by two thirds or more.
It doesn’t really matter which things popped into your mind. It’s a very long list to pick from. You can imagine hospitals, taxis, hair salons, babysitters, home repair people, hotels, restaurants, and amusement parks. If a person who would be paid $50 an hour where you live now gets $15 an hour where you’re moving, that’s a massive difference in the cost structure. If a surgeon makes $3,000 a day in your home town and makes $300 a day where you’re going, imagine what that’s going to do to your coronary bypass bill.
My handyman in Mexico gets around $4 an hour and that’s considered pretty good money. The maid cleans our four-bedroom house for the local equivalent of $15.50. A ten-minute taxi ride across town is $3. A carpenter made us an entire king sized platform bed frame with built-in drawers, in cedar, for a shade over $300. In none of these cases have we bargained people down to their minimum: we’re paying normal rates or better.
The minimum wage in Ecuador is around $10 a day. So if you pay someone triple the minimum in Cuenca to build you some custom cabinets, the labor part of the cost may only be $30 per day.
Food Costs
Where I live in Mexico, a sit-down “meal of the day” can easily be found for $2 to $4, a tamale on the street is never more than 80 cents, and a fresh-squeezed orange juice is a $1.20 for 16 ounces. A pulled-pork sandwich is $1.55 and I can get four pastries at the bakery for a buck. If I were to spend more than $10 on seasonal fruit and vegetables at the market I’d need someone to help me carry it all home.
Think about your last trip to the supermarket and where all those items came from. You may have bought blueberries from Chile, peppers from Mexico, pineapples from Costa Rica, and bananas from Honduras. If you’re in the UK, maybe green beans, oranges, and bananas from somewhere in Africa or Asia. Assume the wholesale cost doubled along the way, there were shipping costs, and then the retailer doubled the price again. You’re easily paying four times what the cost was at the source. So, when you move to the source and start shopping locally, you’ll probably find your food costs are a small fraction of what you paid at home. This may require some dietary adjustments however and buying things in season instead of all year, but that’s a healthier way to live anyway.
Transportation Costs
The American Automobile Association reported in 2014 that a person driving 15,000 miles a year in the USA spends an average of $760 a month on all car-related expenses, or $967 a month if they own a sport utility vehicle. In much of the world, that could get you a private chauffeur at your beck and call instead, all expenses included. Or better yet, a nice vacation on a regular basis with the savings.
Most of the world is not as car-centric and spread out as the USA and Canada and there’s a better inter-city transportation system since a smaller percentage of the population relies on a car. When you need a taxi ride or an internal flight, you’ll probably find it’s cheaper than what you’re used to paying. You may not need a vehicle at all and if you have one, you’ll probably drive it less. You’ll likely do more walking because you can get to where you need to go on foot, which also leads to fewer health problems.
Health Care
This is a minor line item for the residents of most civilized countries, but a huge one for those from the USA. Instead of our taxes covering a non-profit system, we pay a fortune to very rich insurance, medical device, and health provider companies. Sometimes the care is better or more advanced as a result, but more often it’s not by any independent measure. If you have a rare disease and platinum coverage through your company, the USA is a great place for treatment. If you’re a normal self-employed schmuck like me trying to support a family, it can easily cost $800 to $1,000 a month even if you’re healthy.
By contrast, if you live in Argentina it’s almost free (even if you’re a tourist who gets hurt) and in other countries it’s such a trifling amount that you just pay out of pocket in cash. “Here’s my health insurance card,” said a retiree I interviewed in Grenada, Nicaragua. He held up his Visa card. With an $8,000 credit limit, he said there was no surgery or treatment available that couldn’t be covered with his $8,000 credit limit. That probably wouldn’t cover two days in the hospital for something simple stateside.
The most I’ve paid for a doctor’s bill in Mexio was $50 and dental work has been 20% of comparable costs in the United States. No waiting, no reams of paperwork either. Simple, easy, reasonable. What a nice contrast.
When you move somewhere to become a resident, you generally move from the tourist price universe to the local price universe. And those local prices can cost a tiny fraction of what you’re used to. After all, the per capita annual Gross Domestic Product in Australia is more than $55,000. In Nepal it’s more like $550. If you earned just half the annual per capita GDP amount in Australia—$27,500—and spent that in Nepal, you’d instantly be among the upper crust. You’d be elite, wealthy, stinking rich by local standards.
Want to keep twice as much of what you earn just by changing your address? See more at the Cheap Living Abroad site.
