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Home Retirement/Living

How To Retire Overseas On A Budget

Kathleen Peddicord by Kathleen Peddicord
Apr 20, 2011
in Retirement/Living
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Retirement on a Budget doesn't have to mean smashing the piggy bank.
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How To Afford To Live Anywhere On Earth

“Vicki and I recently spent a month in the United States,” writes Retirement Planning Guru Paul Terhorst. “Now we’ve returned to Argentina, where we have a house in a rural area outside Buenos Aires.

“As I look back on our U.S. trip, I recall that, item for item, most things in the States are cheaper–sometimes far cheaper–than in the southern cone countries of Brazil, Argentina, Uruguay, and Chile. By ‘item for item,’ I mean a pound of chicken or beef, a computer or a camera, a tablet or a pen in the stationer’s, an airplane ticket, a car and gallon of gas, a garden hose… All these things are cheaper in the United States.

“So what’s new, right? Despite claims to the contrary, the United States has followed a weak-dollar policy for at least 10 years. Traders picked up on the trend and hammered the dollar, year after year, with only a few temporary pauses. As a result, Americans these days–and even many Europeans–pay more for many things overseas.

“Still, you can often live well overseas, in spite of higher costs.

“First, you’re helped by what I call the Third World Syndrome. The Third World Syndrome means you can get high-quality products and services in the Third World that have disappeared in the United States. For example, an equivalent four-star hotel in Buenos Aires would likely cost more than, say, a four-star hotel in Houston. But you can also get a no-star, neighborhood hotel in Buenos Aires at rock-bottom prices. These small family-run hotels offer clean rooms, private bath, and personal attention. In most parts of the United States, these no-star hotels have disappeared, are badly run, or in lousy neighborhoods.

“Another example of Third World Syndrome would be food stalls and food carts. In poorer countries the food stall’s owner and his family often serve you personally. They have no employees and operate with minimum costs, often sharing a simple dining space with many other stalls. You take advantage of the savings. Again, these food stalls and carts have largely disappeared in the United States.

“Another example: I recently took an American developer friend to a rural Argentine hole-in-the-wall restaurant. My friend loved the food, loved the low prices. He also noted about US$50,000 in code violations that would have to be fixed if this were the United States. That US$50,000 would amount to closing the place.

“In addition, moving around the way we do, we’re able to reduce living costs through arbitrage. Clothing and shoes, for example, often cost way more outside the States. So on U.S. visits, I shop at Ross or Marshall’s or at Nordstrom on sale. I also buy clothes in the export shops in Thailand. (Export shops sell high-quality overruns and seconds.) When textiles skyrocket in price somewhere (like Argentina right now), I buy elsewhere.

“Similarly, I buy over-the counter ibuprofen, disposable razors, vitamins, and other items in the United States. I buy prescription medicine in Thailand or Malaysia.

“On this U.S. trip, I bought a fry pan and a wok. Those items in Argentina are of such bad quality, or such a high price, that we’re put off. I even bought a fly swatter in the United States. I know that sounds silly, but consider. Fly swatters in Argentina amount to cheap, plastic affairs imported from China. We go through two or three a year. I’m tired of buying them. For about the same price as the cheap import in Argentina, I bought a durable, metal fly swatter in the States that advertised it would last forever.

“Even in high-cost countries, you’ll find some items remain good value. For example, at a Chilean wine shop, a good wine costs about 10 bucks, a very good wine about US$20. Even better restaurants in Chile typically mark up wine two times, versus the three or more times mark-up you pay in U.S. restaurants and the four times mark-up you’ll pay in France. If you like wine, you do well in Chile and Argentina (and France if you avoid drinking in restaurants).

“Another example: You can buy a tender, juicy steak in a top Buenos Aires eatery for US$20 or so. That’s much more than a few years ago, but still good value.

“Finally, remember that housing accounts for a huge part of your monthly expenses. No matter where you live you’ll find some housing choices less costly than others.

“Years ago I read a book called ‘Nickel and Dimed’ by Barbara Ehrenreich. As an undercover journalist Ehrenreich lived on low wages in Boston and other cities. She gives a poignant account of her struggle, especially the crummy housing choices she faced. She had to live in a slum, take on an unstable roommate, deal with a crooked landlord, whatever. She wound up miserable both at home and at work.

“I think the writer ran the experiment backward. She chose Boston and the other cities largely at random and had a hard time making a go because of the housing problem.

“I’d submit that first we need to find suitable, inexpensive housing of some sort. Once we get the housing right, we can then afford to live on less–even on a Wal-Mart salary.

“You have a choice when you move overseas. Whether you head to France or Croatia, to Brazil or Uruguay, first get the rent right. Make it your top priority. If you get the rent right, you can live almost anywhere on earth. In a high-cost country you might settle for an apartment over the garage instead of the big house in front. A guest house with shared kitchen rather than an apartment. A house-sit, temporary digs, a mobile home, whatever.

“When Vicki and I lived in Chapala, Mexico, we befriended an older guy named Lyle. Lyle had had a tough life and somehow wound up in old age living on a US$600-a-month military pension. But that never bothered Lyle. He simply left the United States, moved to Chapala, and found himself a room for US$100 a month. That left him US$500 to spend on tacos and Dos Equis beer, which Lyle consumed in great quantity. Sure, his simple bed-sit was small and Spartan, with bathroom down the hall. But Lyle lived way better than he could have elsewhere, and he thoroughly enjoyed himself well into a fine old age.

“Conclusion: If you want to live overseas, even in expensive countries, you can do it. As my friend Billy says, you want to live your dreams rather than dream your life. By taking advantage of Third World Syndrome and arbitrage, ferreting out good values in the host country, and getting your housing costs under control, you can live or retire almost anywhere on this earth that appeals.”

Kathleen Peddicord

 

Tags: 'how to retire overseas''Retire Overseas On A Budget'
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Kathleen Peddicord

Kathleen Peddicord

Kathleen Peddicord has covered the live, retire, and do business overseas beat for more than 30 years and is considered the world's foremost authority on these subjects. She has traveled to more than 75 countries, invested in real estate in 21, established businesses in 7, renovated historic properties in 6, and educated her children in 4.

Kathleen has moved children, staff, enterprises, household goods, and pets across three continents, from the East Coast of the United States to Waterford, Ireland... then to Paris, France... next to Panama City, where she has based her Live and Invest Overseas business. Most recently, Kathleen and her husband Lief Simon are dividing their time between Panama and Paris.

Kathleen was a partner with Agora Publishing’s International Living group for 23 years. In that capacity, she opened her first office overseas, in Waterford, Ireland, where she managed a staff of up to 30 employees for more than 10 years. Kathleen also opened, staffed, and operated International Living publishing and real estate marketing offices in Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France.

Kathleen moved on from her role with Agora in 2007 and launched her Live and Invest Overseas group in 2008. In the years since, she has built Live and Invest Overseas into a successful, recognized, and respected multi-million-dollar business that employs a staff of 35 in Panama City and dozens of writers and other resources around the world.

Kathleen has been quoted by The New York Times, Money magazine, MSNBC, Yahoo Finance, the AARP, and beyond. She has appeared often on radio and television (including Bloomberg and CNBC) and speaks regularly on topics to do with living, retiring, investing, and doing business around the world.

In addition to her own daily e-letter, the Overseas Opportunity Letter, with a circulation of more than 300,000 readers, Kathleen writes regularly for U.S. News & World Report and Forbes.

Her newest book, "How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad," published by Penguin Random House, is the culmination of decades of personal experience living and investing around the world.

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