How To Reduce Or Eliminate The Biggest Two Expenses In Your Retire Overseas Budget
The first, a 43-year-old self-employed organizer, cut weekly expenses from US$568 to US$400 by eating out less.
The second, a 20-year-old who works at an ad agency, cut her expenses from US$572 to US$178 by buying fewer new clothes.
The last, 36-years-old and self-employed, cut back on dining and socializing, from US$795 to US$627 a week.
These three women learned a lot from the exercise. However, I’d argue that cutting back out-of-pocket spending like this, you’re just tinkering around the edges. You’re behaving like the government.
When the sequester hit last year, the U.S. government nearly shut down the economy. Rather than go after the mega expenses–Social Security, Medicare, Veteran’s Affairs, and other transfer payments–they cut back on air-traffic controllers, for example. Controller cuts risked shutting down airports, in effect shutting down the U.S. economy.
Luckily, the government was able to adjust. Air-traffic controllers went back to work, and airports stayed open. But that’s government think: cut minor costs rather than the mega expenses.
In our personal lives, we can avoid government think. Rather than cutting tiny outlays, we can cut big things that can have a much greater impact.
I encourage this approach when considering a move overseas. How much will it cost you to retire in a new country? Don’t be distracted by the little expenditures when trying to answer that question. Focus on the big two: housing and transportation.
Here’s the good news: When retiring overseas, the first of these can be seriously controlled and the second can be all but eliminated.
In the following top choices for retirement overseas, you could rent a comfortable, convenient, pleasant place to live for US$500 per month or less:
- Cayo, Belize
- Cebu, Philippines
- Chiang Mai, Thailand
- Cuenca, Ecuador
- Granada, Nicaragua
- Hoi An, Vietnam
- Medellin, Colombia
- Pedasi, Panama
When you’re spending but US$500 a month or less on rent, you’ve got lots of flexibility with other, smaller expenses like nights out, new clothes, and cable TV packages.
In Chiang Mai, Cuenca, Granada, Hoi An, and Medellin, you could not only control your housing expense, but you could all but eliminate your transportation expense, for these are all places where you could live a full and fun life without owning a car.
Just as living overseas makes it easier to live in smaller spaces, with less stuff, retiring overseas also makes it easier to live without a car. Living in the United States, everyone you know has a car. Los Angeles was designed and built for cars. But in Chiang Mai and Medellin, for example, you’ll meet large numbers of expats without cars. They get around using buses and taxis, instead, both so much cheaper (as a rule) overseas.
How much could this save you? The IRS every year studies fixed and variable costs of running a car. For 2013 they came up with 56.5 cents per mile. If you and your spouse each owned your own car (as many retirees do Stateside) and drove a total of 40,000 miles per year, you’d spend about US$22,000 on transportation (40,000 X .565). That’s US$1,833 per month. Even cut in half (assuming you and your significant other are sharing a single vehicle), that’s US$916 per month. In any of the eight appealing, affordable, and walkable cities on my list, you could almost live on that US$916 per month!
Continue reading: Why More Americans Than Ever Are Retiring Overseas