personal finance

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Ever wondered if you could retire on $3,000 a month? Well the answer is “Yes!”. Not only that, you might be able to get by on only $2,000 a month!

Of course, you’d have to sell you gas-guzzling Tahoe and move -out from your swanky Downtown condo and move somewhere cheaper. But cheaper doesn’t necessarily mean inferior! A Canadian couple who retired and moved to Mazatlan are actually spending only $2,000/month.

When Anne retired, we sold our house outside of Calgary, which had 10.5 acres of land. With the proceeds from the sale, we paid off the house in Mexico and bought a 14 x 44-ft mobile home in a beautiful RV park south of Calgary. Now we spend November to April in Mexico and the summer months in Canada.

Overall, I’d say living expenses in Mexico are between a third and half of what they are in Canada. The two of us can live very well on about $2,000 a month. When we worked out our monthly expenses, we were paying about $135 a month for shelter, including utilities, property taxes, Internet and telephone.

Some costs seem absurdly low to Canadian eyes. Our property tax, for example, is just 381 pesos per year($40), although we pay an additional bank trust fee of $422 annually because our house is within 50 km of the ocean. Even with air conditioning in the hot months, our electricity costs have averaged $16 a month. Of course, we never have any heating costs. If it gets chilly at night, you just throw on an extra blanket. Fire insurance is not necessary except for contents because all the houses are built of concrete.

Food is cheap. You might pay $2 for a 1.9-litre bottle of milk, 43 cents for a kilo of tomatoes and $2.50 for enough large fresh shrimp for a meal. Services cost even less. You can visit the dentist for $20 to $30, hire a cleaning lady for the day for $10, have your hair cut for $4, and get your laundry done for about $4.50 for three kilos.

We don’t need a car — the bus system is great and the local bus costs 4 pesos(41 cents Cdn.), or you can pay 8 pesos for the air-conditioned bus, which is mostly for tourists. That means we can afford to dine out often. On Valentine’s Day we went all out and had dinner at a Mexican-Greek restaurant. We had a large margarita, a bottle of wine, a delicious meal, a dessert flambé and cappuccino for about $50 including tip. Normally, we don’t spend that much. There are many places where the two of us can get a simple meal for $10.

Another advantage to being in Mexico, as opposed to, say Thailand or Costa Rica, or some of the other places where Canadians can live cheaply during retirement, is that it’s fairly close to home. The flight to Calgary costs us about $700 so if we need to go back to see the kids, it’s not a problem.

On the flip side, if your house is paid off, you probably might be able to live on $2,000/mo in San Diego! You might have more fun in Mazatlan, but if you’re retired, your partying days are probably older, and you’d more than likely enjoy the quiet company of your friends and relatives. Having spent so much of my life moving between very different places, I probably wouldn’t mind. But the average person might not want to suddenly move to new country when he or she is 60-65.

Anyway, its a different perspective on adjusting your means to fulfill your living!

You can read the rest of their story here.

Once again, Thanksgiving is upon us. A day of gluttony, friends and family. And even better is the fact that its followed by Black Friday, named because its the day that retailers finally show a profit for the year (or so the story goes).

Once again, I’ll be hounded by friends to replace my perfectly good 19″ TV with a new-fangled 46″ Plasma Hi-Definition TV. (Of course, most of them are too dumb to realize that they need HD cable in order to get the best picture so instead they’ve spent $1500+ on a TV with worse clarity than my 10 year old analog TV).

The only problem I have with buying such an expensive TV is that I’ll be forced to watch the the damn thing. Right now I have more important things to do and its so easy to get sucked into wasting your whole evening veggetating (or rather rotting) in front of the telly.

I got suckered into a Russ Whitney seminar many years ago. The only thing I learnt from it was that broke people always have “big-ass TVs with all the channels”. Best $4,950 I ever spent. Ahem.

I went to meet one of my tenants two years ago. I had been renting out the place for a year and had never seen it. (mainly because it was about 970 miles away). He had 2 nice new cars parked out front. My rental looked like a model home with luxurious furniture, and paintings and candles in the bathrooms. He also had a HUGE TV. It was at least 6 ft wide. Damn, the dude lived so much better than I did (and do). But he also couldn’t afford to buy the $180,000 house he was living in, despite making more than his landlord (thats yours truly). And he never got around to figuring out how he could save thousands in taxes and rent by owning instead of renting. He just lived paycheck to paycheck, until he fell behind and I had to evict him. (Actually I very nicely told him to move out, and for once, it was a painless eviction).

But getting back to the story, the fancier the TV, the more you’re inclined to make use of it. And it results in you spending less time living life and more time watching someone else live it for you. Not only that, but you’re bombarded with ads every 5 minutes trying to sell you crap you don’t need. (Or atleast you thought you didn’t need until you were exposed to it repeatedly during the evening). I once calculated that ads account for about a third of all viewing time, so thats another huge drain on your time.

And right now they’re showing ads for day-after-thanksgiving sales that start at fricking 4 am. Who in their right mind would get up on a cold autumn/winter day to buy the same crap they can buy 3 hours later? I know that with the economy contracting, retailers are hurting, but do they think that if the stores are open twice as long, sales will actually double? I think the morons who came up with that idea should be flogged. Twice. Once before thanksgiving and once the day after.

Doesn’t mean I won’t be buying my fair share of crap on Friday. (hey, someone needs to fuel our consumer-spending-driven economy). But it’ll probably be more of the essentials that I’ve been putting off getting so I can get them at a discount. I might even get a Wii, if I can get it under $150. But I’ll probably leave the big-screen TV off my list until Feb 2009.

Ok, thats enough rant for this evening. Happy Thanksgiving everyone!

I got an email today from Amazon.com

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Get your biz and finance magazines now!

While reading Boston Gal’s Open Wallet Blog, I came across a post about an article in the Boston Globe titled
“To feed a lifestyle, some are taking second jobs”.

It mentioned stories about several well-educated people having decent jobs that were taking on minimum wage jobs to help pay for Christmas gifts. The people in the story weren’t those faced with hardship and had trouble paying for the necessities of life, but middle-class families whose incomes weren’t probably enough to cover they’re consumer spending. There was a young software engineer making $75,000/yr who took a job paying $800/month [probably more like $500 after taxes] so she could buy gifts and an expensive wedding dress. While its commendable that people take 2nd jobs rather than additional debt, if you need an extra few thousand a year after making 75 grand there’s something wrong with the picture.

The people in the article are probably the same kind of people who refuse to spend 6 hrs/month learning about finances/investing or planning for their future. Instead of working minimum wage jobs for which they’re vastly overqualified, if they spent more time at the library and gym instead of the malls and restaurants, they’d be smarter and healthier!

However, as one of my uncle’s said, “anytime your aunt spends working, that’s time not spent shopping!”, so I guess there’s a silver lining in everything.