Some Thoughts on Living Abroad

I'm thinking the special rate isn't a discount.
I'm thinking the special rate isn't a discount.

Based on my past experience living in Guatemala for three months I have long thought that living in a foreign country would be a good way to live cheaply. This would allow you to live on a small retirement income or perhaps allow you to take an extended amount of time off each year. After my recent trip through Central America I have some more thoughts on this subject.

It is true that you can live on less in Central America. My experience in Guatemala though was that you usually would also have a lower standard of living than in the U.S. While trying to find a private apartment in Guatemala the only ones that I considered acceptable cost almost as much as I would pay here in Kansas City.

Since I am able to have a comfortable lifestyle here in the U.S. for about a $1000 a month it is difficult to save much money by living elsewhere. I often see ads for books or guides on how you can live in a foreign country for as little as $1000 a month which wouldn’t be a savings for me. That would only be a good deal for me if I had a better standard of living there or at least a different but similar standard of living.

One of my problems was that the places I was looking at were targeted towards foreigners and were priced accordingly. Generally, any goods or services in a foreign country that are being marketed to gringos will come with a gringo price tag. If I would have spent some more time searching for an apartment I probably could have found a better deal on a place that wasn’t being marketed for foreigners. This just takes more time and some knowledge of the area you would be living in would be helpful.

I still think that someday I will be living in Central America at least part of the year. This won’t be because it is cheap but because I like it there. My recommendation to anyone who is thinking of living abroad is not to live somewhere just because it is cheap. If you can find a place that is cheap and it is an area you want to live in as well then you have found a good combination.

Living in a Foreign Country

I’ve mentioned before that living in a foreign country is something I’m considering as part of my plan to retire at 50. Based on my past experience of living for three months on $450 in Guatemala I know that living in a foreign country can be substantially cheaper than living in the United States.

I am also considering living in a foreign country before retirement. This is not just to save money but because I like living in a different culture. This could be done as a geoarbitrage type situation. I currently make $300-$400 a month online. Not enough to live on here in the U.S. but it would be enough to live modestly in Guatemala and a few other countries. If I did this the most likely scenario would be that I would work in the U.S for a few months to build up savings and then live in Guatemala or elsewhere the rest of the year. I wouldn’t build up savings during that part of the year but I wouldn’t be depleting my savings either.

Another thing I’m considering is joining the Peace Corps. Financially, it doesn’t make much sense but that wouldn’t be my motivation for joining. That would be 27 months that I most likely wouldn’t be saving any money. On the plus side I would be totally immersed in a foreign culture and get to help people. They do have programs that would allow me to put my student loans on hold while serving and the time would count towards the 10 years of public service for loan forgiveness also. This is something I have to study more in the future.

Living in a foreign country is more practical than many people think. If you live in Mexico or Central America a plane ride back to the U.S. is about the same as flying from one coast to another. I most likely won’t be living within driving distance of most of my family if I continue to live in the U.S. so I’d be taking a plane trip either way. As far as friends I’ve found that I meet more people and am far more social when living in a foreign country. There are other things to consider when living abroad but it isn’t nearly as difficult as many people think.

A $500 a Month Retirement Budget

Jacob at Early Retirement Extreme recently posted an example $500 a month retirement budget.  It is displayed below.

  • Rent $200-250
  • Health insurance $75 (get the cheapest possible and stay healthy!)
  • Food $50-75
  • Transport $0-$75
  • Utilities $25-100

I found this very interesting because I’ve been making over $500 a month in alternative income lately.  If I could get my budget down to $500 a month I could “retire” and live off my alternative income.   Here is one possible budget.

  • Rent $250
  • Health Insurance $70
  • Food $75
  • Transportation $25
  • Utilities $80

It is possible to rent an apartment for $250 in some areas.  I think there are even some place in KC that rent that cheap but I wouldn’t want to live there.  A better alternative is to move to a small town or live with a roommate. The health insurance is what I actually pay now.  The food budget would require a little more self-discipline on my part.  I used to spend about $100 a month on food and if I were to cut out fast food I could get that down to $75 or lower.  The transportation cost is for an occassional bus or giving a friend gas money for a ride.  Ideally I would live somewhere I could walk to most places I needed to go.  The utilities expense of $80 would include a phone.  This amount would vary somewhat but an average of $80 seems easily achievable.

An alternative would be to live in Guatemala (or any low-cost country) for part of the year.  Or to spend several months hiking.  Both would allow me to live on about $300 a month.  A possible budget would be.

  • Rent $100 (if hiking would be for hostels, hotels, showers, etc.)
  • Food $75 (would probably be more while hiking)
  • Health Insurance $70 (this would be the same although I could consider going without in Guatemala since health care is so cheap there.  I wouldn’t want to take the chance of being uninsurable upon a return to the U.S. though.)
  • Miscellaneous $55 (entertainment, postage, gear replacement, transportation, etc.)

The $300 budget would allow me to spend a little extra when visiting the U.S. or not hiking.  Some of the difference would have to go airfare to get to Guatemala or transportation to and from the trailheads but the savings would more than make up for this amount. These budgets might seem a little extreme but based on my experiences living in Guatemala and hiking long distances I’m confident that they are feasible.  I’m planning on doing a $200 a month hike for several months next year.

For now though these budgets are just musings but after I get out of law school they could very well become reality.