Can we afford to live in paradise? Is living in Mexico as cheap as everyone says? How can we afford to retire so early? (me at 50, Andy at 52). I assume this question is on many minds. How the heck did we make this big move happen?
- We have no children. That means no Xboxes to buy, no first cars to wrap a big ribbon around, no college fees to pay, no weddings to bankroll and no, “I’m going out tonight. Gimme some money.” By not having kids, we conservatively estimate we saved ourselves about $27.5 trillion.
- We live in a hot housing market (Oakland, Calif.). This has allowed us to rent out our house well above our mortgage. If it wasn’t for this, it would be very difficult for us to make this move.
- Andy is working remotely two days a week. This is helping us fund this adventure, for when converted to pesos, his pay goes a long way.
Now let me be 100 percent honest. We don’t know with any certainty that we have amassed enough “wealth” to retire so young. But, since our 20s, we put money away for retirement every month … and it added up to a tidy sum. Is it enough? We’re not sure.
But we think we’re close based on what our financial planner has told us. Andy always wanted to stop working around 55 or 56 (which was our plan). Unfortunately, the money we saved in our 401k’s and other retirement funds can’t be touched — without us having to pay a huge penalty — until we’re 59. And, of course, we’re too young to tap into our U.S. social security, so no help there (yet).
In light of this, a more creative solution had to be found. This included Andy working a few days a week and us renting out our home. And I also plan on working remotely, doing a bit of non-profit consulting.
Luckily, our families supported our decision (all four of our parents), and bravery, or maybe stupidity, won out. The chance to live out a long-held dream skewed our reality and helped us make this monumental leap.
And then there’s the philosophic approach to life. Shit happens. People have heart attacks. People get cancer. In my case, it is statistically likely the cancer will return. None of us knows when our time is up, but we can live every day like it’s our last. And so we are.
When we decided to quit our jobs, I made a budget of how much I thought our monthly expenses would be. I based it on what other ex-pats pay to live in Mexico. There are tons of ex-pats who provide online advice and guidance on how to set a realistic retirement budget. I read many of these blogs and then created a budget based on the numbers they reported. The problem is that people have very different expectations of what a “low,” “moderate” and “high-end” budget is. My idea of a nice night out might be very different from another person’s — so everything becomes subjective. We won’t know for sure how realistic our budget is until we start living in Zihuatanejo full-time in October (and paying rent and electricity bills, etc.)
Still, I was curious as to how much we’d be spending while house/dog-sitting, so for the last month, Andy and I have been keeping track of every single peso we’ve spent. The value of the Mexican peso compared to the U.S dollar changes daily, but it now it’s about 18.5. Kudos to Andy for entering our daily expenses info into our spreadsheet every night. Even though we are not paying rent during our six-week dog sitting/house-sitting gig, we wanted to get an idea of how much our food and entertainment costs were running. The spreadsheet is at the end of the blog if you want to check it out.
The basic idea is to not have to dip into any savings for day-to-day living expenses from October through March. During the summer months, we may have to use a bit of savings to travel — especially since we decided to pay my mom’s landlord a reasonable rate ($350 USD per month) to borrow his car instead of taking public transportation. Starting Oct. 1, we’re going to have to live within a bit of a modest budget ($500 USD a month for entertainment, including beach excursions and eating out). While we have always lived within our means, we never counted pesos, er pennies, in Oakland.
Now things are going to have to be different.
So what kind of decisions are we making to live in paradise?
- Instead of dining at Zihuatanejo’s “fancy” restaurants, where many expats spend $8 or $9 on top-shelf anejo tequila and could easily have a final bill of $25 to $30, or even more, per person, we’re going to steer toward lower-cost places (and eat at home a lot). In Oakland, we also ate home mostly, but sometimes I’d drop $35 eating sushi for lunch, or we’d spend $70 to $80 on a nice dinner out. Now our modest budget can no longer take these luxuries. For example, the second day I was here, I saw a takeout sushi kiosk at the U.S.-style Comercial supermarket, and on a whim I indulged, and, not so whimsically, it came to $11 USD (plus it was pretty bad sushi). So stuff like that is out. We will eat out at a “fancy” restaurant every once in awhile, where a low-to-mid-range entree could cost anywhere from $10 to $20 … cheap by U.S. standards, right? My mom really enjoys eating out at higher-end places when she’s here. It’s going to be tough to limit our excursions with her.
- Instead of ordering expensive cocktails, perhaps I’ll take to flasking it, sort of like this (yes, that’s my mom).
3. No beach lunches more than once a week. Having a simple lunch at a surfside restaurant could put a dent in our budget. If we were to visit the beach three times a week (very realistic in high season) and order lunch and drinks, we’d probably spend $20-$25 USD each time. That’s for both of us combined, so it doesn’t sound too bad. But it could add up to $250 or more USD a month just for beach lounging! A serious hit to our budget.
Instead, one cost-saver is packing some sandwiches and jicama sticks (and, as the situation dictates, walking down the beach a bit to eat our lunch, so as to not offend the restaurant owner). Or sometimes we’ll split a shrimp and avocado omelet for $6 USD, because if we are sitting in nice lounge chairs all day, we feel guilty ordering just drinks. Lunch at a beachside establishment once a week? Not a problem.
What are we going to do the other days? One of our plans is to BYOLC (bring your own lounge chair).
Often we see ex-pats bringing their own coolers, umbrellas and beach chairs to the beach. This is also something tons of Mexicans do. They are our absolute idols! We brought down high-end beach chairs (boxing them up and bringing them on the plane for a $25 USD extra-bag charge), and we are excited to break them out come October. They have straps and can be carried like backpacks (plus have a pouch), and we can easily tote them to Playa la Madera (a 4-minute walk) and/or the beach that’s either a 15-minute walk or a 41-cent “micro” (or “combi”) bus ride away, Playa la Ropa.
Packing a simple lunch of peanut butter and pineapple jam sandwiches, or avocado and cheese, along with some carrot and jicama sticks, is definitely worth it to experience the beauty of the beach.
So how does our restricted budget (still a work in progress, since we’ve been here only four weeks) shape up?
* We can afford to gobble down quesadillas at local eateries every day of the week — three meals a day if we want! They cost $1.20 a pop and are very filling.
* There are local restaurants where you can get a lunch for $4 or a dinner for $6 to $8.
* We can afford to drink local beer. It’s about $1 USD a bottle. And don’t get me going on happy hour. It’s everywhere!
* We can afford to buy all the fruits and vegetables we want at the local market. Super fresh and super delicious and super convenient. So far, we’ve been spending about $14 a week on a ton (literally, almost) of fresh fruits and vegetables, and we’re always stocked with fresh avocados, jicama and pineapple.
* We can afford to eat at home, and eat well. This means eating pretty much whatever we want — including fresh fish and shrimp a few times a week. The fresh ahi tuna is to die for! So far, I am spending about $70-$80 USD a week on groceries. It’s not hard to keep our grocery spending in check if we don’t buy a lot of imported food.
* We can afford to take an afternoon break and visit the coconut shop for fresh, cold coconut water. A chilled coconut (with the top cut off and a straw inserted) costs about $1.10. Yum
* We can afford a few occasional splurges … a hot stone massage for Stacey, and tickets to see some Mexican baseball for Andy.
Want to geek out and see our day-to-day expenses for the past month? Isn’t it impressive?
Feel free to view this budget I created to get us started on our adventure. It’s basic, but it’s proving to be accurate.
On a side note, the only thing I really underestimated was rent. I thought we’d be able to find a decent rental in Zihuatanejo for about $500-$6o0 USD per month. It’s actually going to be closer to $800, plus electricity of about $75 a month. However, I’m pretty sure if we decide to stay here, I will be able to find much cheaper housing for Year 2. I’ve already spoken to many ex-pats who report spending $400-$500 a month on rent. In the meantime, we’ve got a sweet place lined up for October 2016 through March 2017, and we’re both super jazzed. It’s in a tremendous location that $400-$500 in high season (November through March) could never buy, but it’s also a far cry from the $2,000- to $4,000-a-month hillside places that overlook the bay.
If I have advice to share, it’s this. Don’t put off living your dream. Find your brave space. You can make do with less. Eat home. Watch Netflix. Flask it.
Live your dream. Paradise is worth it.