Saturday, January 16, 2016

LII. ¿Cuánto Gastamos Cada Mes?

How Much Do We Spend Each Month?

About four months ago my sensible but fun-loving spouse and I began tracking all of our expenses here in Mexico. We kept a 3”X5” post-it on the table where we have the phone, change basket, keys, etc. Every day when we’d come home from shopping, we’d write things like, “115 [amount in pesos] - fruit/veg”, or “410 - meds”. We could usually get a whole week’s worth of expenses on one side of that little piece of paper. At the end of the week I’d add it all up and start a new post-it.

We did this for twelve weeks. We felt that this amount of time would allow us to reasonably extrapolate to a typical month for the whole year. 

At the end of the twelve weeks I ordered all the expenses into categories and totaled the amount in each. Since I figure we probably captured a little less than 100% of all that we spent, I added 4% to make up for what we might have missed. And since twelve weeks is not quite equal to three months, in order to get the “average” monthly outlay I added 8% (except to expenses billed monthly like rent and utilities) before dividing by three, thus turning 28 days into a tad over 30—the typical month.

To turn pesos into dollars I divided these totals by 17, since the current exchange rate—unusually high and very favorable to Yanks—is 17.8 pesos to each dollar. As recently as three years ago, however, the rate was 12.5 to 1, so the following figures will probably be somewhat higher as the global economy changes. 

Altogether we spent during each of those three months, on average, about $2300US. Major expenses were for rent (the peso equivalent of $800/month), groceries (about $450/mo), dining out (about $250) and travel (including hotel and car rental, about $175). Health care, including visits to Mexican clinics and for drugs, plus our U.S. Medicare supplemental payments, came to a little over $100. All of our utilities, including internet wi-fi (but no TV) cost us about $75/month.

We didn’t stint, buying artwork which would have cost us in the U.S. well over $200 during that period, eating out several times a week, a couple of big and entertaining eventos, and weekly recreation—often including kayak rental and gas money for short trips out of town—plus Spanish and cooking classes, with books and supplies for both of us. During this time, we were also paying down a student loan of over $200/month. In other words, we lived comfortably but definitely not lavishly, unless you contrast it to the frugal lifestyle we were accustomed to in the States. We even had a liquor bill of about $60/month which allowed us a generous margarita early every evening.

The "Future Expenses" column mainly differs from "Current" in that it is based on a budget 
after buying a home in Ajijic and includes funds earmarked for savings in several categories. 
The final column extrapolates from the previous one to the entire year. One caveat is that the 
peso to dollar conversion is figured near the current (Jan., 2016) rate of 17 pesos to one dollar.
Even so, these expenses are well in line with those reported by other ex-pats in Judy King's 
excellent book, Living at Lake Chapala, based on the 2012 exchange rate of 12.5 to 1. 
To give you an idea how we could spend so much less in Mexico and get more, compare some of our current costs with what we'd be paying in the States: locally grown ground coffee here, $4.40/lb; there, $9-10/lb; bottle of good tequila here, $9 for 950mL; there, about $20 plus for the same brand and amount; excellent haircut here, $4-10; there, $30-50, full breakfast here, $2-3; there, $5-10; rent here, $800; there, for a comparable apartment, $1500; mammogram, pap smear and bone density scan in Guadalajara including transportation there and back, $90; at Seattle's Group Health, not sure, but the latter test is not normally given...

Looking to the future, we will increase our budget for health care to about three times what we have been spending. We have both joined Seguro Popular—the free Mexican public health insurance that we plan to use as a backup for emergency, catastrophic care. Our local and reliable MD charges only about $10 per office visit, but the prescription meds can be expensive—$50-75 for a week's worth of antibiotics. (We could get these drugs from Seguro Popular for much, much less but we'd have to take the bus into Chapala and wait at a dispensary.) Finally, our plans include—as a familiar safety net for now—keeping our supplemental Medicare programs, but we want to build up a fund to allow for unanticipated expenses that we elect to take care of outside the Mexican health insurance, including possible travel to the States. We’ll do that to the extent of putting aside about $3,000/year over our current healthcare spending. 

We will also set aside more money for travel—a little over $4K a year. This will allow us each one week-long trip stateside a year, as well as the funds to continue 3-7 day trips around Mexico about every quarter or so.

Buying a house instead of renting will effect a big change in our budget. Since home sales are always cash here, and utilities are about the same whether owning or renting, after the purchase the main additional cost is for upkeep. Because labor is pretty inexpensive, maintenance and even remodeling costs are relatively low. And property taxes for one house that we have been considering buying are less than $50 a year.

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