Friday, July 10, 2009

luxury of la luz


Live in Mexico like a king for $20 a day.


OK. I made up the slogan, but the first articles I read about retiring in Mexico emphasized how inexpensive everything is.


I recall an article of a couple who rented a house outside of Cabo San Lucas with a maid, gardener, and swimming pool (if somehow all three were on the same level). They claimed their total monthly budget was something like $1500.


Now, you would have to be a grade A slack-jawed idiot not to realize that the couple were elbow deep in the real estate business. The same type of people who are still trying to bamboozle Americans and Canadians to invest money in Mexican tourist destinations to get in on the carcass-picking from the "stampede of Baby Boomers" headed south.


I eventually found some very good sources (mainly among our blogger colleagues) that added a dollop of reality to my cost expectations. From those sources, I concluded you can save money in Mexico. Maybe 10% to 20% overall if you want to live a life style similar to the one you left behind. You can save more by giving up some things.


One of the most complicated items is electricity. As a commodity it is very expensive in Mexico. But it depends what you are comparing it with. The Pacific Northwest is blessed with very low tax-subsidized electricity. The eastern seaboard pays a premium for its kilowatts.


But, even by New York standards, Mexico power can be breath-takingly expensive.


Of course, like all commodities, it depends how much you use. And that is where Mexican luz shines. I live in an area where no one heats -- with electricity or anything else. Cooking and hot water are propane-assisted.


For most people, electricity runs lights, refrigerators, water pumps, microwaves, and assorted small appliances. Those are the basics. And then there are the folks who add pool pumps and air conditioners.


I fall in the first category. This week I received my first electrical bill for the months of May and June -- $490 (MX). Or $245 (MX) a month. About $19 (US) a month. My June bill in Oregon last year was about $60.


So, there are some savings for electricity. Of course, if I start using the air conditioner in the bedroom (and I have now used it two nights), I will see my total rise.


The potential expense of electricity is one reason the owner of the house I am sitting is acting as a good steward with electricity. In the areas where lights are needed for navigation, she has reduced the wattage. A good idea for all of us to consider.


In fact, Calypso has been pushing
similar ideas for some time.




11 comments:

Felipe said...

Don´t know the specifics of the sweatbox area in which you have dropped yourself, but I pay about 12 bucks a month for electricity, winter and summer. In Houston, I paid over $100 a month, and that was a decade back. God knows what it would be now. And I also was in some program that averaged out the monthly cost over the year, so you didn´t get the summer spike. The summer spike would have been FAR more than $100 a month.

Ain´t no summer spike here in the breezy Sierras.

Inmigrante Rentista said...

Look closely at your bill and you will see that you may have received a "Aportacion Gubr." about 40 percent of the cost of production. If you go over the magic number of 499 kWh for a total of three billing periods within a year you will lose it, nearly doubling your bill. If that happens, you must remain under that magic number for an entire year of billing in regain the government payment.

Laurie said...

Our rates for electricty are high in Honduras. Our natural light is very intense, being closer to the equator than you are. The average person doesn't need indoor lights during the day. I grew accustomed to that even during the school day. Just a fan running was all we needed. And propane is the fuel of choice for cooking, too. If I live here for a long time, I will look for a home with natural ventilation on a hill, b/c that means natural cooling.

Calypso said...

No need for ac here in the Xalapa area - our bill is also about 10-12 a month.

The compact fluorescent (those squiggly light bulbs - focos) are a sad story in Mexico. All available really hit the 'being green' mark as they put out a stark white light that makes everyone look green - terrible things.

The U.S. made CF's bulbs are color corrected and put off the same tone as their incandescent power wasters. A 13 watt CF from the US will emit the equivalent lumens (brightness) as a 60 watt incandescent. I buy blister packed GE CF's - 8 on a card for as little as $2 US in the States.

I use to theorize the U.S. was foisting off their terrible stark white units as they wouldn't sell post the development of the color corrected jobs - but this poor quality bulb (at a much higher cost btw) remains virtually the only thing available in Mexico after many years.

I always bring down several 'cards' of CF bulbs to use and give to friends. As I stated in my Blog entry you linked (thanks btw) my thoughts are incandescent bulbs should be illegal - the current CF bulbs are just as good of light source at many times the less power and they last 8-10 times longer as well.

WHY would anyone burn an incandescent bulb in this day and age? But don't think those 50 peso squiggly bulbs here in Mexico will do - they don't.

We also bring lamps down here (we buy at Thrift Stores) as they are expensive here and hard to find in rentals or many Mexicans casas. Buy a lamp and find a color corrected CF bulb señor - you will be able to read at night.

Calypso said...

Inmigrante Rentista makes a point that the cost per kilowatt will increase on a scale of use (not uncommon in the US). But, while CFE is the outfit that supplies all the electric in Mexico the price of watts and the scale of use are variable.

Here in the Hood we pay less for the same power than the folks in Xalapa. Also the government claims to pay about 80% of our bill being that it is essentially a campesino (peasant) area that we live we live.

I have compared bills with people on the Forum and the KW fees vary as well as the government's 'contribution'.

Leslie Limon said...

I happen to agree with your opening sentence. A person can live like a king for only 20 dollars a day. But they would have to live as the Mexicans live, without a lot of the "luxuries" that Americans are used to. Also, it would have to be in a small town, such as mine. The bigger the city, the higher the cost of living. We are currently renting a house that also has a shop attatched. Our combined rent is 600 pesos a month! If we didn't have 4 children, I'm sure we'd be able to live comfortably on 20 dollars a day!

Theresa said...

One thing about cost of living standards. For most people, being retired is less costly than working, when you factor in commuting, wardrobe,lunches out (sometimes dinners out too due to time constraints),even entertainment for example, retirees can go to matinees rather than the more expensive evening show etc.
For us the two biggies are the fact that we now own our home free and clear (except for that pesky trust payment)and we pay less per month for health care than we did for health insurance! Those two took a big bite out of the take home pay.
Now if you have to pay rent, that changes the equation quite a bit, but if the goal was solely to save money, I know where you can rent a room for 600 pesos a month includes sheets and towels.
It really is about standard of living isn't it? Not cost of living?
regards,
Theresa

Steve Cotton said...

Felipe -- If I used the portable air conditioner whenever it was hot, I would not only spike my bill, I would send it into orbit.

Immigrante Rentista -- I give the bill to the preoperty manager. I will ask her to show it to me.

Laurie -- I use almost no lights in the house. When the sun goes down, I retreat to the computer. But a reading light would be nice.

Calypso -- Good tips. The owner must have brought her bulbs from The States because the color is fine.

Leslie -- The problem is that most people who hear the "live like a king" statement think the only question is how many servants they get for $20 a day. I could not believe the number of very intelligent people at work who were convinced that a handful of dollars made you a millionaire in Mexico. Too many people want an increibly high standard of living for a low cost of living. These were the same people who were shocked to discover that I was comfortably living in Salem on $2000 a month. Expectations make all the difference.

Theresa -- You nailed it right on the head.

Anonymous said...

Steve,

UBS does annual survey of "Prices and Earnings" in about 100 cities around the world. They try to figure out what it would cost to maintain an upper-middle class expat couple with two kids in various cities. The calculate this with and without rent.

Including rent, Mexico City costs 60.6% of the cost of living in New York City. Without rent,the number drops to 49.1%, or slightly less than half the cost of New York. Given that Mexico City is the most expensive place in Mexico, Melaque (or anywhere else for that matter) should be dramatically less expensive.

Your 10-20% discount figure seems as unlikely as the $1,500 per month figure.

Remember, you are living in a house that anywhere in the USA would likely rent for $5,000 per month, more in places like Los Angeles or Florida.

The UBS survey is free to download here: http://www.ubs.com/1/ShowMedia/wealthmanagement/wealth_management_research?contentId=143404&name=prices_and_earnings.pdf

Saludos,

Kim G
Boston, MA
Where, what with the economy, the cost of living is falling by the day. And, by the way, we pay $0.218 per KWH including generation and transmission. My last month's bill is $72, no A/C use, 3 bed house, use washer and dishwasher 2x/wk.

Anonymous said...

P.S. By the way, www.yucatanliving.com did a fairly detailed story about costs of living in Mérida. Costs will certainly be different elsewhere, but she did a remarkably thoroughly researched story with lots of lists of prices of things (in pesos), and also detailed expenses by category (rent, taxes, electricity, transportation, food, medical, etc.) Given that it is the effort of a few people at best, it is a very impressive article. The article can be found here: http://www.yucatanliving.com/yucatan-survivor/the-cost-of-living-in-merida-yucatan.htm

Also, note that with the generally weakening peso, USD costs are on a slow creep downward. Also, the currency markets didn't like the result of the election, so the peso is likely to continue to drift lower. Perhaps even more so now that oil prices are falling again.

But also to some of the points above, lifestyle is the biggest variable. If you want to live like a king, it'll cost you. If you can live like a Mexican, well, you'll save boatloads.

Saludos,

Kim G
Boston, MA
Where we frankly spend way too much on heat.

Steve Cotton said...

Kim -- One reason I did not retire in New York City or Boston (or London, where I would love to live during The Season) is I simply cannot afford to live there -- and I did not want to continue working to save that type of money. My $1500-$2000 budget will do me just fine. And I stretch it because I still buy too many NOB products. For many purposes, I still live the same circumstantial life that I led in Salem. With time, I will find bargains. But, for now, 10-20% savings is all I can see overall. Part of that is Jiggs's veterinary bills. I have been spending about $600 (US) a month on him. It skews the other savings.