Retirement; like your parents, but way cooler
In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 3rd decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
Expat Living and Dollar
How to deal
with Dollar Fluctuations when you live outside the US
Billy and Akaisha Kaderli
at least the ones that follow our advice, use ATM's to extract cash in the local
currency. Most likely you are limited to a daily withdrawal amount from your US based bank or
from the local ATM machine you are using. In Mexico that could be 6,000 Pesos, in
Guatemala 2,000 Quetzals, and in
Thailand 18,000 Baht. It just depends on the daily
fluctuation of the currencies themselves and the country in which you are
Dollar loses value against one of these
currencies, we still receive money from the ATM but it costs us more than the
last time we withdrew funds, thus increasing our cost of living.
first started coming to Guatemala our 2,000Q ATM withdrawal cost us $262.00 USD.
Today it's $274.00 USD. Figuring we take multiple withdrawals a month to live on,
this $12.00 increase per withdrawal can add up. This could be as much as a
$100.00 a month or $1200.00 per year in increased expenses. Add local inflation
to that and this can make a difference in your lifestyle.
How do you protect yourself against this slippage?
a fixed income
monthly budget is
solely derived from fixed income investments such as bonds, annuities, pensions,
Social Security, you could feel a financial squeeze as prices rise for you
and your lifestyle is costing you more. Add in some inflation to your costs of
groceries, dining, utilities and so on, and you have the perfect storm. It's called loss of purchasing power.
This is why
it is important to
have equities like an Index fund in one's portfolio no matter what your age, to counter the effects of inflation, and in an Expat's case,
a falling Dollar.
2,000 Q = $274 USD... Today!
news is that when the Dollar declines and you are invested in the stock market, the multi-national companies that make up
the S&P 500 Index usually increase in value as their exports become cheaper in the
global markets and their profits rise. Your portfolio total would rise as well,
reflecting these profits. The bad news is that costs in groceries, rent,
and travel go up as you receive fewer Pesos,
Baht, or Quetzals to the Dollar.
This is why we
say being invested
in the equity markets helps counteract any drop of the Dollar.
Panajachel, Guatemala in one of our biggest splurges of the week, we now pay $13.01 for a
complete bar-b-que baby back pork ribs dinner for two which includes
vegetables, salad and garlic bread as compared to $11.84 a year or so ago. Even
though thatís a 10% increase, it does not effect our lifestyle in general
because we are invested in equities.
local meal of tacos in
Mexico runs less than $2USD per
Chapala, and a
meal of chicken, guacamole, rice, beans and
tortillas can be purchased for under $4USD. Meals of the same type and quality
are similarly priced in Guatemala.
worth noting is that the more integrated retirees are into the local culture the
less expensive their lifestyle will become. Eating in local restaurants as
compared to western hangouts will significantly affect oneís food costs for the
Dollar weakens, your portfolio gains should outpace the small
increase in your local expenses. The
in our Net Worth reflects those gains, and if dinner, hotel rates or transportation costs go up a bit, it doesn't affect
To sum it
up, to offset your limited income based in Dollars, it's prudent to have
investments in the stock market to keep up with a possible Dollar decline, and
to offset inflation.
manner of supporting your lifestyle is to blend into the local culture to keep
your expenses down.
two practical tools, you should be able to withstand any reasonable Dollar
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Early Lifestyle appeals to a different
kind of person Ė the person who prizes their
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time, and who doesnít want to mindlessly
follow the crowd.
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About Billy & Akaisha