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Frugal ESR turned expat ER
Old 06-11-2009, 02:36 PM   #1
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Frugal ESR turned expat ER

I've posted occasionally on this board and am truly grateful for all I've learned in my years of lurking and occasional participation, but until now I always hesitated to introduce myself.

I thought I finally should - perhaps mostly as an example of how NOT to do it, but also because given the market meltdown I suspect some others may have to make some of the choices we've made. The challenge of living a quasi-middle class lifestyle on 30-50% less money than one planned to have can inspire a great deal of creativity!

I ESR'd in '02 in a fairly messy fashion - it just became completely impossible to continue working for the megacorp who'd swallowed up the small company I'd worked for for years. Since then I've done some consulting work, but changes in my field have all been in the direction of consolidation and cost-cutting, so work has been increasingly rare. Meanwhile my wife transitioned from HR drone to massage therapist - fulfilling, but financially not the greatest move, as you can imagine.

We were actually doing okay on 4% of a sub-$1M portfolio (invested a la Bob Clyatt's RIP portfolio) until the market collapse last fall. We were living in a sunny, low-cost small town in my home state of Colorado, but both of us have also spent a lot of time traveling all over the world (I was a coffee taster and buyer, my wife's parent's taught in the international schools in Africa and Indonesia).

With even part-time paid work having dried up for us, the economy in a tailspin and our theoretically well diversified holdings all tanking at once, we decided we needed to find a way to live well on even less, in hopes of giving the markets a chance to recover (we're early 50's and late 40's respectively, so SS, if it even exists by then, is a long way away).

For a variety of reasons (familiarity with the area, proximity to the U.S., healthcare, food, culture, climate among them) we chose to move to the Lake Chapala area of Mexico. As Mexico goes it's expensive, though nothing like the beach resorts, and with the single largest U.S. and Canadian expat population anywhere it's certainly "discovered." Certainly there are plenty of places (Ecuador and Thailand come to mind) where we could live cheaper, but it's been a good move so far.

We sold our small house in Colorado and were lucky enough to almost break even. We rent here and have no plans to buy. Kept a very basic car which we may get rid of at some point - the bus system here is incredibly cheap and, for long journeys, luxurious. The big areas of savings are food, health care and utilities.

We have fresh local fruits and vegetables all year thanks to the climate, of a quality and variety that are mind-boggling. We're serious "foodies" but find we spent less than a third of what we did at home, and are eating better.

We pay out of pocket for health care, which is of particularly high quality in this area, with many U.S. trained, English speaking doctors. An office visit is less than $15, ultrasonic dental cleaning (by the dentist, not an aide) is about $20. In about a year we'll have full catastrophic coverage through the Mexican government system for less than $350 a year for the two of us.

Per-unit costs for electricity and gas are higher here than in the States, but with year-round highs averaging in the high 70's and lows around 50-60 there are no heating or cooling costs. As renters we don't directly pay property taxes, but friends who own a 200K place here pay around $100 a year.

Of course we see enough cable news to be well aware that Mexico to most in the U.S. is nothing but drug cartels, kidnappings and swine flu outbreaks, but as with safety issues in the U.S. where you live and how you live makes all the difference. Mexico has serious problems and is no paradise, but it does have a lot going for it.

We'd have preferred to do the snowbird thing and keep some sort of base in the U.S. - even a mobile home - just as we'd preferred to have steady part-time work, affordable health insurance or more prescience about the market, but so far so good on this experiment. Certainly we know plenty of people in this area living only on social security, and having a rich social life in the company of cultured expats from all over the world - something that's hard to pull off in many small town retirement places we lived in or visited back home.

If we had it to do over: (1) nothing would have helped like a bigger nest egg; (2) developing one or more Depression-proof part-time employment skills would have been smart. On the investing side I can't imagine what more we could have done, but doubtless there were warning signs I missed. At least I'm in good company there.

Kevin
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Old 06-11-2009, 03:54 PM   #2
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Kevin, thank you for sharing the stories of your FIRE, both good and bad.

As a young(er) FIRE wannabe, I am profoundly grateful it isn't all "rah rah rah quit your job you'll be fine" stuff I get here on the board.

I am glad that you've been able to adjust well to life there, and I'm sure your past travel experiences have helped tremendously in figuring out the best solution to your nest-egg decline.

I worked for a tea taster (my dad's business partner) and it is fascinating work but not certainly something you can do part-time or in a recession climate.

Again, thanks for sharing your real world pluses and minuses of life as an expat. It sounds like you've taken the lemons and made lemonade.

All the best to you!
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Old 06-11-2009, 05:05 PM   #3
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Kevin,

Thanks for your news! Please update us as you settle in.

Cheers,

Gypsy
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Old 06-11-2009, 10:04 PM   #4
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Chapala country has always interested me (mostly the weather). Keep the news coming.
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Old 06-12-2009, 10:17 AM   #5
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Kevin,

Thank you so much for sharing. I, for one, am considering Mexico as my initial retirement destination for many of the same reasons that you have listed (including my significantly reduced portfolio).

Please update us with your experience getting into and using the Mexican national health care system.

Thank you again.
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Old 06-12-2009, 10:42 AM   #6
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Yes, I'd like to hear your take on what you get for $350 a year and how you went about getting that.
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Old 06-12-2009, 11:02 AM   #7
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Quote:
Originally Posted by FUEGO View Post
Yes, I'd like to hear your take on what you get for $350 a year and how you went about getting that.
It is IMSS and has been written up by many retirees such as this one:
Information about IMSS, Medical Coverage in Mexico for retirees and gringos living in Mexico
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Old 06-12-2009, 11:37 AM   #8
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Kevin
We have also been considering living more in Mexico as a result of the portfolio meltdown. We had purchased a condo in 2007 in anticipation of spending the snowbird season in Puerto Vallarta. This was fortunate timing because the Canadian $ was at an all time high and we bought at par with the USD. And we had to take money out of the portfolio to purchase the condo.

But with the subsequent meltdown and uncertainty about future returns, we are going to be living in Mexico more than in Canada. The costs are about 40% cheaper for us so it brings our SWR back into balance.
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Old 06-12-2009, 12:44 PM   #9
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Kevin, I am curious as to how old you were when you pulled the plug? Did you run your numbers through FireCalc at all and if so what chance were you given of success? If you run FireCalc now does it allow you to withdraw enough from your portfolio to survive until SS kicks in?
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Old 06-12-2009, 01:09 PM   #10
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Quote:
Originally Posted by kcowan View Post
It is IMSS and has been written up by many retirees such as this one:
Information about IMSS, Medical Coverage in Mexico for retirees and gringos living in Mexico
Interesting. Thanks. I didn't know it was that easy to get and cheap. The coverage sounds like it would do the job in a pinch for younger folks without a lot of health conditions and the price is right.
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Old 06-12-2009, 01:36 PM   #11
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Kevin,
Thanks for sharing your story.

Quick question:
How many years of your expense budget did you have in cash equivalents prior to the recent market downturn?
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