PhilFAQS

If you are expecting an answer to the question posed in the title, you may be slightly disappointed.  I know quite a bit about living here in the Philippines, but as far as being a currency guru … not likley to ever happen.

But even though I am no expert and am not currently a currency trader in the sense of trading for trading’s sake, I certainly am involved in foreign exchange … FOREX … on a daily basis.  If you chose to live outside the US you will be too, in the Philippines or any other country that doesn’t use the US dollar as its offical currency.

Here’s a very interesting current analysis sent in to me by Paul … thanks Paul … that has some good explanations and common-sense thoughts.

NEW YORK (Reuters) - Naysayers who predicted the U.S. dollar’s demise as the world reserve currency of choice have been silent of late given the greenback’s meteoric recovery in recent months.

Slammed over the last several years as U.S. government budget and trade deficits mounted, the greenback was seen ceding its status as the predominant currency to the euro.

Talk of nations reducing their dollar reserves in favor of the euro prompted talk the dollar would also lose favor as the medium of exchange for commodities.

However, the global financial crisis that has rocked markets worldwide has seen investors voting with their cash and buying U.S. dollars, indicating that reports of the greenback’s death as a reserve currency have been greatly exaggerated. … read moer about the value of the US dollar in foreign exchange.

Two things I think are not as well explained by most of us in the small community of bloggers who actually live in and write about the Philippines.

First of all, once you actually live here, you start to think in Pesos and most of what seems so complicated from the outside becomes a lot simpler.  Of course my wife and I check the Peso per Dollar rate an average of several times a day, but normally only in terms of curiousity about some news article or background planning for some future project or investment.  After all, it is what ir is, and even though there has been sigbificant change from when we first moved here .. about 56 to the dollar down to about 40 to the dollar and now back up to the 49-ish range, what we buy in the grocery store makes more overall difference in money left over at the end of the month … or month left over at the en dof the money (less fun) … than whatever gymnastics the rate has performed over that month.

Secondly, there are ways to mitigate rate changes in some ways for those who have a head for figures and want to diversify their holdings.  If you read very many of my articles you know I am a big advocate of diversifying your income streams.  Even if you have a comnventional job, don’t let that be your sole source of income.  It can vanish tomorrow, you will someday have to give it up in retirement anyway, and what’s the point of leaving money on the table today.  By far the best way, in my view, for a person to empower thier income … regular or retirement … is to earn money online.  One of the hidden advanatages of earning money online is that many of the sources you can earn from allow you to be paid in currencies other than the US dollar.

A friend, fo example, has moved several of his ventures into Euros.  Is this a good deal?  Well there’s no way to predict the future from past performance of currency, but let’s just make a rapid “guesstimate” example.

Suppose, for ease in calculating, you were making a steady $100 USD-worth of profit per month.  I’m just going to use an average exchange rate over the past 12 months, which of course is far from accurate but I don’t want to build an analyssis spreadsheet here.  Most of us live pretty average anyway, yes?

• Just leave everything in US dollars: Income: $12,000 USD  On hand today: $12,000 PhP if converted today: ~ PhP 586,000
• Take the money in Euros and Hold them:  A little over E 700 per month, today about E 860 and if convereted today ~ PhP 551,000
• Convert the USD to PhP as earned … again an average .. he’d have about PhP 540,00 in his Peso account today.

This is of course an oversimplification and a genealization … and. in general, all generalizations are wrong ;-), but on average over the last year, Philippine pesos-wise (which is, of course, what we spend to live here, our mythical mogual would have been 45,000 Pesos richer … almost a month’s income … by keeping his business in good old US Dollars.

As they say, on the Internet, or especially living here in the Philippines, YMMV.

One of the things people always ask me about Living in the Philippines is how much computers cost here, and should they ship their computer(s) from home or by new after the move to the Philippines.

The answer isn’t always cut and dried.  Mostly, it depends on ho wold your exisiting equipment is, how much it differs from ’standard’ offerings and how you are shipping.

If you existing machine is two or three years old, it’s time for a new one in general.  So if you are shipping exspensivley, give it to a favorite niece or nephew or to the Salvation Army store.

If you are shipping cheaply, like using a container via my freinds at Manila Forwarder, then pack it and thro wit in, it’s for sure it will find some good use here.

Now if you are thinking about buying new and shipping is not aproblem, I have found in general that buying in the US is cheaper than buying after you come to live in the Philippines.

But I just stopped in a new store here in our local SM Mall called PC Broker and I notice the perceived gap between US and Philippine computer prices seems to have narrowed a lot.

In fact I was going to write here that I saw a “manager’s Special” in my local store’s window with new 15 inch CRT monitors acvailable for PhP 1400 to PhP 1200 ($28 to $25 USD at today’s rate).  Then I looked at PC Broker’s online catalog and find they have almnost the identicle deal on _17_inch_ CRT’s.  I’m planning to get one just to use in place of my laptop’s smaller screen when I am at home.  And if you are still using a CRT monitor?  Shame on you … get rid of it now and reduce your power consumption tremendously while you save your e\yes.

Anyway, it’s nearly Christams time and all red-blooded Americn amen love to computer shop, while living in the USA or living in the Philippines, so, have fun.

Warning. reading this post may be very taxing. Do not attempt if you suffer from heart disease or have any other health condition that requires a physicians (or accountant’s) care.

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Q & A 25 Sep 2008 Do I Have To Pay taxes?

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Question: I currently live and work outside the US so I don’t owe US federal or State income tax on my wages. If I start making money online, and come to live in the Philippines, do I have to pay US taxes, especially Self Employment taxes? What are some ways to minimize the US tax bite?

Answer: First of all, you have to really understand I am not an expert … and especially if you are setting up a business … which one hopes would be successful … you really need advice from a qualified professional. My answers are personal opinions, based on personal experience and may be injurious to your pocketbook if you don’t check and double check what you are doing. Setting up a business the wrong way and then changing it to fix errors made at the beginning may prove much more expensive that making the investment in sound professional advice at the start.

Issue 1: Do you have to report? Better to read what the IRS has to say than what I say:

While most people are aware they must include wages, salaries, interest, dividends, tips and commissions as income on their tax returns, many don’t realize that they must also report most other income, such as:

cash earned from side jobs, (my emphasis)
barter exchanges of goods or services,
awards, prizes, contest winnings and
gambling proceeds. ….

Taxpayers must report all income from any source and any country (my emphasis) unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands….
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040…

Much more explaining tax liabilities on the IRS website … it is likely better that you learn before you burn. In particular a lot of people seem to believe some fairy tale that money earned online isn’t taxable … or isn’t taxable if you live outside the US. Not so.

As a matter of fact, Google and other regular US corps routinely report all payments to others as the US tax law requires. eBay and PayPal,two other places people seem to think money can be hidden, always report when subpoenaed. I recently read of an eBay power seller who was failing to report thousands per year in income. Seemed like a great deal to him, saving all those taxes. He got caught when one of his buyers was involved in a phony credit card scam.

In response to the credit card scam investigation the seller’s income amounts just happened to come to the attention if the IRS. Ooops.

Issue 2: Self Employment Tax: Many people balk at the thought of paying (currently) 15.3% of their self employment earnings into the Federal kitty. Sorry, can’t help much there. The truth is every single tax payer pays thise taxes but wage earners normally have more than half paid by their employer so they don’t see such a whopping deduction. You pay it though, one way or another. Again, the IRS is pretty clear about this:

What is Self-Employment Tax?
Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners….
SE tax rate. The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance)…

Again there is a lot of authoritative information that seems clear enough to me … even when I don’t like what it says … on the IRS’s own site. Many people I’ve talked to over the years seem to get their information from Yahoo Group discussions or bar room conversations. Probably not the best source. If you form a corporation, as just one example, you may be able to legally avoid some of the SE tax bite. Probably a wise thing to consider. You need better assistance than what I can offer on that, though.

Speaking from experience, when my wife and I had our own corporation in the US we essentially didn’t pay SE taxes. However, the overall cost of running the corporation and all the other taxes and reporting requirements I believe came up to more that our SE tax bite would have been. And we gained no earned income toward our Social Security retirement in those years either … once you have a zero year for Social Security, you have a zero year … there is no going back.

Some Conclusions: Well once again I seem to be creating an opus here. Time to wrap things up. My one last, perhaps most important pice of advice on these complex issues. When you seek professional assistance, remember this abut the professionals you are likely to encounter.

Accountants are trained in the practice of accountancy and such subjects of the procedures of how money flows in your business, the best methods to handle your banking and issues along these lines. All accounts have professional training in tax matters and some have a great deal of expertise, but I personally do not recommend you go to an accountant for advice in setting up the basic structure of your business … nor in answering questions about what is and isn’t reportable, what techniques you can use t legally exclude income and minimize taxes, etc.

Who do I recommend then? Simple. A tax attorney. First, a tax attorney is by definition and by professional accreditation an expert on the law. You must be sure you are complying with the law before you get into the intricacies of accounting procedures. Choose an attorney who specializes in tax law and who is enrolled to practice before the IRS.

Other individuals, including CPA’s may also become enrolled to practice before the IRS but there is an important difference. If you engage an attorney, communication between you and that attorney becomes privileged. It can not be disclosed to the IRS. Taxpayer-accountant relationships do not have that advantage of legal privilege. Why is this important?

Neither an attorney nor a lawyer can legally advise you to do something illegal … but you’ll never know if your ideas are legal unless you ask, now will you? If you ask about procedures which later turn out to be illegal, an accountant can be forced to testify about this in court. Your attorney can not. It’s only Dave’s opinion, of course, but I feel that if I am undertaking something which might land me in court later, I might as well protect myself properly from day one.

OK, what other questions do you folks need answers to? A couple came in today. I’ll try to keep this a regular weekly feature of PhilFAQS the source of information about moving to, living in or retiring in the Philippines.

A couple of the most popularly searched posts here on PhilFAQS, the authoritative blog about traveling to, retiring in and in and living in the Philippines are this one What Things Cost — Department Store 1 and this one What Things Cost — Department Store 2. I have hesitated to write much about my personal living costs manly because such reports often seem to attract people who want to argue about what the reporter spends, criticize how the report is laid out or find some other kind of fault. But a lot of people want to know, so here’s an update current as of 23 Sep 2008 … a day I picked because I just took care of my last regularly scheduled bill for the month of September and I’m a “rich American” until October rolls around and starts the cycle over.

Some things, of course, can’t be predicted, but next month is our 24th month living here in the same town, in the same house, so in general I have a pretty good understanding of what to expect.

Rent: Our monthly rent for a 3 bedroom, one bath, single story concrete house is PhP 7,000. That’s $150.55 USD at today’s rate. This house is about 1,000 square feet and is walled and fenced all around with gated off street parking for two cars. The first thing every American I meet seems to ask is, “OMG, why are you renting and not buying”? My answer to that is, “Because in my case it would be financially stupid to buy.” My landlord, who lives and works in the States, half-heartedly wants to sell this house. The last figure I heard was PhP 2.5 million … almost $54,000 USD. The most generous financing plans here involve a 20 or 25% cash down payment … about PhP 625,000 or nearly $13,500 USD … nearly 7 and a half years of rent payments … just for the privilege of then owing millions (in Pesos) at 12% or higher interest. Thanks, but no thanks.

The usual next moan is, “Oh but the landlord might come back and turn you out.” Yep, he sure might. Or he might not. But one thing for sure is, there’s a house for rent on nearly every block, so if he does come back, so what? I’m going to go millions into debt for a 40 year-old bungalow style house just to avoid the remote possibility I might have to move into a substitute house? No.

I essentially owe no one anything except my regular monthly bills. No mortgage company can send me a past due notice, no insurance company can write and tell me all my investment stocks have lost 90% of their value (sorry AIG investors). I have no weight on my shoulders and I like it just fine, thank you. I enjoy living within my means, it’s refreshing.

For them who do insist that buying is the only way, there is a lot to buy here, some of it I occasionally feature on the blog … so enough on that subject. To each his own (no pun intended)

Food: This is the hardest to pin down, for sure. My wife and I eat out occasionally … like every time we go to the mall for groceries we normally plan it around lunch. Today we spent something like PhP 300 at one takeout place and I bought 3 orders of excellent calamari take out at a little kiosk on the way out … each order is 5 piece of squid for 20 pesos so my indulgence there was 60 PhP or $1.29.

Yesterday I walked to a store a few blocks away that sells empanadas (they look like mini calzones and come packed with your choice of ground chicken, ground beef, ground pork, pork afritada (ground pork and veggies), ham and cheese and usually several other fillings for 10 Pesos each … ($0.21 USD each for a nice little meat pie). I spent PhP 120 and that took care of a hot lunch for the two of us and left-over’s to heat and munch that evening while we watched TV.

There’s a Chinese restaurant nearby that specializes in call-in delivery service. You can get a meal with more than enough for 5 or 6 people for a typical price of PhP 350 … ~$7.50 USD delivered, on time, hot, rain or shine. So a couple or a single person could live very well here never even going to a grocery store … but no one wants to eat out all the time.

“Real” groceries/raw ingredients for cooking vary widely in cost. We have a couple ladies who come by the house 3 or 4 times a week. They sell everything from standard vegetables to the “exotic”, like broccoli from Baguio that they have sent here specially for the ‘kano’. Every day they’ll have something different in the meat line … sometimes just everyday chunks of beef or pork (meat cutting in the Philippines typical seems to involve the use of a hand grenade .. beef and pork apparently are routinely blown into unrecognizable fragments of meat, bone, gristle and fat which are sold by weight without labeling or apology), other days fresh fish, shrimp, Rellenong Bangus (a good size fish competently opened, deboned and stuffed with the meat that came out plus tangy vegetables. Somtimes, on special order, they’ll bring my favorite … pork tenderloin … you cut it into little medallions and sauté gently with home fry potatoes …. mmmm.

We spend on the order of a few hundred pesos every time these ladies stop at the gate and call out to us. Some days, nothing, other days when they are delivering a pork tenderloin or some other delicacy quite a bit more.

In the supermarket … pretty much comparable to most US supermarkets, we generally spend the Peso equivalent about $150 to $200 USD per month. Sorry if these figures are not the “accountant-grade” costings that many people expect, but I just don’t track food costs to that level of detail.

One thing I do know, and you will too if you make the move, despite Hurricane Ike, the latest George Bush bailing out his rich friend’s financial charade or the complaints about the price of a gallon of gas … Americans have by far the cheapest and most abundant food on the planet … and we seldom realize it. Plan to spend more on food overall in the Philippines.

Electricity: This is the third highest cost every month. The majority of our kilowatt hours go to air conditioning so the bills vary quite a bit from the hot months of ’summer’ … April, May and June to the cooler ‘ber’ months like SeptemBER, OctoBER and so on. Fortunately our electric supplier here, Meralco prints me a nice 12 month summary on each bill. Since last September we have consumed an average of 377 kWh per month for an average daily cost of PhP 115 per day. For estimating purposes you can figure an averge of $75 to $80 USD per month … depending on the Peso exchange rate, of course. Right no It works out to nearly 20 US cents per kWh, typically two to three times what the average US electric consumer pays. So far as I know from the last figures I saw, only Japan has higher consumer costs for electricity than the Philippines.

Everything Else: OK, this is already getting unmanageably long. What else do we pay every month? Landline phone … zero, don’t use one. Cell phone(s) zero monthly bill, we buy ‘load’ as we use them .. $10 USD per month if you talk a lot. Internet .. PhP 999 per month for unlimited wireless. It’s specified to be 256 kbps, sometimes it is much worse but often very much better. We have a TV cable system that is Internet cable ready but our local provider has so far declined to offer ISP service. In Manila there is readily available US equivalent cable modem service for US $25 to $35 a month and up, depending on options. Cable TV … 50 something channels including HBO and several other movie channels, as _ton_ of sports (limited US sports though), and much of the other cable TV trivia and drivel, (and a couple gems … like the ABC (Australian Broadcasting Network, not the other ABC)), PhP 550 per month. Water , 300 to 400 PhP per month. This is the community provided water and alleged safe to drink, but we don’t drink it. We buy reverse-osmosis triple filtered filtered bottled water for about PhP 60 per week, delivered in 5 gallon jugs. Garbage? Weekly pickups by the municipality … tax supported. Since we rent we don’t pay property taxes directly, but annual property taxes on this home are about PhP 1,000. Sewer? Like about 90% of the Philippines. we’re on a septic tank. So far, so good. Pozonegro is a word you will just as soon not learn while living here. Gas for cooking? We use bottled gas, about PhP 600 and something for what most Americans would recognize as a barbecue size bottle (20 pounder). Lasts three to 4 months. Gas for the car? I use diesel and you will too if you are smart … too infrequent to judge. I last bought diesel on the 27th of August while I was on a trip to Angeles City. I used the car yesterday and noticed the needle is now below half-full so I guess I’ll need to buy more sometime in October … not bragging, just don’t use the car all that much.

Over the past year gas and diesel prices have stayed pretty much on par with the AAA US national averges, when converted to dollars per gallon, except that diesel here is always cheaper than gas, becuase in the US diesel gets socked with extra taxes

OK, this is probably long enough to bore my average reader, I hope it is of some use to those pondering the economics of a move to the Philippines.

Please ask if you have any questions, if there’s something you feel I haven’t covered or if I have not been clear on some issue. Remember that according to my new editorial calendar here at PhilFAQS, the Frequently Asked Questions about the Philippines, I am due for another Q/A post tomorrow. I don’t yet have a long list of questions to answer, so get yours in now while opportunity is still knocking.

My apologies that this post was “borked” with the partial HTML mess. I can not just delete it as certain links already point here, so the post is republished in it’s entirety in the next post. Thanks also to those who took the time to tell me about the problem and tried to help as well, it is much appreciated.

Cost of living in the Philippines is always one of the most consistently searched for items here on PhlFAQS … your site to learn the answers to the FAQS (Frequently Asked Questions) about flying to the Philippines, moving to the Philippines, retiring in the Philippines and whatever else the “ringmaster” here decides to ramble on about.

I don’t get as many direct questions as I would like … and it occurs to me that one reason for that is, I hardly ever ask for them … d’oh. So, that’s what I am doing now. If you have a question, that’s connected to the Philippines, big or small, give me a shot. You can leave a comment, which I’ll always try to answer … but sometimes comments may get missed. It’s better to contact me directly through the secure, spam free contact page here on the site, leave a comment, or call me on 1-719-966-4295 (My US number that rings at my desk). I’ll shoot for a schedule right now that makes Friday as the day for a Q & A session. What do you want to know? (Image via Wikipedia )

 

 

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Q & A 19 Sep 2008  Air Con Electric Costs

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Randy C (Randy’s excellent Journey to Samal blog is a recommended read) asks:
Question: Found the part about your monthly kwh usage useful, because I didn’t really have anything to relate that to over there. How often do you run the aircon, and how many rooms?
Answer: Mita (Tots ‘N Tings and the Unofficial Cook) and I rent a 3 bedroom single story home in Marilao, Bulacan, about 20 kilometers north of Metro Manila. The house is approximately 1,000 square feet in living area and has a small amount of shade from exiting trees. It is typical low-cost employee housing (our subdivision was built about 40 years ago to accommodate employees of the Philippine Central Bank) the walls are reinforced hollow block skim coated on both inside and out, the windows are single-pane steel swing out casement style and the roof is a low, hip roof design covered with the ubiquitous corrugated GI sheet (stands for galvanized iron by the way, not GI like the military folks, but totally inaccurate as the material is galvanized steel, not iron … oh well).

Our electric service is via conventional overhead power pole service to a US made electric meter and thence to a US-made circuit beaker (main service) panel. Total service capacity is 60 amps. We are billed monthly by hand-delivered paper bill (there is virtually no working Philippine postal system, (you only think you got problems with the USPS) each business that wants to operate on a monthly billing scheme has to employ couriers to deliver bills individually) and I normally pay the bill, in cash, at the dedicated “Bill Paying” counter in our local mall’s customer service area. I could also pay at the power company’s local office by cash or check, or (a real rarity) pay by direct debit of my local BDO bank account. One thing I don’t do is delay .. typically power gets cut off within a few days of a bill’s due date … it pays to mark the calendar and follow up if you don’t get a bill in your hand on time, else things will get very dark and warm in a hurry.

Here on Luzon there is a distinct wet and dry season. Usage is highest in “high summer’ which is April through June and lowest during the dry ‘ber’ months of November through February. My last bill, for service from 15 August through 15 September was for 376kWh @ 9.0613 Pesos per Kwh ($0.19376 USD) for a total of PhP 3407.05, or about $72.87 USD at today’s rate. Philippine electricity has the distinction of being second most expensive in the world, only Japan is more costly. To put this in perspective, our rent is PhP 7,000, which is $149.68 USD at today’s rate, so our electric costs are basically 50% of our rent.

We have two individual one horsepower (12,000 BTU) window unit air conditioners, one in the master bedroom and one in the bedroom we use as Blog Central Bulacan. The wiring is ample to run both at once, but we seldom do. Typically the one in the computer room runs 6 or 8 hours a day (I seldom need to turn it on before 9 am) and the one in the bedroom runs 10 pm to 6 am or so … so that electric bill includes an average of 16 hours a day of 12,00 BTU air conditioning. The temperature makes much more difference than the time, it seems, because the units spend much of their time in “fan only” status, while in the hot months the compressor kicks in much more often. These units are over sized for the rooms they serve, if I were do it over again, I would buy a single one horsepower “split” unit with two “heads”, one head for each bedroom. The rest of the house gets by fine on open windows and fans.

How does that compare with your rent or mortgage payments versus your electric bill?

I notice a lot of folks search here at PhilFAQS for information about prices.  Both in the Philippines and in the US the price of gas is a hot topic right now.  My wife and I had a laugh a few days ago when one of her sisters sent a message from Rhode Island and said, "I just filled my car up for $4.07 a gallon … can you believe that prices have gone that high"?

Well it turns out that I had just come back from filling up our Mitsubishi Adventure here in Marilao.  Know what I paid?  $4.03 based on that day’s exchange rate.  Pretty small world, eh?  Can you believe that prices have gone that high?

Yesterday I used up more than half a tank on a trip to Pangasinan (a province north of here in Central Luzon).  I’m on my way out to the store for a few items and I think I’ll fill the tank back up while I am out, because the headlines in the morning paper say more hikes are coming any day now … the government and the petroleum companies are "Unable to say" what they think it will be, but figures of as much as 15 pesos per liter are flying about. Sheesh.

Yesterday I took note of the prices at a lot of stations over a 100 plus mile radius.  The price differences were tiny.  diesel, which I use, and I highly recommend you plan on using, averaged just over 48 pesos per liter.  At yesterday’s exchange rate … call it 44 pesos to the dollar, that would be 48 times 3.785 (the number of liters in a US gallon) divided by 44.07 (pesos per dollar) or a lovely, economical $4.12 USD per USG.

Unleaded regular gas seemed to average PhP 55.6 per liter, or $4.78 USD per USG.  I’ve lived a number of years in Europe and lately in Japan, so I’m used to these sorts of prices .. for the rest of you, welcome to the real world.  There’s an old Chinese curse that goes, "May you live in interesting times". and I believe it’s coming true … I hear GM dealers are offering some great cash back incentives on Hummers this month ….

The reason I said I recommend diesel has to do with two things.  Physics and politics.

Physics:  Here in the Philippines you can plan on spending a lot more time sitting in traffic.  A diesel engine of comparable size has one tenth the hurly consumption of a gasoline engine at idle … you will really notice the difference in Philippine conditions.

Politics:  For each barrel of crude oil a refinery can make slightly less diesel fuel than regular gasoline.  Therefore, in simple commercial terms, diesel should always cost slightly more than gasoline … and in the US this has been holding true … just ask an over the road trucker who is paying $100,000 plus per year for fuel.  Here in the Philippines there are two major transportation-related lobby groups the government pays attention to … long haul bus companies and Jeepney diver’s unions.  Any guesses as to what all big busses and most Jeepney’s use for fuel?

Don’t know how long this situation will hold true, but in the meantime I am enjoying my artificial government-0mandated discount on fuel along with many other things which I still enjoy about living here.  Going to the gas station, though, is rapidly falling of my enjoyment list.

The cost of living and ordinary family purchasing information is always a popular subject here at PhilFAQS.  My friend Bob just posted an article wondering "if the worst was over" regarding the exchange rate between the US dollar and the Philippine Peso.

In some respects this last year has been rather tight for us … when I had $1,000 USD sent from my US account to my Peso account in January of 2007, I would get about PhP 50,000.  Last time I transferred $1,000 it was more like PhP 42,000.   That difference is more than the cost of my rent, my water bill and my cable service for a month combined, so it certainly has made a difference.  As I write this, Yahoo Finance is showing 43.215 Pesos per US Dollar, so it certainly seems to be headed in the right direction for a person who earns in dollars.

Yet back in 1999, on my first visit to the Philippines, the Peso was about 44 to the dollar, so in some ways the more things change, the more they stay the same.

What really has changed a lot though is food.  Americans, especially those who don’t travel much, have no idea, really, how blessed the US is with cheap food prices.  In almost every other country of the world, people pay a significantly higher percentage of their income on food … and Filipinos are no exception.  Rice, the single most basic commodity in the Philippines has doubled for some varieties, and judging by my last trip to the supermarket, food prices are not going to moderate any time soon.  In comparison to many countries, though, the Philippines is still a great bargain.  The prestigious British news agency/magazine, "The Economist" has been doing a cute but very practical "apples to apples" price report for more than 10 years now, called the "Big Mac Index".  Since McDonald’s Big Mac burger is essentially the same product sold in over 100 countries, it’s very practical to look at the cost in each country in local currency and also what the burger would cost in dollars at the current rate.  based on that index the Philippines has one of the strongest purchasing power per local currency unit in the world … only China, Thailand and one or two others can equal what it costs for a burger … more than 50% less in US Dollar terms than the exact same product in the US (by the way, don’t order a Big Mac in Reykjavik, Iceland currency has less than half the purchasing power).  I don’t eat many Big Mac’s, though (in the Philippines rice and fried chicken are the big sellers in "Makko".  Food still seems expensive to me.

I can’t close out this article, though, without a reference to fuel prices.  Just a few weeks ago I was paying 38 PhP for diesel, yesterday most places were well over 42 PhP to the liter, that’s about $3.82 USD per gallon at yesterday’s exchange rate.  gasoline is going for about 45 PhP per liter as I write this (21 May 2008), so that translates to about $4.10 USD/US gallon.  Thank goodness I only use about 1 tank per month … I’d hate to be operating a taxi or leasing out a jeepney … government-controlled fares (ever notice how many Americans want ‘the Government to "do something" about prices … come here and you’ll get a real lesson in socialist economics) make it pretty darn hard for these guys to earn a living.

I really must do something about buying a bicycle ;-)  With the pesos per dollar, the price per liter and my waistline all rising over 40, it’s time to make a change!

Disclaimer: Prices are F.O.B. Manila, Prices are as of January 2008.

Model FSP
2007 Lancer 1.6 GLX M/T Php 695,000
2007 Lancer 1.6 GLS CVT Php 768,000
2007 Lancer 2.0 GT Php 958,000
Grandis 2.4 AT (Standard) Php 1,505,000
Grandis 2.4 AT (Limited Ed) Php 1,575,000
Galant 240M Php 1,580,000
Eclipse GT 3.8L V6 AT Gas Php 2,500,000
2007 Lancer Evo IX RS Php 2,448,000
2007 Adv. GX Diesel Php 700,000
2007 Adv. GLX Gas Php 743,000
2007 Adv. GLX Diesel Php 773,000
2007 Adv. GLS Sport Diesel (7&9 Seater) Php 840,000
2007 Adv. GLS Sport Gas AT Php 893,000
2007 Adv. Super Sport Diesel Php 883,000
L300 Cab Chassis Php 499,000
L300 Versa Van Php 781,000
L400 Space Gear Gas AT Php 1,241,000
L200 GLX 4×4 M/T Php 918,000
All-new Fuzion GLX Gas AT Php 950,000
All-new Fuzion GLS Sport Gas AT Php 1,150,000
Strada GLS 4×4 M/T Php 1,110,000
Strada GLS Sport 4×4 M/T Php 1,230,000
Strada GLS Sport 4×4 A/T Php 1,280,000
2007 Endeavor LE 3.8 V6 Gas Php 2,150,000
Outlander 2.4 GLS Gas AT Php 1,440,000
Outlander 3.0 GLS Sport Gas AT Php 1,688,000
Montero Sport 4×4 Dsl Php 1,608,000
Pajero Fieldmaster 4×2 Diesel A/T L.E. Php 1,843,000
2007 Pajero 4×4 3.8L V6 MIVEC Gas Php 2,588,000
2007 Pajero 4×4 3.2L CRDi Php 2,688,000
Canter FE 519 Php 820,000
Canter FE 639 Php 941,000
Rosa Bus - 26 seater Php 2,990,000
Strada GLX 4×2 M/T Php 908,000

Here’s last week’s "official" gas prices.  Prices are not directly controlled by the government, but they are so closely monitored (and import duties adjusted up and down) that they sometimes seem that way.

The latest adjustments brought the prices of premium unleaded gasoline to between P43.37 and P47.65 a liter, diesel to P35.91 and P40 a liter, and kerosene to P41.30 and P45.80 a liter.

Yesterday I went to the mall and saw diesel at P38 per liter ($3.53 USD/gallon) and unleaded gas at P44.5 ($4.13 USD/gallon) per liter.  To me, personally, this means diesel has gone up nearly 50 US cents per gallon in less than 3 months.  Good thing I rarely use a tankful per month.  A few weeks ago I filled up at a station on the former US naval base at Subic where they still charge in US dollars.  I was low, below a quarter tank, and the fill up came to $33 USD.  I didn’t bother to do the math, but the lines at the gas station told me a lot of my Filipino neighbors considered the gas cheap …I’ve never waited in line for gas anywhere else.  Both Subic and the former US base at Clark are operated by government corporations that promote shopping in dollars … you can spend dollars directly, but mostly the stores sell "branded’ items that I never spend my money on anyway … but if you are a designer maven rather than a Wal*Mart sort of boy like me, you might like the shopping there.  The hotels and (especially) the casinos take dollars too, makes it easy to get rid of that spare cash many people seem to be in a hurry to get rid of on vacation.

One price I don’t recall mentioning before is propane, LPG or ’stove gas’.  Most homes here use bottled gas for cooking.  A standard 11 kg tank will last from weeks to months depending on the number of people you’re cooking for and how enthusiastically you cook.  The current delivered price is P600 ($14.14 USD) here in my (metro Manila) area.

Here’s some samples from the stores yesterday:

——————————————-

Cubed pork, Bulk pack …………………………. 500g … P 75

Lean ground pork, bulk pack ………………….. 500g … P 55

Ground beef, (about 82% lean) ………………… 500g … P 62.5

Beef spareribs, (looked pretty bony to me) ….. 500g … P 82.5

Yellow fin Tuna …(looked decent, whole) …… 500g … P 82.5

Medium size local squid, (Fresh, on ice) ……… 500g … P135

CDO brand skinless longganisa (pork sausage) .. 400g … P 66

Swift hot dogs (with cheese) pack of a dozen) ………. P120

Menuto brand frozen heat and serve chicken per pack  P 67

Menuto brand frozen heat and serve adobo  per pack   P 57

Frozen Thai heat & serve sweet/sour shrimp (serves 2) P 77

Frozen Thai heat & serve sweet/sour fish … (serves 2) P 87

Oranges (small, 72 per kilo) ……………………. 500g … P 32.5

medium pineapple, per piece ………………………….. P 22

local carrots ……………………………………. 500g … P 20

local potatoes (quite small) …………………… 500g … P 21

Fukuda single tub washer/spinner, 6.2 kg cap. ………. P 2799

Rice cooker, 1.8 liter with steamer basket …………… P 699

Everest .65 hp window air conditioner ……………….. P 7590

Red Horse Beer …………………………………….500ml … P 24

——————————————–

If you want specific prices on items, feel free to leave me a comment or email me via the contact page: http://philfaqs.com/about/contact/ and I’ll be glad to help you out if I can.

Fuel:  Just looked a few minutes ago and diesel at the Shell station around the corner is 36 Philippine Peso per liter ($3.36 USD per Gallon) and unleaded regular is 42.10 Philippine Peso per liter  ($4.00 USD per Gallon).  Here’s a clip from an article I read after I came home about fuel prices in the US…

According to the U.S. Energy Information Agency, the average cost for a gallon of diesel fuel in the Midwest this week was $3.78, up more than $1.11 from a year ago and $1.67 a gallon from the same week in 2005. Gas price Web site, www.Gasbuddy.com, yesterday reported diesel prices in the Toledo area as high as $4 per gallon…

I note that’s in the upper Midwest, historically a cheaper area than say California. 

 Currency: The Philippine Pesos is toying with us again, down against the dollar for several days now, not sure if the ’street rate’ like you can get in a department store dollar/peso exchange has crossed from the 40’s to the 41’s territory, but yesterdays’s official rate moved well into 41 territory:

Hard to say what foreign exchange is going to do … I was amused/saddened to see a huge foreign exchange company banner ad on Yahoo Finance with quotes from a Bloomberg analyst (among others) stating "get out of dollars, now!  they aren’t the currency to hold".  lessee, Bloomberg, isn’t he some kind of big-deal public official in the US … probably wears a US flag on his suit lapel.  Wonder if he tells the chief financial officer of New York to get rid of dollars?

Electricity:  Most volatile consumer item I’ve run across here in the Philippines is my electric bill.  Hardly a day goes by that there isn’t a rate hike or rate cut announced in the newspaper.  Yet they all seem to make little difference.  I paid the peso equivalent of about $80 USD last month and the preceding February’s bill was about $76 USD … so how close do you really want to track things?

What’s Important: I run the aircons sensibly, drive when I feel like it and eat what is (mostly) good for me and spend most of my life enjoying things rather than penny-pinching.  Life not only can be good, it is good … and I haven’t had to watch a single Democratic or Republican television election commercial in more than a year.  Yahoo!

SM (originally Shoe Mart) is the Philippines’ leader in the retail industry. For more than 40 years this chain has grown from a tiny one-man discount shoe store in Qiapo (Chinatown), Manila to a chain that covers all of the Philippines and even some stores in other Asian countries.  You can see most of the mall locations here, on this map I made (just zoom in to go all the way down to street level if you care to).

The most popular post on this blog, bar none, is one I made a month or so ago about shopping and prices in SM.  So, who am I to argue, here’s more info for your shopping planning/pleasure.  I will only post the prices in Philippines Pesos current 15 February 2008 … you can figure them out on your own with the current exchange rate when you happen to read this.  The most up to date convertor is here.

Magic Sing duet (two mike) karaoke set …………………………. 16,500

Whirlpool 1 kg washing machine ………………………………….. 15,999

American Home 5 kg (twin tub)washing machine …………………. 4,999

Dowell 14 inch Box Fan (table top) ………………………………… 2,999

Tagwood Electric Juicer ……………………………………………. 4,999

Nikon 16 inch industrial floor fan …………………………………….  799

Standard 2 burner Counter Top LPG range, Stainless Steel ………… 789

Samon 14 inch cable ready semi-flat TV with remote …………….. 3250

Fukuda DIVX Player with USB, SD card, CD, DVD, digital Dolby …… 1749

Helena 36 x 75 (Single) steel bed frame ……………………………. 1999

Hyper Living 4 seat Dinette Table and Chairs ………………………. 5999

Alps Living Room Set (3-seat couch and 2 arm chairs) …………….. 7999

Colgate Apple Mint fresh Confidence toothpaste, 150 ml ………….   77

Savana (kids size) chinellas (flip flops) ……………………………….   39

Kids size denim flare jeans (yes, the 1980’s look) …………………..  380

Pringles 120g can ………………………………………………………. 54

Coke Light, 1.5 l bottle ……………………………………………….. 34

Nagaraya cracker Nuts, 160g sack …………………………………….. 19

San Miguel lite beer, 330 ml can ………………………………………. 24

Fundanor brandy, 1 L …………………………………………………. 474

California Rice, 25 kg, ………………………………………………… 860

555 Sardines, 425g can ………………………………………………… 23

Century Tuna 184 g, chunk in oil …………………………………….. 30

Vigan Longganisa, 500 g ………………………………………………. 85

Beef cubes (strew meat) 500 g ………………………………………. 98

lean ground pork, 500 g, ……………………………………………… 68

Carrots, 500g, …………………………………………………………. 25

Fuji Apples, 6 back, #80, …………………………………………….. 100

Sanicare, 400 sheet toilet paper, 12 rolls …………………………… 129

Tide detergent, 2.2 kg plastic sack, ………………………………… 182

 

OK, that ought to be enough to keep you calculating for a while.  remember, it is not what things cost here that will decide of you can succeed at living in the Philippines … the deciding factor is if you can adapt to the life style … it will not adapt to you.  Prices are only a small consideration.

Happy New year to all … been a little busy with family things here at the ranch, but I hope everyone had a great holiday season … I for one am really looking forward to 2008 as I begin my second complete year of living in the Philippines (we moved here to Marilao, Bulacan in November, 2006.  Regrets?  yes, that I waited do long before I made the move.

Those who know me or are regular readers (and if you aren’t, why not, just click on the Orange square in the top right corner) know what an important person my mother-in-law is in our life here.  I don’t call her "Momma" for convenience, my own mom passed many years ago and I feel very close to Mita’s mom … she treats me as part of the family and belive me, that’s an honor.

We had a bit of a feast on Christmas Day and sometime late in the afternoon Momma swallowed something that got stuck in her throat … best guess it was a piece of skin from a pice of lechon … and after a couple hours it was still there, so off to the hospital we went.

The closest hospital to our home is named Nazarenus.  It’s a small, three-story place with most common hospital equipment that certainly won’t win any prizes for decor, but the personnel their are top notch in my book.  I can back my car right to the Emergency Room entrance and they quickly got a wheelcahir for mom and took her in to evalaute things.

Yep, sure seems to be something there.  Nope, our ENT specialist is out of town.  You’d better take her to Fatiima University Hospital in Venezuela (about 5 miles down MacArthur Highway, the "main drag" of Bulacan).  They checked mom’s vitals and looked everything pretty thoroughly over before letting us go, Mom isd well known there and the folks at Nazerenus are the kind who know the patients and actually give a care.  Good to go.  Cost?  (and remember, in all these cost quotes I’m giving you, I was there the whole way … I personally think all these negative comments you’ve heard about "western prices for Americans" is a lot of baseless grumbling) … total of PhP 0.0.  Try getting instant care in the emergency room at your local US hospital on Christmas Night and being charged nothing … nada.

So down the road to Fatima we go.  This is a much nicer and more modern 5 story building, the teaching hospital of a small university center.  Again, drive right up to the door .. I mean right up, so close I almost couldn’t open the car door.  Mom gets seen in less than 10 minutes by the attending ER physician.  His evaluation?  It’s too far down in her throat for me to attempt with the instruments at hand.  he recommends we go to Jose Reyes memorial on Taft Avenue in Manila where they have a 24 hour ENT department.  Again, the price? Zero.  (when I was double checking facts on this article with my wife who went along on this journey she confirmed we paid nothing at either of the first two hospitals, and she seemed a bit surprised that i would ask. "they didn’t charge, because they didn’t so anything." Ha, breath the air in the typical US Emergency Room and your wallet is going to be substantially lighter … whether or not the docs perform any procedures.)

(more…)

One of the things people always come here looking for are up to date costs.  Here are a few items, from a sale circular I just picked up at the local SM Hypermarket.  SM is the largest chain of department stores in the Philippines … here’s a map with the current locations … I think they opened two more already since I made this map … and Hypermarket is sort of their Wal*Mart equivalent … a discount store in most all of the SM Malls, with particular emphasis on food … it’s where we do the majority of our food shopping and a great many Filipinos do, too.  The prices are in Philippine pesos, of course.  The bank exchange rate today is right at 42 Pesos to the US dollar, 86.9 Pesos to the GBP, 61.7 to the Euro and 36.8 to the Australian dollar.  This is the best place online for conversion rates: www.xe.com/ucc/ … better that you convert as you’re reading becuase the exchange rate is liable to change much faster than the prices in Philippine Pesos.

Promac 29" true-flat TV, cable ready, stereo ……………. 10,999

Promac 16 inch, 3-speed desktop fan …………………….      599

Dowell 18 inch floor fan, 3 speed ………………………….     899

Nikon 4 cup rise cooker ……………………………………      499

Marubishi 2 burner counter top gas stove ……………….       499

American Home .7 cu ft microwave oven ………………..    2,499

Camel 3 cycle washing machine …………………………..    1,999

Alonah living room set, 2 armchairs, 3 pax sofa ………….  10,999

Kachina bedroom set, queen bed, night tables, wardrobe  12,999

Kachina kids study desk ……………………………………   1,299

Mariah 4 seat dining set … table, 4 chairs ……………….    4,499

Uratex thin foam mattress, queen ………………………..    2,699

Cozy Denime folding playpen ………………………………    2,300

100g M&M candy —————————————————         60

Alactagrow toddlers formula mix . 800g …………………..       270

Coke, 1.5 liter bottle ………………………………………          32

Magnolia 1 liter "fresh’ milk … tetrapack ………………..           65

Pampers, newborn size, 18 pack …………………………          170

Pampers, large baby size, 38 pack ………………………..         255

Colgate toothpaste, 150 gram …………………………….           75

Cook Best vegetable oil, 1 liter …………………………..           70

Golden Valley whole kernal canned corn 425g …………..           25

Cubed pork, 500g ………………………………………….           68

Ground pork, 500g  ………………………………………..           70

Cut up chicken parts, 500g ……………………………….           58

Pullman white bread, 500g loaf …………………………..           42

Small cantaloupe …………………………………………..           60

Tide detergent, 1,5 kilo plastic pack …………………….          182

Tricycle ride to and from the store, each way ………….            30

Shell Dieselline, 1 liter, (in case you drive yourself as I do           37

Last month’s water bill, came in today ……………………         354

This month’s cable TV bill ………………………………….         550

Last month’s electric bill ………………………………….       4,230

Anyway, enough for now.  This is kind of a random selection that will give you ideas, if anyone wants specific prices I will try to dig them up for you.  Just don’t ask me "the budget for an "average" family" … what you will spend and what i will spend per month will vary widely.  Let me know if this helped anyone.