A few weeks ago a reader wrote and asked for my viewpoint on how the “shrinking US Dollar” is affecting life as an expat here in the Philippines. Truth is, for me anyway, the “shrinking dollar” hasn’t done that much shrinking here at all.
Life in general costs more and more every month in every country. Pretty amazing to me that the US government has decreed that those of us who get government pensions from the DoD and Social Security retirement benefits are not getting even a penny increase for 2010 over 2009 … we all know that those figures are skewed to balance the budget on the backs of the “peasants” … but that’s politics and not economics, so I’m not going any farther down that road.
I’ve published a number of reports on what things cost in the Philippines, including a semi-regular updated detailed spread sheet of what my wife and I are spending. I don’t update this all that often because frankly, not that much has changed. My rent, electric, water, food spending haven’t changed all that much.
Food does cost more than it did 4 years ago, that’s for sure, but day-to-day, we’re living well on $1200 a month and saving money besides, just as we were 3 plus years ago when we moved here. (I also am spending money to send a niece to school and to help out with some medical bills which are discretionary to me, so I don’t include them in any of my published figures).
But the question is really about the “weak dollar” and frankly I had to look things up to be sure I knew what my reader meant. Turns out it is not an invention of Fox News:
Now of course that chart is a little “busy” and mostly too small to read here .. if you click on the graphic itself it should take you directly to the live chart on Yahoo .. you can see better and zoom in on certain features. But here it is doing what a chart needs to do … give you and overall impressions. It covers the US Dollar versus the Japanese Yen (green line), the Euro, (blue line), the Great Britain Pound (red line) and the Philippine Peso, (orange line).
It starts back in 1999 and basically shows you where to would be if you had a fixed income in US Dollars and had to exchange (sell) those dollars for a local currency at any point over the ten years.
While there were times during those ten years that it would have been great to sell for Euros or Pounds, time, the healer of all wounds and the wounder of all heels, pretty much averages things out … except for the Yen. I lived in Tokyo for years when the Yen varied between 106 to the dollar a and 140 to the dollar. Believe me, at about 90 to the dollar where it sits today, you would be really feeling the pain of a ‘shrinking dollar” in Japan today.
Overall on the GBP one would have about broken even in 10 years. The Euro and the Yen, you would have taken a big hit … about 20% or so down over the decade. So as Mythbusters would say if they ran a segment on the shrinking dollar, a big emphatic “Confirmed”.
But the Philippine Peso … how did it do? You read the Orange Line for yourself. If you started in 1999 and bought pesos with your US Dollars like I do, in ten years, in currency trading terms, you’d be an average of 20% ahead of the game. That’s why the question about “weak dollar” gave me a little pause .. it hasn’t been weak to me at all.
To be sure there is a lot of fluctuation, but if you look at the peso and the 0% gain/loss line, there are only a few months out of ten years that a US Dollar foreigner would have lost even a penny buying Pesos for Dollars.
Now when we look at a closer in time snapshot. here’s how the last 12 months have worked out. A high of just thousandth of a Peso less then 50 to the dollar, versus a low of 44 something. Looks like some tremendous fluctuations, in the past three years, if you translate my Peso ‘spend’ back into dollars, my monthly ‘needs have varied as much as nearly $500 USD.
So three quick lessons as I see them:
- “Weak Dollar” depends on how you define it. When the Peso is even weaker, the dollar still seems strong.
- If you want “stability”, better not live outside the US. There are no guarantees out here in the real world.
- Plan your life style so that you spend less than you have available … you need a cushion.
All that being said? I’m now into my forth year here and you would need a crowbar to get me out of the Philippines. It certainly has worked well for my dear wife and I. YMMV.
A note for my freinds who are ‘based’ in other currencies .. say Canadian dollars. Go to: http://finance.yahoo.com/ and select the currency you want to compare with the Philippine Pesos and then select Yahoo’s Interactive Chart heatire .. yo can play all sorts of “what ifs”
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Nice to see the long term comparison, Dave. I’ve only been follow the Philippine Peso for a few years now. This gives me a lot better perspective!
Yes I had to look that up myself, Randy. I guess that’s something good for America in general .. a currency the US dollar is able to ‘beat’. Nice to hear from you again.
Hi Dave;
That cost of living question comes up a lot, maybe too much. Sit around and compare this to that and you’ll never make up your mind (some planning is wise). I would pose the question like this. “Are you doing that well where you live?” If they are, then by all means stay put. If the response is no, then make the move. We both know that things go up, and seldom go down. Is that not the same all over the world? You have correctly advised over and over again, that to budget oneself is always the answer. You have found the life you want; I and others have also, without sweating the Global Economy. My response to such cost of living questions would be like this “It’s Better than Yours!”
H ha ha, Paul, that’s a masterpiece. I should have had that answer ready years ago. Better than yours, for sure.
People also get a bit ‘strange’ when they want the outcome to be what they want it to, rather than what the numbers come up to.
Hi Dave;
When I lived in Puerto Rico, the questions were the same from the “I ain’t going nowhere people”. What’s it cost? Is it safe? How would I live? Can I work? Blah, blah, and then some more blah. I was tired of it as I knew not a one of them had enough adventure in them to cross their own state line. I had them visit, for a week or two, so many that I’d keep an extra car and just toss them the keys and tell them to take off for a couple of days and see the Island. Not a one made the trip; they would hang around at my bar and go anywhere I went.
It’s the same here except, very few visit (two far I guess) but they sit home safe and dream, and continue to ask the same questions over and over again. Dave you must have the knack of holding your temper, as to not go off on some of those people.
I know there are for-real people that will make the move and need a few questions answered, but for the others, I say as a lawyer would say “Asked and answered!”
I’ll put the soap box away for awhile now. Have a great day!
You obviously have me confused with someone else when you allege that I can control my temper, Paul. My temper is one of my least redeeming features. Don’t ask me why I have spent the last ten years working closely with many people who think they want to move to the Philippines. If I were half as smart as I _think_ I am, I would have quit this silliness long ago. Let’s put up a sign, Philippines is closed, the rest of you stay home
Hi Dave;
In a blog with Bob on his site, I explained something my Father taught his 5 sons, he explained to us that when you lose your temper the other person won the discussion; I pondered that wisdom and it just did not make sense to me. (I was about 13 then, and nothing made sense) He further explained that when you started you were in a good mood, the other guy said something that jacked your jaw, and you fired back, and proved your point. How did he still win? He changed your mood, he got to you, and you let him.
Read some of my responses to my articles on LIP. I told one idiot, “Thank you for your clear and concise thoughts!” I will give the other guy no power or control over me. And I’ve read your responses on your site and never seen you respond harshly. That why I commented on your temper!
So,what ya gotta’ say about that Dave??? (LOL)
You dectect things my heart doesn’t feel, so either my writing has improved, I am abetter charlatasn, or both
When I worked in Japan I had aboss who was really hard to please, esepcially with the written word. He gave me the job of writing a letter for the boss to sign out to some general officer who was giving our unit a hard time, but who richly deserved to learn how the cow ate thecabbage … the general was (as some cowardly ones will, taking out his frustration on our junior enlisted folks .. just because he could).
After alot of work I handed my first draft to my boss. He perused it along time while I stewed, wondering what his comments would be. Finally he handed it back to me with a smile and said, “Damn good letter, Dave, excellent first draft. Now take this back and remove about 80% of the wire brush bristles and then I’ll be able to sign it..
I really think he was exaggerating a bit, they were wire brush bristles, merely carefully selected from a KiYi brush
(but alter all, what would a baby Air Force colonel know about work-related brushes after all?
I think the Colonel’s brother was in the Navy!