Apples to apples.
That’s the principle to keep in mind when comparing costs, both for living and for buying real estate overseas.
Readers sometimes write in to take issue with our costs references.
“Restaurants in the Philippines are more expensive than restaurants in the United States,” wrote one reader recently, after having visited Philippines for two weeks, staying in a business-class hotel in Manila and eating out three times a day in trendy, “touristy” restaurants.
I traveled, world-wide for years for the US government. US government employees (and, by association, the thousands of employees of US government contractors who are contractually required to live with basically the same travel rules), are given a maximum lodging allowance and a ‘per diem’ … literally ‘by the day’ allowance for meals and incidentals. It is well-known and well publicized. So guess what? Hotels and restaurants that cater to the business and tourist community seem to always set their prices to follow the allowances their business customers receive.
If you sent me to New Your City or Tokyo or Paris or Manila under the government travel system, my costs would be just about the same.
Comparing costs in Manila with costs in say, Los Angeles, is pretty much a waste of time if you travel like a middle-class business person. The differences are hardly worth noting. That’s not how you are going to live in the Philippines if you decide to move here.
Another wrote last week to tell us he could buy a condo in Memphis for half the price of a condo on the Camaya Coast.
Another got in touch to explain how the United States is, in fact, a less expensive place to live than the Philippines.
All of these assertions are similarly flawed. They aren’t comparing apples to apples. Frankly, it’s hard to say what they are comparing.
Every restaurant in every city and town in the Philippines is 35% more expensive than every restaurant in every city and town in the United States?
That can’t be what the reader meant to say…
I don’t doubt that you could buy a condo in Memphis (or in many other cities across the United States) for the same cost per square foot or less than you’d spend for a condo on the Camaya Coast.
Of course, Camaya Coast is hidden away on the tip of the Bataan peninsula, fronting the South China sea boasting long white-sand beaches and the some of the best snorkeling and diving in the world. A condo in downtown Memphis doesn’t seem to compare, does it?
Or maybe it does. It depends what’s important to you.
If you want to live near the ocean, you’re going to spend more per square foot for your place of residence than you would for an apartment in any random land-locked city.
If living near the ocean isn’t important to you, then you don’t have to concern yourself with beachfront pricing.
One couple recently visited the Philippines, stopped in a couple of grocery stores, and checked prices at the pumps. Their conclusion? Food and gas prices in this country are “much higher than back home.”
Maybe some specific grocery items are more expensive than the same foods in this couple’s home town. But, again, you’ve got to compare apples to apples. Processed foods imported from the States are going to cost more anywhere. If you want them, you’re going to have to pay the price.
However, shop not at the U.S.-style grocery stores but at the local markets, and your apples, tomatoes, lettuce, onions, peppers, corn, rice, and locally raised beef and chicken will cost you less than they do back home. I’d bet on it.
Is the price of gas higher in the Philippines than in the States? Depends where in the States you’re comparing to and what kind of gas you’re buying. We could compare figures for a gallon of 91 octane in Manila with those for a gallon of 91 octane in Dallas, Texas, Baltimore, Maryland, or San Diego, California.
Or, we could note that right now, unleaded gas here in the Philippines seems to be trending higher than most cities in the US. But diesel fuel here is way, way lower .. as much as a dollar a gallon or more, because of the regressive road use tax the US imposes on diesel fuel.
But, frankly, that seems a bit tedious. And it misses the point.
Are you going to base your retire-overseas decision on the cost of a gallon of 91 octane gasoline?
I hope not.
Depending where you’re moving from and where you decide to move to, some things are going to cost less (maybe dramatically less), and some things are going to cost more. You’ve got to consider overall costs of living and not be distracted by the cost of a loaf of bread.
In other words, compare not only apples to apples, but baskets of costs to comparable baskets of costs.
Back home you’re likely paying hefty annual property taxes. In many countries, you won’t have to pay property taxes at all. In the Philippines, for those who do own their own homes, they’re negligible. I pay about P1400 a year. That about $31 USD at today’s rate. Homeowner’s insurance? In my central Luzon area, full coverage for our modest home runs P11,000 a year … about $250 USD. Full coverage for our 2006 car cost P13,000 last December … about $295USD … not for the month, but for all of 2011. It will drop measurably again next year, because the value of the car (and thus the maximum payout the insurance company would be responsible for) will be less.
Back home you likely don’t have a maid or a gardener. If you do, the help is likely part-time and expensive. In the Philippines, you could have full-time help around the house for as little as US $50 a month. Figure closer to $100USD in higher cost areas to be safe.
If your only goal in retirement is to live cheap, you could probably save yourself the trouble of relocating to another country and seek out, instead, a super-low-cost locale Stateside. Living a modest (penny-minding) lifestyle in a small town in Alabama or Iowa, for example, you could likely do OK on your Social Security income.
However, you can’t compare modest, small-town life, (including waiting in line a couple of times a week for the discount spaghetti dinner, and mac and cheese three other nights at least, and continually searching for a Medicare doctor) in middle America with beachfront living in a Philippine resort community. It just isn’t apples to apples.
This isn’t only about the money.
We remind you regularly how much more affordable your life could be living in the Philippines. This isn’t marketing hype. It’s fact. I don’t sell real estate here, I really couldn’t care less if you decide to move here or not. I wonder at times why a few folk have so little to interest themselves in life that they have to argue repetitively about the cost of living here, or there, or anywhere, for that matter. Everyone has to breath, drink, eat and sleep to live. Do you really think basic necessities (as opposed to optional items) differ all that much from place to place?
It’s all relative. The particulars depend on where you’re coming from, where you’re moving to, and how you intend to live.
But I can tell you that boiling this adventure down to a line-item comparison of costs for things like cable television and a pound of ground beef is a mistake. And basing your decision to move (or not) on that kind of thinking is doing yourself a disservice.
It won’t always be easy, but you’ve got to keep the big picture in mind.
Moving to another country, at any point in your life, would be the adventure of your lifetime.
Start with that. And stay the course.