US Bailout Plan Rejected, Mexico Economy Hit, What’s An Expat To Do?
For any of you who have been living under a rock and not reading today’s headlines, the U.S. Congress rejected the proposed economic bailout plan. This led to the biggest drop in the DOW ever, worse than in the Great Depression. Bank after bank is failing, and subsequently being bought up by their competitors. Money lending is scarce, and mass layoffs are on the horizon for many US companies.
Mexico did not escape this fallout. The Mexican Stock Market tumbled to a one year low, and the peso has hit a drop of 2.13% as a result. The current peso to dollar ratio is 11.04 to 1. Yesterday it was 10.79. The price of oil also rose a record amount in one day. Why is it nothing ever makes the oil prices drop?
With such a shaky economy, and such high oil prices, tourism around the world this year is bound to be affected. The situation is a little more stressful for expats who live in foreign countries, while their money sits in banks that may or may not be going under. Expat Focus put it very well when they said:
“…many expats chose to start a new life in a nation with a reduced cost of living, a high quantity of these expats are also living on a fixed monthly budget with no additional income. As food and housing prices begin to rise across the board, these kinds of expats will find it increasingly difficult to maintain their current lifestyles on their current funds.
With the world heading into recession, we could begin to see the amount of expats returning home start to increase as they struggle to maintain their life in their chosen host nation.”
We certainly see this in our home town of Manzanillo. The price for basic commodities like rice and tortillas have more than doubled in less than a year. In this economy, what is an expat to do? There is no clear answer at the moment. Stuffing your mattress full of pesos while the dollar is high is always a possibility, and there is also off shore banking. However, one is not recommended by your chiropractor, and the other may or may not put you on certain government watchlists. It is times like this to keep in mind Douglas Adam’s advice: “DON’T PANIC!”
In the future we will be posting some articles that may help you save money while living as an expat in Mexico. So be sure to check back regularly.
Update 10/16/08- We now have another article full of great advice: 3 Tips To Surviving Global Economic Rollercoaster As An Expat
How have you been affected by recent happenings? Has it raised the stress level of our local expats? Has it changed the travel plans for any who were planning on visiting?
Update 10/1/08- Almost Fearless has posted a great article on how the current economy should affect your travel:
When my husband and I sold all our belongings and committed ourselves to traveling full-time, we were lucky. It was 3 months ago, and while the economy wasn’t great, we didn’t have to make our decision against the backdrop of an uncertain financial future. I just checked my retirement account (401K invested in mutual funds) and it has dropped 20%. I’m not worried, because I’m confident things will bounce back well before I need those funds and I’m invested for the long term. But it is a little unsettling. I had to wonder, if I was planning my trip now, would I still do it? The short answer: absolutely. If you’re starting to get cold feet on your next trip, (whether RTW or two weeks abroad) here are some things to consider: [...]
To read the rest of their post click here
Another great post article on Mexico Premier about why now is the time to move to Mexico:
Sphere: Related ContentFor those of you who would like to live in dignity as you age, Mexico just might be the answer. Right now you can live well, either on or near the beach or in a 400-year-old colonial town for 30 - 50% of what it would cost in the U.S. Medical care can be purhased for about $300 per year, and local doctors still do house calls for about $30.
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[...] For any of you who have been living under a rock and not reading today’s headlines, the US Congress rejected the proposed economic bailout plan. This led to the biggest drop in the DOW ever, worse than in the Great Depression. …[Continue Reading] [...]
It may still boil down to quality of life for an expat. Personally, my quality of life is much higher than it was in the U.S., and we lived in a privileged and insulated part of the U.S.; the greater Seattle area.
Are some things more expensive here? Sure! Electronics always will be cheaper in the U.S. because of the 15% duty imposed on goods imported. Clothes same way, unless made here. Cars sameo. Any “durable good” will nearly always be cheaper in the U.S.
But what about commodities? There is no way to get 1 kg of good tomatoes for 10 pesos in the U.S. A beer for 7 pesos, 6 pesos at the Corona distributor? Nope. A kilo of fresh tortillas for 8-10 pesos? From what I’ve seen things made/grown in Mexico are cheaper. The quality may not be as high, but many things found in the U.S. are actually made/grown in Mexico (read “Home Depot”). So it seems difficult that those things would be more expensive as there are no transportation or duties imposed on them.
Phone costs are exorbitant. It’s a monopoly and nothing can be done, thank you Carlos Slim. Gas prices are nearly 1/2 of the U.S. and we can FIND gas. They can’t get gas in Atlanta even after going to 10 stations. Electricity is expensive here… if you use a lot. If not, the government subsidizes part of the cost. My parents in a rural area of Washington state pay twice the amount we do for a kilo of LP gas. Car insurance is 1/2 here what it is in the U.S. Full health insurance for a family of three for 70 pesos a month with Seguro Popular? Forget about it! Plus no screening for pre-existing conditions. Unheard of in the U.S.
Quality of life. If we want to live like we did when up North in The Promised Land (although that can be effectively debated now…), it is going to cost more than before. It is possible to simplify ones life and end up with a higher quality of life too.
In talking with some of my local friends at a fiesta Saturday, they pointed out how the U.S. appears to be following Mexico. How so? In 1995 when there were financial disasters in Mexico all the banks were nationalized until things stabilized and then slowly some were privatized. Sound familiar? It would be an interesting editorial if somebody wrote about the similarities of the Mexican collapse and then process of rebuilding with what is happening in the U.S. now.
Just like at Disneyland with Mr. Toad’s Wild Ride, hang on and scream a little. It’s going to be bumpy.
@El zorro platiado you might want to try the skype.com software. I use skype for daily business and personal phone calls. Don’t let Carlos Slim thwart you. Skype will likely cost you $50 for the whole year. Skype may help you more if the other user has the software too.
As for the economy, I’ve held off visiting Manzanillo this past year because of the high price air fares. I’m also feeling the pinch through my client’s lack of funds. So the trickle down economy is in effect, but not how we wanted it.
Skype is great… but you need DSL for it… and you need a phone line for that… ergo TelMex!
Skype now has monthly plans that I just learned about for country-to-country calling. Most of the numbers I call in the U.S. are 1-800 numbers so there is little point for the plan for me.
The TelMex plan we have has unlimited calls inside Mexico and a reduced rate for international calls. Not too bad at all.
Sorry you are delaying coming to Manzanillo “Miguel”. Flying into Guadalajara can be cheaper, but you probably know that anyway.
¡Hasta pronto!
[...] Blog talks about the impact the US financial crisis has had on [...]
Bummer to hear that the cost of rice and tortillas is up so much in such a short time. Many of us here in the US are able to absorb some of the rise in prices a bit easier than developing countries. So… best of luck to you and all the folks south of the border!
Beth Whitman
http://www.WanderlustAndLipstick.com
[...] that in mind we have already written an article about what to do as an expat in this economy. What about as a tourist? One of the first things visitors notice is that Mexico is not as cheap as [...]
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