Living the Good Life on a Small Budget in Mexico

low cost 401kI’ve written about stateside geographic arbitrage, the ability to earn more money while living in a lower cost of living area. It works quite well, particularly for physicians, who tend to command higher salaries in places where non-medical jobs don’t pay particularly well.

Today’s guest author is taking advantage of a more global variety of geographic arbitrage. He left the life he had built north of the border for a more peaceful life south of the border. My family and I thoroughly enjoyed the three weeks we spent in Mexico last year, but unlike Shawn, we were nowhere near the beach.

While we can debate the merits of curling versus surfing (I’ve done both and prefer the former), it will become clear that our friend prefers the beach. To each, his own.

Read on to learn how one thirty-something is making a life for himself on a barebones budget and has never been happier. You can learn more about his journey by following @freedomthirty3 on Twitter and by visiting his website at freedomthirtythree.com.

 

Living the Good Life on a Small Budget in Mexico

 

I am, for the most part, just a regular Canadian guy.  I love my parents.  I like to surf.  I wish I had a dog. Oh, and one more thing: I live in Mexico and plan to retire before I turn 34 in 2019 (and the earlier the better).

So, how did I get here?

Well, although I don’t come from riches, I grew up with a pretty averagely awesome amount of opportunity by almost any standard in today’s world, and like many people I knew at the time, I took a ‘year off’ after graduating from high-school in British Columbia, Canada.  I traveled for 8 months, ‘found myself’, and then came home to work as an electrician’s apprentice for about a year.  Eventually, I started drifting towards returning to school, and between the age of about 22 to 27, I completed a degree in Biology/Marine Ecology at the University of Victoria on Vancouver Island.

set for life insuranceAfter that, I had some jobs that paid OK, and they took me to some interesting and remote parts of the country. Due to the competitive nature of the rat race for new graduates in most fields these days, I was constantly looking for other jobs.

I poked away for a few years, traveled some more, met another girl, and ‘settled down’.  I bought a house (with a rental suite) in Victoria and started a Master’s Degree program that I could complete mostly online, allowing me to keep my job.

I was house poor but fortunate.  It would have taken me the rest of my career to be completely free of all debt, but from the outside, I was living the American Dream (in Canada, mind you, where it’s probably more of a thing than in America to be completely honest).

 

Finding Mexico

 

And then the girl left. And then another girl not too long after.  Before long, I was 30 years old in an empty house with a job I didn’t care for that paid me just enough to pay all my bills with no apparent prospects for quickly replacing it with one I would care for.  Especially one that could pay my bills.  And although I had some debt associated with school, the house, and my shiny new motorbike, I was making gains overall (i.e. my net worth was growing).  But I felt broke and, above all, stuck.

Within the next few weeks, I decided to sell my house, especially once I learned just how strong the Real Estate Market where I lived was.  I had no idea where I would live after or what was to come, but I knew that I had no attachments or obligations and that I would be free of all debt with a good chunk of cash if I sold, so I did.

And as fate one have it, later that summer, before I had actually moved out of the house, I was on vacation in Mexico – the home of the chili pepper*. Then, lo-and-behold, the opportunity to build myself a great and simple home that would also produce enough rental income to sustain my single-life in Mexico came my way through a friend of a friend.  I should also mention that it suited my lifestyle goals wildly.  In fact, it exceeded them (I can walk to the beach and be surfing in less than 10 minutes).  So I went for it.

Currently, I am working to pay off the relatively small remaining cost of the construction and it will be paid for outright.  I rent out the two units as much as I can to tourists and travelers on Airbnb, and the income from this is enough for me to cover my basic cost of living there including food, utilities, household items, beer, and the occasional surfboard repair.

I am, of course, mortgage-free. I am also saving to possibly add another level to the house in order to increase living space and rental income in the long run, but also trying to avoid being ‘housebroke’ and ‘stuck’ once again.

 

 

surfing in mexico

surf’s up!

 

The FIRE Journey

 

My official “FIRE” journey started a little while later after I had fallen into some old spending habits and was wondering why in the world it was taking me so much longer than expected to reach my financial goals.

I had been tracking calories and fitness activities for a while at that point, and simply shifted my focus to tracking my spending in order to make sure I was actually meeting my goals.  I think that because for many people, purchases happen in all sorts of ways, including debit cards, credit cards and cash, we don’t always process the totality of our spending.

lucidity locumsIn many cases, people are already making plenty of money and the prospects for increasing income by much,  especially quickly, may not be all that high.  But people don’t see it this way.  They only see how much others are making, or how much they aren’t earning, or how much everyone is spending, rather than  focusing on what they have and seeing spending and earning as completely distinct from one another.

Because the problem with cultivating a focus on chasing endlessly higher earnings is that you’ll never feel totally satisfied because you can never have all of the money in the universe.  Many have tried, all have failed.

Alternatively, in most cases, reducing spending, and quickly, is very achievable. And you can learn to feel far more of a reward from saving and investing your money or avoiding consuming something that’s better left unconsumed than you ever would from adding a bit more money to the top of your money stack.  Hell, you may even just save the world in the process, and there’s a ton of ways to do this.

 

The Finances and Reality of Life in Mexico

 

Moving to Mexico reduced my cost of living greatly.  My house cost $75,000 USD and as well as providing me with a place to live without rent or mortgage,  it generates about $1200 USD/month in rental income.  My monthly mobile phone bill in Mexico runs about $20 USD per month on a pay-as-you-go basis, and I pay about $10-15 USD for 2 months of power services.

As my house is in a fairly remote location, one of my most expensive utilities is internet at about $40 USD per month.  A bag of deliciously fresh groceries usually runs me about $30 and will last most of a week.

Gasoline is relatively expensive (especially to Americans who have among the cheapest gas prices in the Universe), but most of any work I do there is online, so I rarely use my car to commute.  Primarily it is used as transport for larger trips like week-long surf excursions while I walk to and from the local beach as much as possible.

I am on a mission to stick true to my New Year’s Resolution to spend only $15,000 CAD this year, or $1,250 per month, which allows me to save and invest 100% of the salary from my job.  I have been tracking my progress since.

 


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Unfortunately, violent crimes are at an all-time high in Mexico and have been steadily increasing for over 10 years.  However, whether you like to accept the fact or not, that violence exists due to the size and voracity of the American market for drugs.

Mexican Cartels make a large portion of their money moving drugs from Central and South America to the USA and when such large and seemingly endless profit margins are available, there will always be a struggle to control them.

Tourists, expatriates, and regular Mexican people are not at much risk of this violence on a daily basis, and the fact of the matter is that where you live is likely just as dangerous if not more.  There are a million and one things one could do that are statistically more dangerous than going to Mexico.

Although inequality is rampant (as in most of the world these days, unfortunately), the Mexican economy is recovering nicely from the 2008 crisis, with unprecedentedly low interest rates and inflation thanks to a relatively high amount of macroeconomic stability.  Due to this, more people are staying home rather than seeking work abroad**, which should have positive social impacts moving forward.

To own land in Mexico*** All you need is a ‘Fideicomiso‘, which is effectively your title held in trust by a bank, but as the beneficiary, you get to call the shots and receive the benefits, making it effectively yours.  There is a small annual fee, but the up-front costs are quite high, in the range of $6,000 – $10,000 USD depending on the property size and value.

 

The Role of the Side Hustle

 

There’s so many ways to make money these days.  I sell my photos for $15 USD (at least 2 or 3 days’ worth of Tacos, for some perspective) at the local Farmer’s Markets and shops.  I provide Spanish-English translation services online, effectively getting paid to continue to improve my language skills.  I even sell photos on a Stock Photography website.

No, none of these things currently bring in high returns, and many never will.  But they’re things I’m interested in and when you understand that any additional income is pure gravy, it doesn’t really matter if you earn $100 or $100,000.  Gravy is gravy, and just like money, creativity is a compounding resource.

I have big plans for ‘retirement’, starting with pedaling around New Zealand chasing empty waves for a while.  There’s also the whole rest of Mexico that’s said to have even better places to surf.  And, oh yeah, the rest of Central America, South America, Europe and beyond are all on the list (I have traveled a fair amount in Asia already).

All I’m saying is that if you find your thing, you’ll never run out of meaningful pursuits no matter how long or short your retirement may be or what the markets do.  However, without this, you may deeply fear retirement after decades of committing to working and identifying with your job and your solid attendance record.  I think a lot of could-be retirees fall into this trap, not knowing what they will do with all their time.

Personally, I may also have a family one day, and it will be great to be able to spend my time with them as they grow rather than in an office somewhere looking at a picture of them.  In the meantime, I will fill the time between surf sessions with reading, writing, practicing languages, taking photos, training for triathlons (hopefully I will be able to raise some charity dollars along the way) and sharing cervezas with the good people around me.

What has been revealing to me, a classic over-spender and use-all-the-debt-available kind of 20-something, is how much happier I am lately****, while spending less than ever  (or ever imagined possible!). I can walk to the beach within minutes and surf 4-6 hours per day while still having a lot of time in my day for new projects, reading, socializing, siestas or whatever else comes my way.

 

A Guilt-Free Early Retirement

 

I have also learned that whatever you leave behind is still a part of who you are, and that by ‘leaving’ my career as a biologist, I still take all my skills and experiences into whatever endeavours I aspire to subsequently, including this blog.  This helps to ease the anxiety of ‘giving up’ on something that comes with making big changes in our lives.

So, like I said, people shouldn’t feel guilty if they are realizing that they’re not happy with their current situation (even if it may look great from the outside and everyone tells you that you should be happy).  Don’t be afraid to take risks and to take action. There’s no shortage of chances for people  – especially millennials – that get creative and make opportunities for themselves. If you don’t like your work (or even your friends or your accountant, for that matter), don’t feel bad about it. Just take action.

Yes, my situation is unique, but so is almost everyone’s. If we look closely and are willing to take action true to our nature and in pursuit of the things that truly spark interest in us, we can all find new opportunities to shape our lives to the form of our desire.  Money is just one part of the equation.

 

*It may also be that wild chili peppers also existed in a small part of Ecuador prior to colonization and domestication.  Either way, very grateful for the propagation.

**There is a growing sentiment within Mexico that people should stay in Mexico when they can.  Of course, the current American political climate is probably discouraging people from seeking opportunities there that they may have in the past.

***This is within 50km of the coast.  In the rest of the country, one can own directly in an even more straightforward way

****Well, when I am at home ‘practicing’ retirement, that is.

 

 

Thanks again to Shawn at Freedom Thirty Three for sharing his story. Even if a life of surfing and side-hustling in Mexico doesn’t appeal to you, I’m sure you can take away some lessons from the life he is choosing to live.

Would you consider moving to another country if it allowed you to leave your job much, much earlier? If you could live anywhere outside the United States, where would you choose?

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3 comments

  • International geoarbitrage seems to take domestic geoarbitrage a step further especially if there can be advantages in currency exchange, etc.

    My question would be since you are Canadian you get free Healthcare, how do you maintain this if you are an expat in Mexico or have you forgone it completely? If I recall, I thought you had to spend at least 6 months of the year in your home country to keep benefits but I may be wrong.

    It does sound like you have found a great balance to allow you to retire early. What are some of the disadvantages you have noticed as an expat that people should consider before taking a similar step?

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  • I’ve thought about moving out of the U.S. for a lower cost of living. It’s possible that I’ll do it at some point, but would be a lot more likely if I were single. I’m married and right now my kids are 5 and 3. When our kids are grown and have families of their own I doubt we would want to move too far away.

  • Lynne

    Being female and of an older age, I am not as brave as I used to be. Therefore moving to a foreign country isn’t too appealing – and I have some horses I’m attached to as well. They are in their 20s now so it’s probable they won’t be around in 6-10 years, but by then I’ll be 66-70 and less brave than I am now.

    My biggest concern about moving to a foreign country is feeling like a target for crime because of my gender and American-born nationality. Yes, that can happen in the US as well, but at least here I know the language, customs and legal system. I’m not even comfortable visiting a foreign country without other Americans with me. I sure miss the days when I was fearless.

    I have to say it is tempting to rent one of this blogger’s AirBnB units just to see what the climate in Mexico is like. I’ve heard the mountainous areas are very comfortable but would guess the Pacific coast area would be similar to southern CA.

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