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Aug 102017
 

You can certainly enjoy a lovely lifestyle in lower cost international destinations (but note these admittedly very nice condos in Kota Kinabalu rent for $2200 a month).  On the other hand, there is a stark choice between ‘spending the same a month and living better’ and ‘saving money but living worse’.

A recent article in Forbes Online had the appealing headline “Quit Your Job And Live Abroad: 8 Places So Cheap You Might Not Need To Work“.  What’s not to like about that (although the web article is one of those ultra-annoying click-bait type articles that results in endless clicks onto new pages, each with minimal content and maximum advertisements – the Forbes online website isn’t nearly as selective in terms of what it offers as is the print magazine.)

Adding an element of semi-science to the article were mini-profiles on eight locations, including their costs of living, showing how it is possible to live – complete with internet, cable tv and phone, for as little as US$850 per month per person.  That certainly would allow most of us to quit our jobs and live abroad, wouldn’t it.  Sign me up!

But are these claims realistic?  There is certainly a substantial industry of sites and services offering information on low-cost expat living, including the somewhat well-known International Living magazine, as well as dozens of articles similar to this week’s Forbes article.

Among all its other benefits and impacts, the internet is making it possible to live just about anywhere and still remain ‘close’ (in a virtual/electronic form) to friends and the places and events wherever you moved from, and so encourages more people to disconnect from their present location and live wherever they wish.

How Realistic is the Forbes Article?

Yes, it is possible to live less expensively than the US by moving to another country.  But ‘the devil is in the details’ and the key question is just how much you’d save, and what you’d have to sacrifice in the process.

So let’s look at the Forbes article and their suggestion that you could live for $850 a month in their lowest cost location, Kota Kinabalu on the island of Borneo and part of Malaysia and see if that proves to be a realistic claim.  Clearly, if that is your objective, you’ll not be renting the $2200/month condo pictured above; leastways, not unless you’re planning on filling it up with multiple families.

The narrative talks about it having affordable health care, which is probably a good thing, because – ooops – there is no allowance in the $850 a month for any healthcare costs at all!  If you let your US health insurance expire, you’d be in a world of hurt trying to restart it again subsequently, so for some of us, we’ve instantly doubled our $850 a month cost, while simultaneously still having no healthcare coverage in our place of chosen exile.  Finding an insurance solution for foreign healthcare can be a challenge and definitely is not something to take for granted, like this article does.

Oh, still talking about healthcare, and Kota Kinabalu, did we also mention that the Zika virus is an issue in Malaysia, and there’s also a low but measurable risk of malaria, a possible risk of Japanese encephalitis, and maybe even, as a surprise bonus, a bit of cholera floating around.  Then there’s rabies, which is described as ‘not a major risk to most travelers’ which isn’t actually the most positively reassuring statement, is it.  Here’s the complete CDC page on Malaysia.

The article says the city is small and you can walk around it.  Again, a good thing, because there is no allowance for you to own a car, and a total monthly budget of about $20 for all transportation related costs.  Looking at the picture below, it seems that you’d be traveling quite a distance when walking.  I guess they expect you to stay at home a lot of the time.

On the other hand, they tell us it is a lovely place to live,

Life revolves around the water and is lived out-of-doors.  At home, you can fill your days snorkeling, diving, boating and ferry hopping from the city center to neighboring islands.

Sounds idyllic, doesn’t it.  But there’s no allowance for the cost of these days filled with snorkeling, diving, and boating, unless that is covered by the $55/month allowance for entertainment, which is utterly improbable.

The downtown/city area of Kota Kinabalu is fairly modern and has a westernized ‘resorty’ feel to it.

Talking about entertainment, after you’ve spent your day snorkeling, diving, and boating, what would be more appropriate than a relaxing fruity drink somewhere, complete with umbrella in it, while enjoying a nice meal, perhaps of fresh fish and seafood?  Ooops again – yes, you guessed it.  Unless this too is to be included in the $55 per whole month for entertainment, there’s no allowance for eating and drinking out (and talking about drink, the predominantly Muslim culture means that drinks, while still available, tend to be expensive rather than cheap).

Your total groceries allowance (there’s no separate allowance for drink) of $120 seems fairly parsimonious, so let’s hope your meal of lovely fresh fish is taking advantage of the fish you caught yourself, earlier in the day.

There are other items also mysteriously excluded from the $850 a month figure.  Clothing.  Travel.  And perhaps most alarming of all, an item innocently described as ‘other costs’, but a potential financial black hole you could vanish into and disappear without trace.

And, most extraordinary of all, we are told that in some of their calculations, they don’t bother including the cost of electricity because it is either included in the cost of rent, or is unnecessary.  Electricity – unnecessary?  Not in my world!  (It is also relevant to note that the US has some of the cheapest electricity of anywhere in the world.)  Tell me a country, anywhere, that doesn’t need electricity for lighting, for appliances and electronics, for water heating and cooking, and, at least some of the year, for either heating or cooling?

One could pick apart every part of the $850 budget in the article, and the similar budgets for the other destinations they also enthusiastically advocate we should move to.  But even if we decide to accept these ridiculous numbers, there’s an unstated assumption that needs to be revealed and considered.

Living Cheaply is Not the Same as Living Well

Yes, you can live cheaply in other countries.  There’s nothing magic about living at lower cost, and you don’t need to uproot yourself and move thousands of miles away.  You could live more cheaply in the US too, if you are willing to compromise and reduce your current standard of living.  But if you wish to enjoy the same quality of life as you have at present, you’re going to be paying the same amount per month or more in most other countries.  I know this from personal experience.

When I was spending large amounts of time in Russia, I would have three choices for food – it is the same in most other countries and for most other people.  The first choice was to buy food from the local markets and cook it at home, myself.  This involved buying ‘mystery meat’ in cuts quite unlike any I’d seen in the US, fish that was clearly a day or two past its sell-by date, and vegetables of dubious provenance and unknown amounts of heavy metal and radiation poisoning within them.  The good news – the cost of such food was commensurately low, to match its low quality.

The second choice involved going to a western style supermarket, where all the food items, many of them western brands, were at least as expensive and often more expensive than in the west.  Plus, particularly in the summer, you could never trust the frozen food items, because it was dismayingly common that the frozen items had been left out on the loading dock in the searing sun for hours before being taken inside, and had thoroughly warmed up before being refrozen in the freezer cases.  However, overall, the food quality was almost as good as in the west, but the costs were higher.

The third choice was eating out, with either cheap restaurants where you are eating the mystery foods from the markets, along with the added excitement of possibly enjoying a dose of food poisoning and dealing with staff who didn’t speak English, or at the expensive restaurants where the food quality and preparation was better, but the costs were high.

So to eat food like a Russian peasant would have indeed been less costly than eating ‘normal’ food in the US, but it wasn’t a lifestyle I wanted to enjoy.  Eating food to a standard I felt comfortable with was more expensive, not less expensive, and that same dynamic is generally true, everywhere in the world.  It is unavoidable – you’re getting imported food items rather than local food items, and you’re going through an inefficient and expensive distribution system, nowhere the equal of the extraordinary efficiencies enjoyed back home.

A similar comment can be made for housing.  Do you want to live in a semi-slum apartment, or do you want to live somewhere ‘nice’ like you have at home?  Do you want to have a quiet peaceful environment, or one marred by noisy neighbors and the menagerie of animals they keep in their apartments – some as pets, and some for food?

I’ll wager that every person reading this could halve their accommodation costs here, too, by shifting from their present hopefully pleasant abode to somewhere in a cheap part of town, much smaller in size, and lacking the same standard of finish and amenities.  There’s no need to go to a foreign country to live uncomfortably – you can do that here, too!

The same can be true of healthcare too.  Do you want the local standard of healthcare, or do you want a western standard?  Sometimes there is little difference between the one and the other, but other times there are significant differences in quality of care/experience and associated costs.  The differences even spill over to medications – do you want a locally made product, which may or may not be fake, or a generic western product (possibly also fake) or a name brand western product (and still possibly fake)?  Yes, the full-on western standard of healthcare will probably still be appreciably less expensive than in the US, but it might also be much more costly than quoted costs that may be based on local standards of healthcare as provided to ordinary local people.

Walking Around With a ‘Kick Me’ Sign on Your Back

There’s another thing to consider as well.  When you move to a foreign country, you’re running the risk of having a huge big ‘kick me’ sign on your back, flashing in dazzling neon to all the locals, but invisible to yourself.  You’re a foreigner, you possibly don’t speak the locals’ language (and they possibly don’t speak English), you probably don’t conform to their customs (Kota Kinabalu is in Muslim Malaysia, for example) and you’ll be perceived as a person with more money than sense, as a person to exploit.

You’ll find the price to rent even the dingiest hovel will double as soon as it is known that a foreigner wants to live there.  If you need any work done on anything, it will take longer and cost more than for the locals.  And, no, you can’t hope to be ‘clever’ and hide your foreignness by getting third-party locals to arrange things on your behalf.  Remember also you’re going to places where ‘the sanctity of contract’ is as foreign a notion as is the enforceability of contracts, and as soon as your landlord sees you’re not a local, he’ll be annoyed at your clumsy efforts to trick him, and will double your rent, no matter what sort of lease agreement you signed.

In addition, how will you find a local who decides to trick their fellow local citizens so as to benefit you?  This is something I’ve often seen – where one’s interpreter/guide is actually working against you in conversations rather than merely translating and/or perhaps giving you ‘helpful’ advice.  Everyone will want a piece of your pocketbook.

It is a bit like the saying – ‘If you’re in a game of poker, look around you at the other players.  If you can’t spot the sucker, then it is you’.  You might think that everything is being done to a comparable level of probity and fairness as in the US, but if you don’t detect the rip-offs that you’re suffering at every turn, then they are probably even bigger than you guessed.

Immigration Issues

It is wonderful to read about these eight ‘low-priced’ places to live in the Forbes article.  But the article is utterly silent about the process by which you can legally be allowed to live in your chosen new home.  For example, several of the recommended inexpensive places are in the EU – not what one would immediately associate with low-cost places to live.  Assuming they are indeed appealing from an economic point of view, how are you going to get a permanent residency visa to live in the EU, short of pretending to be a penniless refugee muslim from North Africa?

Other places involve no end of complications (yes, ‘complications’ is often a polite way of saying ‘bribery’), and the need to regularly leave the country and re-enter so as to extend/renew a short-stay type visa.  Each time you do that, you’re gambling that the immigration officer won’t notice that for 35 of the last 36 months or whatever, you’ve been in his country, and choose to make the obvious inference that you’re actually living permanently there rather than simply visiting as a temporary tourist, at which the inconvenience (bribe) will get massively larger.

Getting a Job

So maybe, after moving to your ‘tropical paradise’, you’ve discovered that your days are too bland and empty, or that your costs are so much higher than you’d expected, and for whatever reason, you decide it would be nice to get a part-time job – to give you an interest, and some extra spending money.

The chances are that your visa won’t allow you to work, lawfully.  So you’ll need to find somewhere that will hire you ‘under the table’.  Now you know what it feels like to be an illegal alien in the US!  Except that, the other side of the ‘low cost’ coin is that casual jobs in such places also pay at very low rates.  You might find yourself lucky to be getting $1/hour.

Oh – one last consideration, but uniquely, only for Americans (as far as we are aware).  Maybe some of the costs of living are reduced in your new domicile.  But one cost will never go down, and might even go up.  Although citizens of most countries are only taxed in their home country if they are living there as a permanent resident, American citizens are taxed on their world-wide earnings for as long as they are a US citizen, even if they don’t spend a single day in the US over an entire decade or longer.

Other Considerations

If you’re going to live in another country, then, as we hint at in the section about your new ‘kick me’ sign, we suggest you choose a country that ranks as highly as possible in terms of lack of corruption (see the annual corruption index published by Transparency International).  You also want a stable country with a stable government (here’s an interesting chart, although we’re not sure we’d rank Samoa as being more stable a government than many of the lower ranked countries).

It would also be preferable if it was a country in which you, as a foreigner, could own property and shares – that would reduce your exploitation and risk when renting, and give you access to local investment opportunities and local investment income.

This site has many other interesting rankings too – crime, particularly petty crime, is another factor to consider.  You can probably avoid becoming a statistic on the murder or incarceration tables, but the petty crime rate is definitely a factor to keep in mind.  But the published table seems to be quite counter-intuitive – is Sweden really the country with the greatest theft rate in the world?  And are the countries with the lowest reported theft rates really truly that safe?  Or is the table instead merely showing the accuracy and completeness of theft reporting, rather than actual theft occurrences?  This issue – the validity of the data being reported – is often a huge factor to keep in mind when evaluating third world countries.

Currency issues are another variable – hard to predict and so almost a random but important factor.  If you’re receiving a retirement income in US dollars (or any other foreign currency, of course), its value in the local currency where you live, and the adjusted cost of living, is of course going to depend on the currency exchange rate.  It is entirely likely that this exchange rate might change substantially, and possibly either increasing or decreasing the cost of living as a result.

It is hard to guess the future of currency exchange rates, but you should at least understand the basic drivers of the country’s economy and understand if it is likely to be a reasonably stable and possibly positive economy, or one that could collapse at any moment.  Have a look also at historical exchange rates – that will at least give you an understanding as to how volatile the currency has been in the past.  This site has lots of historical data on it.

You should also double-check the claims about low costs of living.  We like two sites in particular – this site and this site, and there are several others that also have good information on them – particularly sites that have more of a perspective of ‘what does it cost to live a western type lifestyle in other cities/countries’ rather than ‘what does it cost to live a spartan lifestyle like the locals’ sites.

Spending Money Tactically

It is quite likely that some items will be cheaper in your new home region, but other items might be more expensive.  If the more expensive items are ‘discretionary’ items that you only need to (or choose to) buy occasionally, why not wait until you are wherever in the world that they are less expensive.  Or, if/when you have friends visiting you, ask them to bring such items with them.

For example, some types of clothing and apparel are much less expensive in some countries than others.  The classic truth of Levi jeans and Nike sneakers being cheapest in the US still seems to hold true in many other countries.

You’ll also sometimes find yourself in the ridiculous seeming situation where it is cheaper to buy a locally made item in the US than it is in the country it was originally manufactured in.  Inexplicably, electronic goods are consistently less expensive in the US than China, plus you’ve a higher chance of getting a genuine rather than fake version of whatever you’re buying in the US.

It isn’t just ‘third world’ countries with these pricing discrepancies.  I’ve found NZ lamb less expensive in Costco than in NZ supermarkets, and the same for NZ wine.

In some exciting good news for expats, Amazon is extending and improving its world shipping services and rates.  While this is far from yet fully optimized, it is becoming easier to order from Amazon and get the items quickly and inexpensively delivered to you in other countries.

But, ooops – we’re trespassing way away from the initial concept of ‘living cheaply and well’ aren’t we.  Accepting one to two weeks waiting and some delivery fee on top of the regular US price is in no way a lower cost or higher quality-of-life experience than having Amazon deliver, for free, in a day or two to your US home!

Resources

If you really do want to consider living somewhere else in the world ‘cheaply’, and if we’ve not disabused you of that notion, here are some other recent articles and suggested locations.

Business Insider – World’s 13 Cheapest Countries, January 2017  (strange methodology which involves local residents rating their own perception of their cost of living and life style, gives top spot to Ukraine, followed by Thailand, Taiwan and Vietnam – definitely some surprises on this list)

International Living – World’s Best Places to Retire, January 2017  (scores Mexico as best, followed by Panama, Ecuador and Costa Rica – a very traditional list with clearly a strong focus on )

Escape Here – The 10 Cheapest Cities for Expats to Live Around the World, undated  (Bishkek comes first, followed by Windhoek, Karachi, Tunis, Skopje and Banjul – you’ll need to get out your map to see where some of these unappealing places are located)

Cheapest Destinations – The Cheapest Places to Live in the World – 2017, November 2016  (more sensible than some lists, recommends Mexico then Nicaragua and Colombia in the Americas, Portugal, Bulgaria and Hungary in Europe, and Thailand, Indonesia and Malaysia in Asia)

Bankrate – Six Surprisingly Inexpensive Places to Retire Abroad, January 2017  (Chiang Mai, then Guam and Valencia)

Time – These Are the 50 Cheapest Countries to Live, Feb 2016  (somewhat useless because it contrasts living costs with income, which makes South Africa cheapest, then India, Kosovo and Saudi Arabia in fourth place – definitely not a cheap place, and utterly an impossible place to consider living in)

The Independent – The 17 Countries Where Expats Live the Happiest Lives, Feb 2017  (Being happy isn’t the same as cheap, but is still important and relevant.  You’d be happiest, perhaps, in Costa Rica, followed by Malta, Mexico and the Philippines)

Huffpost – 11 Incredible Cities Where Living Abroad Is Cheap, June 2016  (Lyon came first, followed by Lisbon then Wellington New Zealand and Riga.  No-one could consider Lyon or Wellington to be cheap cities, but maybe their high scores on the ‘incredible’ scale counter their probable low scores on the cost scale)

Summary

Do we accept the Forbes’ article’s claim that you could quit your job and live for $850 a month in Kota Kinabalu.  For the reasons described above, absolutely not!  But some savings are possible with little compromise in life style, and more savings are of course possible with greater compromises.

If you want to enjoy the life style you currently experience and appreciate, staying exactly where you are is probably the best option.  There are ways to reduce your costs by moving elsewhere – and don’t forget the other 49 states in the US, as well as far away foreign countries, if you’re keen to make a change.

Our unscientific feeling is that in terms of overall quality of life and value, the US is right up there near the top.  Whether it is or not, be very careful before changing your life based on largely spurious claims that you could live elsewhere in the world for as little as $850/month.

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