January 25, 2013

You Can Now Retire on $1,400 Instead of $900 Instead of $600 in Cuenca Ecuador

Article after article keeps coming out in the retirement press stating a new cost of living for Cuenca Ecuador.

You Can Now Retire on $1,400 Instead of $900 Instead of $600 in Cuenca Ecuador.

According to the popular retirement press these are the latest figures, and all within a span of a few months. A new article just came out on January 3, 2013 with the retirement press stating it is now possible to retire in Cuenca Ecuador on $1,400 a month.


That is quite a bit of “cost of living” inflation in 6 to 8 months time, don’t you think?  It looks like the trend is “up”, and the trend is your friend, but only if you’re a real estate/rental agent in Cuenca Ecuador!

What’s Happening to Cuenca Ecuador?

What happened to Panama City, Panama? What Happened to Merida, Mexico? What happened to San Jose, Costa Rica? Need we say more?

We inflate prices by bringing our standards of living and our comparisons to third world countries and Cuenca Ecuador is no different.  We also do it by going to the very same places that are popular in the retirement press magazines.

When lots of people bid on a finite number of items, what happens to the price?  And when those very same people make their pricing mechanism a comparison to where they come from, is that real local demand? Or hyped up foreign demand?

What happens to hyped up foreign demand in the long run? How are people treated and seen by the locals when they are paying far more than the local demand? Does ATM machine ring a bell?  How about envy?  What does envy turn into in the eyes of someone without any moral boundary?  Why are expats reporting to us much higher crime rates in Costa Rica and on the Ecuador coast?

And on a small potatoes note, err. or onions, why did onions spike up to $6 a bag from $2.50?  And guess what, now that the rains are back, the price is back to $2.50 again.  Obvious to me it’s not dollar inflation exported from the u.s as some are so quick to say. There are seasonal fluctuations here.  My sense is that it was due to drought caused shortage, i.e. too many people bidding up on a finite item. 
I hope you’re following me on this…

Did you know that the minimum wage (it just went up about 8%) is around $2.90 per hour in Ecuador or about $300 per month. Did you know that most Ecuadorian families rent for between $180 to $250? Did you know that many families are only scraping by in Ecuador? Did you know that 10 oranges for a $1 seems like a lot of money to people here? 

By the Way, when onions were $6 a bag here in Cuenca Ecuador, we weren’t buying.  We substituted garlic.  For some strange reason the u.s exported inflation didn’t touch the garlic. :-)

But seriously, the inflation is against hard goods/commodities versus paper money, so when the price of gas goes up in the u.s. what happens to everything that is trucked to your local store? Think about it: from auto parts to food, the centralized production system up north demands that the inflation will hit all prices and especially food.

Now, when we were in the northern country, we drove 1 & ½ miles to the local farmer and paid the then international spot price of $12 a bushel for organic wheat berries. Then we went home and ground it up into flour and made bread etc.  But is that what your average person is doing?  Or did they go to the grocery store and pay $4 a loaf? Up from $2?

It’s not surprising then that some people would think that price increases here in Cuenca are a result of exported u.s. dollar inflation.  Well it is partially correct but only on imported items. The price of (subsidized) gas has been static here, so the rest of the inflation has to be from shortages due to seasonal fluctuations etc.  And what is a shortage? Either not enough supply or too much demand or usually both.  And sure, if you want to call overpaying - inflation, then it’s exported gringo inflation.

Food Here is Not Cheap to the Locals

.... Ecuadorians have commented on our “food buying” videos telling us that to them the prices are normal, not cheap…so we stopped saying the food is cheap here because it’s not cheap to the locals.

For foreigners the cost of living is going to keep going up here. For the locals they’re cost of living is going to go up too, and faster because Cuenca is just too small to embrace the flood of rental demands that are coming in. Every week we see local rents going up...and on Craig’s List about $50 to $100 for the same amount of house!!  The locals are not getting more house for their money, just more expensive…this is happening in Cuenca now…and it is not going to stop anytime soon.

So with that said, if you’re thinking of  bringing your demands with you to Cuenca Ecuador of needing to live in a furnished condo, or brand new 3,000 sq ft home with a big yard, with around the clock security, and with the views and right across the street from the river, and walking distance to the historic center, then expect your cost of living to be around $1,400 a month…and seriously folks that figure is quite gracious…most expats are complaining that Cuenca is not cheap and they can’t live on their $1,500 retirement check. Some are going home.

Cuenca Ecuador - a paradise, or is it lost? My son says there’s lots of room still to the upside.  (Eye roll) ;’(

The old North American dream of prosperity and liberty can be yours but you might have to change some of your habits and blend in within the local culture. No one can certainly tell you how to live, but if frugality and immersing yourself into the culture of Ecuador sounds like something you want to do then most of the Ecuadorians will welcome you here with open arms.

For more details on how to live frugal and happy in Cuenca see the DIY Cuenca Landing Guide.  For rentals see $300 Cuenca Rentals

2 comments:

  1. Thanks for this. I've been reading of planes that are full of Nortamericanos streaming from the U.S. or Canada looking for a new place that will help them save their money. I'm amazed at those who just pack and leave without taking at least one short term visit to see if they fit into the culture happily. It almost seems that culture is a secondary issue for them. In America, so much of our culture is based on money (getting, spending and keeping), so that seems all that many Americans are concerned about when they emigrate. Hence, the ridiculous headlines about "live like kings on (fill in the $ blank) per month. After numerous trips to Belize, we decided against making the permanent move...not because we couldn't save as much money as all the investment newsletters were screaming -- but because we were not comfortable enough in the community to do so. It was a well thought-out, honest view of our futures in a new country. If Nortamericanos would spend less time looking for investments and more time soaking up and assessing the cultures they visit, this ridiculous revolving door of property values and cost of living would stop. BTW -- our friends in Belize say that with a bit less frantic investment-tourists, some of the skyrocketing property prices, particularly around the beautiful Corozal area have declined a bit.

    ReplyDelete
  2. Appreciate this well-informed and sensitive article.

    ReplyDelete

If you are a registered user of blogger your comments are welcome. We no longer allow comments from anyone who hides behind an anonymous facade. thanks.

Powered by FeedBurner