DE 010: Can you afford it? Living overseas comfortably, for $1000 per month
For the second time in three years, Luanda has been ranked the most expensive city in the world for expats. Ndjamena was ranked fourth. Luanda is the capital of Angola, Southern Africa. Ndjamena is the capital of Chad, Central Africa. They are the 147th and 186th poorest countries in the world.
An imported half liter (500ml) tub of vanilla ice cream in Luanda goes for as much as $31 and an imported kilogram of tomatoes costs up to $16. A one bedroom apartment in the city center costs as much as $4000 per month. This is in a country where the GDP per capita is around $6500 per YEAR and 40% of people live below the poverty line.
People often make the mistake of thinking that poor countries are cheap to visit, and cheap to live in. Places like Zurich, Tokyo, Sydney and New York are expensive because they are rich, and Luanda must be cheap because it’s poor, right?? As these examples show, this is definitely not always the case.
When you are considering a move to another country, it is extremely important you figure out whether the cost of living there is something that fits within you budget. Dan Haskins and Suzan Prescher, who are senior editors at International Living, do this really well in their new, bestselling book. I talked with them recently, and as a nice introduction to some of things you should consider when you are choosing a location and are in the throes of budgeting, I am including a 6 minute snippet of our conversation above (listen to it if you have time – Dan and Suzan are pros).
The main point you should take away from this post is that it is possible for you to live in an awesome country, living an awesome, comfortable life, for less than $1000 per person per month. It is only possible, however, if you make the right decisions.
Following my discussion with Dan and Suzan, I thought about the biggest costs associated with your move overseas. I came up with the 6 big things that will make your wallet wobbly at the knees. There will of course be other costs, but these are the ones that are the biggies. Feel free to point out if I missed something below.
- Choose your country wisely: This is probably the most important decision you will make. If you choose to live in Luanda, you better be independently wealthy otherwise you are seriously stuffed – get ready to pay Tokyo prices in one of the poorest countries on the planet! If you choose to live in Ecuador, where a bus ticket costs 25 cents and a meal at a restaurant for two costs $5, then you can live on a lot less. Find more information on the cost of living here and here.
- City or town, coast or mountains: Big cities are almost always more expensive than towns. Even if you live in a quiet beachside town, living on the beach is going to be far more expensive than living a few streets back from it. There are lots of little things that end up making a difference too. For example, Dan and Suzan mention that living in the mountains in Ecuador almost eliminates their need for heating and cooling, which obviously saves them money
- Healthcare costs can hurt if you aren’t careful: Regardless of how young and invincible you think you are, I’d highly recommend having quality health care options available to you. Some developing countries have really great health care systems – some are even totally free which means you have no need for your own insurance. Others are so bad that I wouldn’t even tell my worst enemy to go there, which means you will need international health insurance or some equivalent. This can cost a decent amount of money. I’ve covered insurance in another blog post, where you will also find lots of links to information on the subject.
- Moving expenses can ruin you: This is the expense that people often forget, ignore or put off to the last minute. That is a mistake. Moving costs can be the least or most expensive cost you have, depending on how you play it.
The expensive route: OK, you really want to keep your brown leather armoir and matching chaps. No one doubts they look good together, but how do you get them to your new country?
It’s likely that you will have too much for airfreight, or your backpack, so you’ll need to sea freight it in a 20ft or 40ft container. Sea freight can take 3 months and has a habit of taking much longer. While you can probably manage to go for a few months without your doodads, it is a nightmare when you realize that getting your expensive crocodile skin couch out of customs is going to incur a 3000% duties fee.
Make absolutely sure you know what you are likely to be charged getting your stuff through customs before even contemplating this option. Also be aware that the customs process in many developing countries is a bit of a lottery. Depending on the humidity in the air, the time of day, the grouchiness of the customs agent dealing with your container, and how broke the government is at the time, you could get charged the official rate or something wildly different. Lots of horror stories about this, so beware! You can find more information by contacting DHL, Fedex or another big postage company – they will point you in the right direction as well as helping you understand what your expectations should be.
The inexpensive route (I’d recommend you do this if humanly possible): Don’t take anything but a few suitcases of clothes. You can buy everything you need once you are over there. If there is stuff you desperately want to keep, and it is too big to travel with you, rent a storage space, or stow it with family.
5. You want me to pay how many months in advance? The key question in many developing countries is not only ‘what is the monthly rent’ but also ‘how many months do I need to pay upfront’. It is not unheard of for landlords in some countries to want a year of rent in advance. That could be a killer for your budget.
6. Getting there. The cost of flights fluctuates depending on the time of year. If you have flexibility, try to travel in the off-season as it will be way cheaper. Sites like Flightfox are a good place to get some cheap advice on the least expensive flights to your destination. If you have plenty of time on your hands, you could also see if you can get to your country a more creative way. For example, repositioning cruises, which are typically one-way routes that cruise liners do in the off-season to get to the starting point for an on-season cruise (for example, from European Mediterranean to Miami, US in preparation for a Caribbean cruise) are often 75% cheaper than a regular cruise. There are lots of repositioning cruises to different parts of the world and they could be a fun and cheap way for you to get to where you need to be.
These costs obviously don’t cover any business related expenses that might accompany your decision to set up shop. I will cover these in a later post.
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TRANSCRIPT:Photo credit: Manoj Vasanth