Time to get back to my Seasons in the Sun series here on LiP. So far, I have written about my Winter years of my life in the Philippines, which hit shortly after moving here. I have also written about the Summer of my Philippine life, which came immediately after I made it through winter. This week, I am going to tell you about Fall, or Autumn.
In short, I had a difficult life during the first few years of my Philippine life. After making it through those difficult years, things heated up and I was really living the good life. Life in the Philippines was good for me. However, around 2006 or 2007, the temperature of life began cooling down a bit, and Fall was on the way.
The exchange rate during those “summer” years was great, reaching as high as P56 to $1 in 2004 and 2005. When I moved to the Philippines in 2000, the exchange rate was only P40 or P41 to $1, so you can imagine how great a quick jump up to a P56 rate was. Expats were living large in the Philippines, including me. As I explained in my last article on this topic, in addition to a great exchange rate, my businesses were really humming, and I was making money like I never had before. Converting those dollars I was earning to Pesos was also great.. it was the best of both worlds.
In 2006, though, things started sliding a bit. The US dollar began losing strength. We started out 2006 with an exchange rate of P53 to $1, a slip of P3 or so from the peak. Things weren’t bad, though, nobody was complaining. By the end of 2006, though, the dollar was worth only 48 Pesos. We had lost nearly 20% of our purchasing power in the span of a little over one year. I started hearing from expats who were having a tough time making the adjustment. I was still doing well, though, and could not complain. Yeah, I enjoyed the time when the exchange rate was so favorable, but I was still living well.
In 2006, I started this website, Live in the Philippines Web Magazine. The site earned no money at all during those early years, but little did I realize that it would turn out to be a very good thing for me in coming years. By the end of 2006, I was spending a major amount of my time on this website, but basically doing it for free. I suppose that in that first year, if I made $50 on this site in a single month, that was a good month for me. Luckily I had other businesses that were doing well.
Then 2008 hit. 2008 was a terrible year for a lot of expats, including me. The dollar’s value continued to slide. By the time that 2008 arrived, the dollar was worth only about P41. Expats were really hurting. During that time, I saw a LOT of expats leave the Philippines and return home. This included Americans, Australians, Europeans, etc. It was a pretty tough time. But, for me, business was still booming… the dollars I was earning were worth a lot less than they were a short time before that, but I was still making it. Then September came. That was when the US economy took a dive. Lots of financial companies were going out of business, unemployment was taking off, people had no work and were really unsure of how they would be able to earn a living.
Business-wise, my market was almost exclusively in the USA. I had some business clients in Europe and Australia, but only a small number, and those regions (less for Australia) also experiencing a financial meltdown. Almost immediately, my business earnings went down by about 90%. That much lower earnings combined with a terrible exchange rate, and you can imagine, life was pretty tough, financially. I was still enjoying my life in the Philippines, but I had to work hard, and even with hard work I only scraped by.
When I was really doing well here financially, I had an American friend who kept telling me:
Remember, Bob, nothing lasts forever.
Oh, how right he was.
Since 2008 when things crashed, most of my businesses have recovered to some extent by now. A couple of my best businesses before, though, are only my lower end businesses now.
It’s Fall
This was Fall, and it was a tough Fall at that. But, although I did not yet realize it, as Fall took a stronghold in my life, I had been developing other things in my business life that would take over as my major earners, and put me back in a good position again, while other expats were still suffering due to a poor economy and a strong Peso. Things like this blog helped me build a profile and popularity, that developed into a huge audience. Because of that popularity and the size of my audience, I was able to follow other types of business opportunities. This blog become so popular that I was able to earn a fairly substantial income from this site itself, and other income from related websites that were a result of this website.
So, Fall brought with it tough times financially. Nearly every expat experience Fall.. actually for some of them it was a deep winter. I am thankful that it didn’t develop into winter for me.
Thankfully, the Autumn is over for me, though. There are a number of things that have turned very positive, and life is good for me here in the Philippines. I’ll write more about that in my next article in the series, and the series finale, Spring has arrived. Coming soon!
Thank you for sharing your stories, hopefully soon we will be on of the Expats. Can not wait
Hi Bob – Good well written article. 56 php for $1 is huge. You could party real hard on that. I could see how if you got used to 56 php for $1, then the php went near 40 php for $1 that would hurt most people real bad, that is almost a 30% slide. I thought I was hurting because the Australian dollar went from 42 php to 40 php for $1 recently, he he.
Hi Brenton – P42 to P40 is just a blip on the radar! You should have been here 6 or 7 years ago when the financial bloodbath hit expats! I can assure you it was no fun. But, I think that going through such things makes us stronger, and helps us prepare for future hardship if it ever comes. Things seem to be moving back the other way recently, hopefully they will continue in that direction for a while!
Bob – I was amazed how much the US dollar moved in the last 2 months alone. About a 10% increase. That means if you are on a pension of say $350 a week. Comparably you get about $385 value now. The dollar shifting really makes a big impact. The extra $35 is about 1500 php, that would allow a heap more freedom and that is only with in a 2 month shift. Let’s hope we keep getting more php for the dollar!
Hi Brenton – Yeah, things have been looking nice for the past few weeks!
Bob;
When I started building my house, the peso rate was 23 to 1, ah those heady days during the Asian Contagion when the peso hit over 50 to 1.
Without bragging or trying to make myself seem smarter than I really am, I had based my retirement on the old 23 to I days and made a budget that I’ve stuck to. Aside from a yearly property tax and electric and water that is my monthly nut, when the peso fluxgates I take it with a grain of salt, But Bob, unlike you, I’m not earning off the economy so it’s not much of a deal for me as it would be for you as a businessman .
I’ve learned to cut back in bad times and still take it easy in good times, I indulge myself, as much as I can but still as before try to live on $ 1,500.00 a month, with back up money in the states to take care of unexpected expenditures like my car this month and its new motor.
Make a budget and stay with it, adjust when required, the price of gas goes up, drive less, and so on. When I was younger I went through those lean times, and told myself that I’d never do it again.
Hi Paul – When I first came to visit the Philippines it was P19 to a $. Things sure have changed since that time!
I was a bit naive. Before the dollar crashed back in 2008, I was too easy in spending money, and not strict on saving. It led to tough times for me when things crashed. Since that time, I am practically paranoid about money now. I am pretty darn tight, and I try to save as much as possible for the next time there is a crash (there will always be another one down the road). Probably I am tight to an excess, but I saw what could happen, and I don’t want to go there again. So, while I have made a nice recovery, financially, in recent years, I try to keep living like my budget is super tight. It’s the only way to go.
Bob;
You made my point better than I did! I buy what I need not what I want.
😉
I sometimes break down for what I want, but try to stick to what I need.
Hi Bob:
One of the secrets to surviving the bad times, is to live below your means during the good times. Saving money for a rainy day is so important.
You are certainly correct on that, Richard. That is one of the secrets to a good life!
Hi Bob- Life is swings and roundabouts and you take the rough with the smooth. Good financial planning is always good and not living above your means is a must in this day and age where there is no certainties. Long may your ‘Lumb Reek’ and poverty remain a stranger in life.
Regards.
Jim.
Without a doubt, Jim. The financial crisis has taught us all a lesson. For a person my age, we did not live through very tough financial times until 2008, just a few rather minor recessions. It really opened my eyes.
There is a drumbeat that is essentially global that says over and over — things are getting better.
They aren’t.
Cyprus still doesn’t allow people access to their money. Greek middle class parents (or formally so) are giving up their kids to orphanages and adoption so that the kids can have food.
It’s more or less unacceptable to suggest the future is not bright, but it’s at least rational to point out that there is no law of the universe that says it must be. Nothing has been done to fix anything that broke. All that has been done is print money.
Hi Owen – I agree that for the most part, things are not getting better. In some instances they are better, though. For instance, things are better for me, but it is mostly because I was proactive and did things to make my situation better. Many around the world are waiting for the government to make things better. That is not going to happen, people have to make things better for themselves.
You hit on it Bob. People waiting for government to make things better is not the answer but too many have that mentality.
Hi Robert – I have found that the Government is never the answer, no matter what the question is! 😉 You are right, though, a lot of people out there think differently than I do on this.
Bob,
If more people had your attitude, the world would be much better off.
Thanks, Robert… probably plenty would disagree though! 😉
Bob,
It was great you were able to make a great recovery for your businesses led by LIP. Our financial situation is better when the peso is strong, which is opposite of most expats. That being said we will be living well within our means comfortably with a couple of splurges a year.
Hi PapaDuck – You sure are right… it was great that I could make a recovery… if I had not been able to, I would have been in for some serious problems! It took a couple of years to turn things around, and I learned some real lessons from the financial crisis! Good luck to you.
Bob it is nice to hear you were able to make a good life for your self and your family. And I like reading the positive posts, it makes my good days better.
Thank you so much, Loren! I like to write positive posts… from time to time there is a need for something negative, but I try to keep that to the minimum. 🙂
I recall an article in LiP some time ago entitled “What Currency do You Think In?” I can’t seem to find it in the search. But, it advocated thinking and budgeting in the local currency. That practice seems like a winner for the long term.
Take care,
Pete
Hi Pete – You can find that post here. You have a good memory, as that article is more than 4 years old! I have a hard time thinking in just one currency, because I earn in US Dollars, but I live in Pesos. I think both. But, I would say that I lean more toward thinking in Pesos.
Bob,
Does the dollar value change from Eastern Mindanao to Western Mindanao? I know this sounds like a stupid question, but I hear that Eastern Mindanao is so different from Western Mindanao, that the markets and value of just common items are different between the two, any thruth to that.
Hi David – As Amin said, there are differences in the two areas. I don’t think that the value of the dollar is different between the two areas, though. At least I have never experienced that before.
David,
I can not speak for Bob, but there are major differences between East and West Mindanao. Mindanao is seperated by a mountain range, it almost splits the Philippines biggest island down the middle. Davao is the second biggest city in the Philippines with a majority being Catholic, it would be the capitol of the east and Cotobato or Zamboangabeing the capitol of the West. The west is poorer, and a majority of the people are mixed with muslim and catholics. If you are thinking of moving here, think about East Mindanao as compared to west, it is safer for westerners. The market is the same, but supplies bary in the west especially in Zamboanga and pints south in the Sulu Archipeligo. The market will always remain the same though. I think Bob will agree me.
I wholly agree, Amin. Thanks!