Living in the Philippines is not something that the majority of people even consider. Heck, to be honest, a lot of people don’t even know where the Philippines is, unless they have some connection to the country (a friend from there, a wife, served here in the military, or something like that). I know that when I got married to Feyma, when we would tell people that she was from the Philippines, a lot of people would ask – “where is that, South America?” Well, no it is not, but that is just an indicator about how much the average person thinks about the Philippines.
For many of us who have a connection to the Philippines we think of the Philippines as a great place to retire. It’s a tropical place with beautiful beaches, a laid back lifestyle and cheap living. Right? Well, not necessarily every one of those points is true today, or will be true in the future. Remember, times change, and the things that we take for granted change too.
After World War II, a lot of American Servicemen decided to settle down in Japan. Life was cheap in Japan. While Japan is a much more closed society than the Philippines, some of these GI’s were able to take a Japanese wife and settle down there. Many of them thought that life would be like this for the rest of their days. But, as time went by and Japan grew and became an economic force in the world, things changed. Living wasn’t cheap any longer. Many such people ended up having to leave the country to find real work, and to live in a place with a lower cost of living. Today, living in Japan is quite expensive!
What about the Philippines? Is the Philippines a cheap place to live? Well, I would say that it was a cheap place to live in the past, and right now it is showing signs of becoming a not-so-cheap place to live. When I talk to other ex-pats living here, I hear the same stories that are in my mind. Prices constantly climbing. Currency value of our home currencies constantly falling against the Peso. Honestly, I know people who are leaving the Philippines, returning home partly for the reason that living here is getting expensive.
A friend and I were talking about this trend a couple of weeks ago. My friend moved here to live in 2001, I believe. I have known this guy since the early 90’s, and we live a similar lifestyle here in Davao. My friend told me that he had been doing some thinking, and he figured that as Americans living in the Philippines, in the time we have been living here we have lost about 70% of our buying power. I have thought this over, and in some areas he is entirely correct, in other areas our buying power has slipped, but not to that extent. Overall, I would say that our buying power is half of what it was in 2000 when I moved here. That’s right, in terms of dollars, prices have doubled in 8 years. And, as I said, I agree with my friend that on many things prices are up almost triple in that time.
Where has our buying power gone? Well, the first thought is that the US Dollar is down by about 35% against the Peso. Just a couple of years ago, a single US Dollar would buy you 56 Pesos. Today, you’ll be doing good to get 40 Pesos for that same Dollar. And, it’s still falling, although more slowly than it was a while ago. Added on top of that, inflation here is high – you can watch prices increase at the grocery store every time you go. The combination of these two things is a killer.
For those in the population that do consider the Philippines as a possible retirement location, I would say that nearly 100% of them have the cost of living as one of the factors that puts the Philippines on (or on top of) the list of potential retirement destionations. Cheap living is a real draw for ex-pats who want to live here. But, honestly, in my opinion cheap living is not something to consider any longer. If you want to live here to enjoy the diving, great! If you want to come here for the beautiful warm and sunny weather, you are in business. If you love the people here and want to enjoy that in your retirement years, that’s great. If you want to come here to live on the cheap, you can still do that to some extent, but that particular aspect of living in the Philippines is fading.
Watch this column tomorrow. I have an interesting column making price comparisons between the USA and the Philippines for items that are exactly the same. What I write tomorrow may shock you. When I started doing some research into this, I was shocked. So, tomorrow, check the prices as Philippine manufactured products go head to head with American products. What you see may not be what you expect.
Living on the 'spread' is indeed getting more difficult when that spread is getting narrower. This is what Alan Greespan termed as the 'invisible hand' of globalization. The Philippines is now starting to be integrated into the stronger current flow part of the world economy. Once the major institutional infrastructures are in placed, 'cheap'- Philippines, as we knew it, will be gone forever.
I'm seriously considering to retire now and work later.
Can't wait for the comparison prices for Spam and corned beef tomorrow, Bob. 😉
Hi Dr. Long – Have you been reading the things I type into my computer? Spam is indeed on my list tomorrow, but corned beef is not. There is a whole grocery list of items, though.
What you say is very correct. The spread is getting narrower and narrower. This has happened before my eyes in the 8 years that I've lived here, and it is very evident. I get e-mail from people asking if they can live a as a family of 3 on $500 per month and such… well, in my opinion, those days are gone.
test
Cost of living in the USA has gone up as well….for those of us living on this side of the pond i wonder if it 'washes' out to a degree.
Hi brian – I am happy to say that you passed the test. However, you forgot to submit the test fee! Don't forget to send me $10,000 as the fee for taking this test. Do you need to know my name on Paypal, so you can send it? 😆
Just kidding… is there a problem on the site?
Hi brian – The prices that I used in the price comparison (which you will see tomorrow) are taken from an online grocery site just last week, so they are current prices. I feel quite sure in my mind that prices are increasing more rapidly here than abroad.
Happy birthday Bob! Another year couldn't happen to a nicer guy! 🙂 I hope you have a special day with your wonderful family!
I am looking forward to tomorrow's column!
Hi AmericanLola – Thanks! I appreciate your nice thoughts.
Sadly, this is true! Back in 2004 my sister bought a piece of property in the Philippines that cost around 3.8M. At that time, the dollar was at its' peak at P56 to $1 and the property was approx. $67-68K. She bought it through an in-house financing of 12.9% for 15 years, making her payments something close to P40,000 per month. Back when she bought it, that would only have been $700 but with the exchange rates now, she is crawling on her payments and unable to shell out what now costs her over a $1,000 a month in mortgage payments! She has tried to rent it out but is unable to do so since the house has not been fully paid. Alas, she is trying to sell it but she has already lost so much money it's painful to whip out the calculator to compute exactly how much. So far no takers.
Another thing I noticed is that every time I come home, prices are out of control. I understand the token increase in prices (it happens everywhere) but when my dollar no longer allows me to enjoy dinners out with my friends on a regular basis, it's very telling of what's going on! I'm not talking about fancy meals, mind you! Maybe a trip to Shakeys and what have you. My wallet is still crying from a $150 charge for a meal at Fish & Co. for a party of 5 people. I had to look twice at my credit card statement to make sure that charge was made in the Philippines and not in San Jose, California.
I have dreams of retiring in the Philippines but it is now proving to be more costly than I first imagined it to be.
Well, all I know is that beer there is cheap (as when compared to beer here in SG, hehehe). BTW, belated happy birthday, Bob. Cheers! (I toast my mug of beer here). 😀
Happy Birthday Sir Bob!!! 🙂
Hi Bob et al, and many happy returns also.
On that last comment from Jio, I found beer rather expensive in Davao on my visit in 2005. The Peso was approx 39-40 to the AUD then. Beer was around $1 AUD per litre whereas the local gut-rot whiskey was only $2.45AUD for 750ml or Brandy at only $1.65AUD per headache. The bloody coke or whatever I mixed it with ended up costing me more than the grog!!! ❗
Hi Bob, I am sure we all will get shocked tomorrow. Can't wait to read your post. By the way I just got the information that oil is up to 100$ +… 🙄
Hi Mia – Your experience about the food bill at the restaurant is right on target. Feyma and I used to eat out regularly, but now it's usually just a treat to do that, the cost has just gone so high!
Hi Jio – I remember when a bottle of San Mig was about P12 or so (while I lived here), now you are looking at P25 or so. Big difference!
Hi Mamai – Thank you!
Hi Aussie-Lee – I think that it's quite accurate what you are saying. By the way, I had an Aussie friend here a few weeks ago, and he told me that he was getting only about P32 or P33 per AUD.
Hi Klaus – The price comparisons tomorrow are somewhat shocking, in my opinion.
hmmm dang failed the test again ! Dang pubik skools !
problem on my end i think
Yes very interested to see your post tomorrow. Speaking as an American living in the USA for another 8 days (moving to Davao 2-29-08), i think it is safe to say that the average American in the states is very concerned with inflation. I make what is still considered to be a good salary , but that money just does not go nearly as far as it once did. The cost of owning, insuring, and maintaining a home in the state of Florida is just out of control now. Health insurance continues to escalate , yet we get less and less for our money. Of course gas is up everywhere, which effects everything in the economical cycle of things. I feel the bottom line is that the glory days of the almighty dollar are over. I am in the business of helping Americans with their credit card debt, and I am here to tell you that business is booming because soo many people are hurting so badly now, trying to maintain their old lifestyle with credit cards. Yes your dollars are shrinking in the states, but they are also shrinking overseas, the Philippines and elsewhere.
Darn you Bob! 😀 Here I was just heading out the door with my bags packed for the Philippines, and then I read your column!
I also will be interested in the price comparison tomorrow. Oh, and a belated Happy Birthday too.
Hi John Culbreth – I think you are very right. If the glory days of the dollar are not over, they are at least taking a rest, no doubt. We can only hope for more positive results in the future!
Hi John in Austria – BTW, I haven't had a chance to respond to the e-mail you sent me yesterday, but I will be doing that, don't worry. Don't worry, it's not so bad that you should not come here, but it is getting to the point that "cheap living" should not be your reason for coming.
Thanks for the birthday greeting!
Hi Bob you speak the truth for the life in philippines you know
I look many foreigners sites in philippines only you speak the
truth. One site have until now you can live in philippines
like a king with little money. I wait the price list also in euro
if possible.
Happy B'Day Bob 😛
Speaking of beer: buying at the "wholesaler/retailer" or sari-sari store and not at a restaurant, bar or other "service" entity, a bottle of SanMig was about P13 in 2001 and P18 last January when I left. The cheapest SanMig served to me in a restaurant was P45.
Lesson learned! 😆
Hi Zois – Thanks for your vote of confidence! Sorry, no Euro prices tomorrow, but that is fairly easy to convert!
Hi Paul – Lesson learned, indeed!
From what I understand prices in the US are going up and rather quickly. It all evens out I suppose but the real costly stuff will always be your imported goods. If you move over here expecting to eat like you did in your home country and expect it to be cheaper beceause they "Told me it was cheaper" then more fool you. If you eat like a middle class Filipino then yes it is cheaper to live over here.
Hi BrSpiritus – Yes, prices increase everywhere. But, I will be comparing current US prices against current Philippine prices on the survey. It's a fair comparison!
Hi B ob
Thanks for the answers to my last post,
however,i still seem to be having a problem finding info on apartments or small homes for rent,maybe you can give me the email or blog to any agents that im sure you have in your files,i really would appreceate your input,
Or direct me to this info on your site,
thanks again
steve
Hi Steve – it is virtually impossible to shop for an apartment over the net in the Philippines.
About your best bet is to be here to start looking.
Hi Bob, Happy Belated Birthday.
I hope your "Press Release"tomorrow does burst my bubble of retirement plans in the PI in the somewhat near future. I will say there are a few of High Bridges to jump from here in RI if I am forced to that 😆
I would love to submit to you some current "Mandatory" living expenses that one has to pay here in the US. Maybe then you could publish a comparason on the US Living expenses that would be eliminated when one moves to the PI vs expenses while living in the
PI.
Hi Neal in RI – I would really welcome you sending me some prices for things that you would consider to be needed items. Use my contact form to e-mail me off-site. That could make for an interesting post.
Gerat column today, Bob, and happy birthday too.
I'l be looking forward to your post tomorrow for sure. One thing that I was gald to see Neal bring up … and a great subject for the future is .. what is the minimum to 'stay afloat' in each country … that's something that the price of a can of spam won't tell very much about. I find that our minimum cost of living expense here in the Philippines are a lot less than in Colorado because of many factors we have no control over in the US … things like monthly cell phone bills, landline bills, health insurance that I don't pay here, state income taxes, substantially higher rents or house oayments, ridiculously high car insurance, etc.
Hi Dave – I agree on some of your points, but disagree on others. For example, I wouldn't consider a cell phone plan to be a minimum stay afloat item. But overall, I agree with what you are saying. Minimum stay afloat varies between people too, though. Some things that I can't live without are a major luxury for other people, etc.
Happy Birthday Bob! May you celebrate many more.
Very interesting topic choice Bob! I’ve been absorbing data from several Philippine sites for the last year. I’ve read many posts about expats bemoaning the change in currency valuations vs. the dollar. Those living on the proverbial edge are in quite a pinch. Inflation is a problem everywhere in the world. I imagine third world countries like the Philippines are particularly vulnerable.
I’ve found a good way to separate the chaff from the wheat, so to speak, is to look at the per capita incomes for people living in different countries. The per capita income in the Philippines is still quite low when compared to the US.
Obviously, I haven’t seen the results of your survey but I’d guess the cost of lunch at Jolly Bee is still lower than a lunch at McDonalds in the US. Labor will be much cheaper in the Philippines. If you’re willing to adapt to a lifestyle comparable to that lived by the natives, your costs should go down when compared to the US. Imported foods and electronics will most likely be more expensive. This is what I’ve seen in third world countries in the western hemisphere. If you want to live a strictly western (our European) life in the Philippines, you’d better be prepared to shell out some cash.
I eagerly await seeing the fruits of your research.
hi bob… i think living in the philippines is still great when you are already adjusted to our lifestyle and government system.. in the states if you earn $2ooo dollars a month, its not much but in the philippines , with 2ooo dollars a month equals to 8o,ooo thousand pesos, you can live very comfortably plus some luxuries in life,, as long as you dont have to feed all the relatives here in the philippines.. its just a matter of lifestyle check..
Hi David – Thanks for the birthday wish. Yes, currency valuation is part of what is bringing up the cost of living here, but non-currency value inflation is also very high here recently as well.
Hi Athena- Firstly, don't worry, we are able to have a nice and very comfortable life here. But, we could not live a comfortable life on P80k/month. With Feyma, 4 kids and myself, that is not even close to the monthly income we would need to live a good lifestyle here. Of course, everybody's needs vary, and $2k per month may be enough for some.
Happy Birthday Bob
Has wages gone up in the Philippines recently to compensate for inflation? If it hasnt then things must be getting desperate for the locals which must cause unrest soon?
Im back out there soon but i think i will be in for shock my money certianly wont go as far as in 2005/6 but i have no family just a single guy so i can live cheap 🙂 i don't drink beer etc either so that is a saver 🙂
I think things will get worse before they get better I just wonder how the locals get by.
With the peso so strong i wonder what effect it has on OFWs sending money home are they just seding more $s compensating for the stronger pesos or are people their just making do with less remitence?
interesting times ahead for world economies…..
Hi Bob, I had sleepless nights having read ur column and the members opinions. I'm aware of what's going on there, on the economy and cost of living in particular. I just got back to the US last month after 4 months stay there and hope to go back in May or June for a longer stay, i mean 6 to 8 months because we are building our home in Samal. I cannot believe the value of my dollar nowadays and i heard it will still go down. Bob, i want to ask your opinion if you were in my shoes, should i continue to build my house or wait for the dollar to go up a little bit. The house is only 40% complete..still a long way to go. I cannot imagine the cost of materials as well.
I look forward to your upcoming post on the cost of commodities.
Peachy
Hi Graham – No, wages have really not increased here. Feyma and I often say that we wonder how the common people here can make it! And, you are right, there is a lot of complaining about the strong Peso, particularly by the families of OFW's. Some OFW's are trying to send home a larger remittance, others are having to make do with fewer Pesos for the Dollars sent home. It's a tough situation.
Hi Peachy – Not trying to cause sleepless nights! I would say that you should hurry and finish your house. I think that the worst days are yet to come, the dollar will continue to fall further. I believe it will be years before we see a dollar stronger than where it is today.
hi… oh sorry bob.. i didnt know that you have 4 kids…for sure 80k is not enough for 4 kids.. i was only thinking of you and feyma .. my mistake 🙂
Exactly, Bob, that's what makes any of these comparisons quicksand. The average American reading this column has a cell phone … and if husband and wife have aphone their monthly bill is $100 or so … but is a cell phone a necessary part of a 'modest standard of living'? It is or it isn't. The majority of readers here have cable TV too … I'll bet money on it. They are paying $60 to $120 a month for their service … is cable TV part of the US basic standard of living? yes, no or maybe.
That's exactly why it gest so difficult to answer the perpetual 'how much doe sit cost there' questions, because a 'modest' or 'average' or 'comfortable' lifestyle can mean so many different things
BTW, I'd really enjoy hearing from anyone regualrly reading here whp doesn't have a cell phone or cable TV … I'd like to know just how far off base I am … if I am …
Hi Athena – Yeah, I understand! 😆
Hi Dave Starr – Yep, I agree that something like a cellphone is something that we almost all have these days, but if I needed to live on the cheap, it would have to be one of the first things that I'd give up. Cable TV too. All of our standards are different, and I do understand that.
cellphones are necesary to most people.. imagine almost all my workers owns a cell phone and they are only earning the minimum wage.. and the funny thing is ,many times they come to my office asking for salary advance saying that they dont have money to pay for thr jeepney fare or tricycle fare but then i catch them sometimes texting messages which also cost them a peso per send.. so they dont have money to pay for jeepney fare to go to work but they have money to buy load for there cell phone.. crazy
Hi Athena – I would argue that a cellphone is not necessary – it is highly desired, but life can still go on without one. I agree about so many people don't have money for very basic needs, yet they always have plenty of money for load! 🙄
ha ha ha.. yeah.. thats what i meant to say.. its not really necessary but most people make it so important that its like an oxgen to them.. like carrying there life support with them all the time.. the cellphone 😆 .. yesterday my purchaser ask me if he can have cash advance saying that his cellphone is broken and he wants to buy a new one.. so i said okey he can buy the cheapest nokia at 1700 pesos.. and he ask again if he can have 4k to buy a nicer model…. ggrrrr they are driving me crazy … they hardly have money for food then wants a nice cellphone… really nuts!…
I know the dollar is really bad if my own mother tells me not to bother to leave her any money on my last visit to davao in December. But then again she's way wealthier than me. I think she needs to start sending me pesos. Might help me pay for my hurricane insurance here in Florida.
BTW, Belated Happy Birthday Bob and its too bad I missed seeing you again on my last visit in December. Might be there again in August.
Hi AllenO – Thanks for stopping by my site! December was so busy – our business booms during Christmas – I might not have been able to see you, so no problem! Next time, na lang!
Athena … hi, my street is named after you, you sure get around ;-). Thanks for the cell phone comments … I've observed much the same thing.
But to be more specific here .. because this discussion was really about cost of living in the Philippines versus the US or other developed nations … for the readers not in the Philippines, is a cell phone per adult/teen and cable TV part of the basic cost of living in today's world? yes, of course we can do without, just like we can live in a tent on a camping trip or use candles at night when the power is cut from a storm … but on a day to day basis, what's afair comparison. This question comes from the fact that Bob mentioned he didn't think such 'niceties' qualified as part of a basic, modest standard of living in the US. I think he's 8 years behind the times, and going without his/her cell phone would make the average American feel 'deprived' rather thna living a modest standard of living. But then again, I surely could be wrong …