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Boy, this has been one helluva rollercoaster lately. Our living expenses have been all over the map this year.
We’ve had a ton of abnormal spending (both more and less) throughout the year. The biggest factors for this were:
- Preparing for our big move
- Enjoying our July adventure
- Living in Texas with family for most of August
- Now living in Panama
For a guy with control issues, this is throwing me off a little. The roller coaster ride we’ve been on this summer is just about wrapping up, but we’re still not running a normal budget right now.
It’s been so crazy with so many unknowns that I’m struggling to project what our living expenses are finally going to settle down and be for the foreseeable future.
We’re working on finding a more permanent place to live here in Panama. The rental range is pretty broad in the area, so depending on what we decide, our future expenses could be higher or lower than I’m anticipating.
I’d like to think that our expenses will likely settle on around $2,500/month, but unfortunately, that’s still just a guess… and maybe some wishful thinking!
In the meantime, here’s why this year’s been such a struggle for us to keep up on financially…
Front-loading some costs
Although our living expenses were pretty normal at the beginning of this year, we had some additional costs we usually wouldn’t have had to worry about.
For example, I’m writing this from a place we’re staying at in Valle Escondido… a fancy-pants resort and gated community in Boquete. We got the rental through HomeAway, which is kind of similar to Airbnb.
We wanted a place to stay for a couple of weeks in the area while we found a more permanent place. Fortunately, when I went to book this, I tried extending the end date by a day and the price didn’t change. I moved it out another day… no change in $$$ again. I was able to get the rental for 30-days for the same cost it would have been for two weeks – that’s a frugal win!
The total cost was $1,698.00 plus a $500 refundable damage deposit. That’s pricey compared to some of the low-cost places here, but we were familiar with the resort from our 2017 visit, so wanted to stick with what we knew to begin this trip.
And, unlike most folks booking a beach vacation somewhere, this is our home. We’re not obligated to continue paying on another mortgage or rent somewhere as well. In other words, that $1,700 is like our mortgage payment for the month.
But, we had to pay for it in advance. So we had an additional $2,198.00 in our expenses in March. Not only does that throw things off a little, but then we’ll get the $500 deposit back (hopefully!) later this month. That’ll mess up our numbers for August as well.
A few uncommon front-loaded costs like that have taken our monthly living expenses and knocked ’em out of whack.
July was an odd month for our living expenses…
Then, of course, the month of July was truly a unique month, I don’t even know where to start. I won’t rehash our July adventure, but in a nutshell, we didn’t have a home to call our own.
Because of that, we floated around like vagabonds throughout the month. We also took the money we’d normally spend on housing expenses and put it toward… well, fun.
In the end, our living expenses ended up being a little less than $1,000 more than normal, but man, that was a great time!
Regardless, it wasn’t spending in a normal fashion like we’re used to doing.
The Texas bull ride
Howdy, Texas… our time there really was like bull riding. We had such a great time living with my brother and sister-in-law for the first few weeks of August. But boy, oh boy, we spent a crapload of money.
In fact, we spent a little over $1,000 on dining and entertainment in that short amount of time. That is so not us. We tend to be very frugal and watch our pennies a little more judiciously.
On the other hand, this was another month where we didn’t have housing costs. Because of that, we were able to spend plenty of time going out to dinner and doing all kinds of activities.
We had a blast, but I was just watching our money fly out the window left and right. $150 for a dinner here and there, $50 for an occasional round of drinks, a rodeo, tubing on a river, movies, etc. We also tried to pick up the tab as much as we could (though they picked up some checks, too) since they were letting us stay with them for three weeks.
Again, we had a great time, but it was a struggle to see our money burn up like that. We’re not used to letting our money go that easily as we did during our stay.
But here’s why it doesn’t matter… well @#$%, of course, it matters. However, its really not a big deal in the long term. We didn’t have rent or a mortgage payment to make and that saves us $1,500-$2,000 right off the rip. No utilities and other expenses either.
So a lot of that was probably a wash or we did better than normal… maybe. Who knows? Tracking our finances is a mess right now. More on that in a little bit.
Living expenses in Panama
Between the 4% rule and our rental property, our financial planner feels we could get away with spending up to $55,000/year. I don’t feel comfortable even acknowledging that number… at least for the time being. Maybe if we see some decent income from this blog and other endeavors down the line that might be a different story.
Instead, I’d rather be over-conservative in our plans. That being the case, my plan has been to keep our annual spending around $40,000. In fact, while we’re here in Panama, I think we can stay way below that number.
As a reminder, we’re in the “pre-paid” period of our HomeAway house so no housing costs for this month’s living expenses. In the meantime though, we’re currently in the middle of looking for a place to live for at least the next year.
A top of the line rental that we just checked out would run us $1,600/month for a 2-bedroom, 2-bathroom house. That’s in the same resort and gated-community we’re in now with the golf course and security onsite. It’s a beautiful place and a 20-minute walk to town as well.
That $1,600 would include use of the gym, racquetball court, tennis court, an indoor and outdoor pool, hot tub, sauna, etc. It also includes high-speed Internet, water, electric, and garbage. Oh, yeah, and a weekly gardener.
Not too shabby, right?
Even so, we’re contemplating not jumping on it. Are we crazy? Maybe… maybe not.
That price is definitely feasible for our “budget” and still gives us room for vacations and fun. But, here’s the thing – if we find a place that costs us less per month, we could have even more fun.
We looked at another place that was $1,000/month. We liked it a lot, but it had a few details we didn’t like such as no ceiling fans and no screens in the windows. That’s a big deal because there’s generally no heat or A/C here. I mean why would there be when the temp is 75° F every day and lower 60’s at night? Just rubbing that in a little!
Regardless, even the $1,000/month place is really nice here and some people who live here might even say it’s pricey. These places likely won’t include all the bells and whistles like the $1,600 rental, but they’re still really good places to live.
Now think about if we got a place that was $1,000/mo. versus $1,600/mo. – that’s an additional $600 we’d be saving. That’s $600 that we could spend freely and not worry about it. That could be used for dining out even more than we’re doing, more weekend trips to the beach or other getaways, or more cruises.
So how do you figure out your living expenses and do high-level budgeting when your housing cost can vary by over $600 a month? Hint, it ain’t gonna happen in this household until we figure out the place we’re going to live.
We’re still debating and looking at other places so we’ll let you know what direction we go, but there are definitely pros and cons to both. I will tell you though that we should be able to live very nicely on $35,000/year. We’d almost be rich here.
We also still haven’t decided on if we’re getting a car or not. The cost of taxis and bussing is cheap and easy and we’re now enjoying plenty of walking and being outside. Imagine skipping the car along with driving in traffic, repairs, maintenance, insurance, finding a parking space, and all the rest of the fun that comes with it. We’re not sure yet, but it’s some discussion on the table.
Dammit, I switched again!
One of the aspects of life in Panama that’s a little different (particularly in places like Boquete) is that the majority of the spending is cash only. Most restaurants and a lot of stores don’t take credit cards. And with the places that do take them (a couple of grocery stores, for instance), you still have to worry about foreign transactions fees with your bank.
That’s both good and bad. It’s good in that you absolutely feel the pain of spending when you see the cash disappear out of your pocket. This can truly be a valuable kick in the pants psychologically to keep you from overspending.
However, it’s a little inconvenient in that you have to always carry cash on you. You also have to periodically hit ATM’s to restock your funds.
A plus is that the Panamanian Balboa trades evenly with the U.S. dollar so we can use that interchangeably here. Additionally, I’ve mentioned before that using a Schwab Bank High Yield Investor Checking Account helps us dodge ATM fees and foreign transaction fees when we can use a card.
But for the most part, we’re using cash for almost all of our living expenses here – purchases, dining, and entertainment. Heck, even the places we’ve looked at to rent are expecting cash each month or a PayPal transfer.
Outside of the minor inconvenience in and of itself, there are two concerns that I have with paying for things in cash:
- The state of our credit score and credit cards
- Tracking our expenses
Not using our credit cards can be a problem. First off, if your card becomes stale from inactive use, a lot of the issuers will close them. When a card closes, your credit utilization goes up because you have less total available credit available. Credit utilization makes up 30% of your FICO score so that’s an important factor.
Between my side businesses and our personal cards, we currently have ten credit cards. A number of those were opened to take advantage of the sign-up bonuses for travel rewards. All of the cards we have do charge foreign transaction fees so we don’t want to use them here if we can help it.
This isn’t the end of the world because we’ll just make sure to rotate through all our cards for U.S. transactions. We still order from Amazon (more on that in a future post soon) and we’ll be booking flights back to the U.S. periodically. Also, when we’re in the U.S., we’ll be spending on Uber/Lyft, dining, etc. so we’ll have plenty of opportunities to cycle through our cards and get some activity on them.
The second concern though on tracking expenses is a little bit of a pain in the butt. If you’re a regular reader, you might know that I spent most of my life using Quicken to manage my finances.
However, after 20 years on Quicken, I finally decided to simplify a little bit and move to something a little more modern. I moved to Personal Capital earlier this year because it focuses more on the investment side of things, which aligns more with my needs.
If you haven’t signed up yet for Personal Capital, you really should try it. It’s free and it an awesome piece of online software. You link all your financial accounts and it does all the work for you. It saved me over $65,000 on fees alone over a 10-year period.
I love it. But, there is one issue that I have with it right now. Personal Capital tracks everything – banking, credit cards, investment and retirement accounts, loans, assets, etc. However, it doesn’t let you add manual transactions.
That works great in a plastic society. Everything is logged and trackable. But when you’re in a cash society like Panama, that’s a problem.
I don’t budget – never have – but if I want to effectively track my expenses, I need to know what I spent. So if we take a taxi ride or eat out, that gets left out of the equation here. Yes, it’s initially tracked at some point that I took money out of the bank, but where that cash went vanishes.
I want to be able to look at my living expenses and easily see that I’m spending too much money on entertainment or eating out. Personal Capital can longer give me that because it’s not seeing the whole picture anymore. So I had to make a change.
I’m continuing to use Personal Capital for my investments, but I’m now using Mint to handle tracking my expenses. I can add cash transactions manually and their app lets me do it on the fly.
I’m in the process of updating the categorized transactions for August so I can see what the @#$% happened. We could have had a good month or maybe not, but right now, I really don’t know. This should give me back the control I need on knowing where our money’s going.
So there you go – it’s been a financial roller coaster ride this year (albeit a fun one!). Having been on top of our expenses for so many years, this hasn’t been a good feeling for me.
As we get settled and work out our new normal on living expenses here in Panama though, I should be able to get back on track with this soon. Change is good and being able to adapt is even better!
Have you ever gone through a period where you just don’t feel like you have a handle on what your living expenses have been? How’d you deal with it?
Thanks for reading!!