The Falling dollar is putting a dent in my fun. And adding stress to my life. My income has fallen about 15% over the last year, maybe two years. Low inflation in the USA meant no cost of living adjustment for me. Now the dollar is falling from a high of P50 to around P43 to 1 USD.
After living in the Philippines for almost three years, I have learned not too take what the experts say as gospel. They also said the peso would go to P55 to 1. That was before TARP. If TARP had not been passed, I think it might have gone to 75 to 1 as it would be very hard to get dollars at all! TARP was good for most Americans but it was bad for expats. The Philippines is experiencing growth in its economy and they seem to be expecting that to continue. I don’t know about that. If the US economy dips back into recession, the Philippines economy will suffer too.
I find it hard to put much faith in economic statistics coming out of the Philippines. I see official unemployment rates of 7.3% and I know that is totally absurd. Its more like 70%. I suppose they do like the USA, and don’t include the millions that gave up on finding work and don’t try any more.
I don’t recall the most recent time when the dollar was at 50 to 1. It was about a year and a half ago. I was hoping that wouldn’t see the 40 to 1 number again, any time soon. The worst thing about the 40 to 1 prediction is the length of time. That is within the next 12 months. It seems they don’t see a turn around any time soon. I’m more concerned about that than I am about the 40 number. Its not likely to stay there for long but if they are correct, the depressing part of this is that it doesn’t look like the dollar will be going up soon.
To put this in real dollar terms. If your pension is $1500 a month and the peso falls from 50 to 1 to 43 to 1, you’ve lost around $225 a a month. That’s just devestating:
1500 USD x 50 PhP = 75,000 PhP
1500 USD x 43 PhP = 64,500 PhP
Now that’s a drop of 10,500 Peso. So lets divide that by the middle rate of 45 peso, which is a conservative number since the Peso was around 48 for a long time. That’s a loss of $233 a month. For a guy making $1500 a month that’s a staggering hit. Lets look at some other numbers:
| Pension in USD | Peso at 50 | Peso at 43 | Loss of Dollars if Peso at 45 |
| $2000 | 100,000 | 86,000 | $311 |
| $1500 | 75,000 | 64500 | $233 |
| $700 | 35,000 | 30100 | $109 |
This is what I mean when I say that when you live in the Philippines, your wealth is tied to the exchange rate. As you can see when there are wide fluctuations in the rate of exchange it can make a large impact on an expats life. When the dollar was a 50, I was able to go to Bantayan Island if I wanted too. Now? I need a vacation from all this work. I need to sit out on the beach smoking a big fat cigar looking like a fat and rich American. Fact is, I’m too poor to go right now. :)
Christmas is coming, gotta buy toys for the kids. Jessie needs to go see her family in Tacloban and the electric bill needs to be paid. I’d hate to have a long term brownout. I jest but that would really make for a miserable time for me. Living in the Philippines without an air conditioner would loose all its charm for me.
Life in the Philippines is not as lush as the dollar falls. Now, that doesn’t mean it is a bad choice. Not as much fun still leaves plenty of room for fun.
Living in the Philippines also helps one to focus on something else. One can be quite rich in the Philippines without being wealthy but I’m not talking about rich in things.
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Tagged with: Exchange Rate • Living In The Philippines • Philippines Economy
Filed under: Cost of living in the Philippines • Dollar To Philippine Peso • Expat Finances • Expats in the Philippines
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So what would you do without airconditioning Rusty ? Now your remark sounds a little like my remark about the ACR charge. You said the philippines would lose all its charm. Relax, I’m not going to scold you like you did me when I made my remark, LOL. Take care buddy.
I scolded you? If you felt scolded then it must have been because of what you said, I surely didn’t scold you.
The first six weeks I was here, I only had AC in the bedroom. Took me three days to leave it.
I don’t know if I could stay here without it but the comment n the article was a joke. I’d have to think long and hard, I’m pretty sure I couldn’t do it. I get pretty sick in the heat. I think it would probably kill me. I wish I was joking still.
Hi Rusty,
TARP didn’t benefit the working class here in the U.S. Our taxes (from personal income tax, real estate, and sales taxes) have gone up. Our salaries have not gone up either. Companies are not hiring employees. Retirees and other individuals with fixed incomes are really hit hard. Many college graduates from last year are still unemployed. I believe that the leniency of the banks in giving out risky loans has taken the world economy in its knees. Expats in the Philippines (on fixed incomes) are hit hard as well. They talk about tightening up their financial belts in their blogs.
Without TARP, the banking system in the USA would have crashed.
There would have been a depression.
Well I felt scolded Rusty when you said maybe I shouldn’t come there if I couldn’t change my mindset. I’m not wanting to get into a pissing contest with you, just saying I felt a bit of resentment from you when I complained about the cost of all the legal stuff expats have to pay for to stay there, that’s all. Sorry I posted that, after all it is still a bargain to live there, right ? I chat with Queenie on a regular basis as you know and I can’t wait to get there and put my arms round her. I may never let her go, hehe. You know I am considering some business we can start together so that she will have something to fall back on when I’m not around anymore, after all I am 30 years older than her so Im sure I won’t be around here on this earth as long as she will be. I can cook some mean barbeque chicken, I’m thinking about doing that when I get there to make some extra cash. Of course it will be her business, I’ll just be there to observe. It’s an idea I’ve had for a long time, I will call it Poyo Loco just like a chain of barbeque chicken resturaunts in south Texas. But on a much smaller scale. What do you think about that idea ?
I’m sorry that you felt scolded. If I remember right, I just agreed with you. You are the one that said maybe you shouldn’t come. Surprised me. You will need a mindset change to be happy here. Everyone does. Can’t sweat the small stuff. Gotta let that controlling nature go and just flow with life like most Filipino do.
Sounds like a reasonable business to get into. A LOT of work also a LOT of competition but the expats may flock to you if she sets up a BBQ stand with you hanging around. Especially if you sell beer cheap. LOL That’s all they really care about, well many of them.
If you don’t set your expectations too high on the income. It does sound like something that would help Queenie out later.
Thanks for your understanding nature Rusty. I just want her to be ok after I pass away you know. I’m sure you feel the same way about Jessie, right ? By the way, how old is she ? I think you said you are about 49. She hasn’t hit 30 yet has she ? She is a doll anyway, you’re a lucky guy, but you know that already, hehe. Talk to ya later, Jerry
Your welcome, rarely I can be. LOL
I would like to send Jessie to school and set her up in a travel agent business. We have some problems with that right now. Living in the Visayas, Jessie doesn’t understand the language well enough. She would not fully understand the lectures. She refuses to wear a uniform and at the moment, I’m freaking broke. LOL
Jessie will be taken care of unless she dumps me before I die. I’m 51 she is 31.
Rusty: I’m going to add more to my comments as more information are released for 2011. TARP did not work as hoped by many U.S. residents. Inflation is up. Financial advisers speculate that the dollar will continue to devalue. Retirees in the Philippines (w/ U.S. pensions) are posting on the huge cuts from their incomes. Some retirees speculate that the U.S. rate of exchange to peso could drop as low as $1 to 35 pesos. Do you think that it is possible? If so, how can retirees in the Philippines adopt to the loss of income?
Roselyn,
inflation in the Philippines is up more than the USA, that is true. But inflation in the USA is very low at just over 1.2% http://www.forecast-chart.com/forecast-inflation-rate.html
The purpose of TARP had zero to do with inflation. It flat out saved the US banking system from collapse. I agree that it has an inflationary impact but only because without it, there would have be deflation.
This would likely have been great for expats but horrible for the US economy. Personally, I would have been far better off without TARP. As soon as they did it I knew the dollar would stop rising the way it had been, I didn’t have to wait for the results. It was obvious that it would hurt the value of the dollar. More funds in the market do that. Less spending would push up the value of the dollar but the US would, without any doubt at all have gone into depression and probably would still be there.
Expats say many things about the dollar that just are completely wrong.
At this point, TARP is no longer an issue. Most of that money has been paid back and the congress keeps looking for new ways to spend it. Mostly the democrats want to do that and republicans have had some success in preventing that. They will have more now.
Right now, as far as the value of the dollar goes, the Feds are buying Tbills. This is inflationary and lowers the value of the dollar. Most also believe it has helped the economy recover in the last few months. http://www.reuters.com/article/idUSTRE7095YM20110110?pageNumber=1 it is called quantitative easing.
By then end of 2011, it is likely this policy will be reversed.
Inflation is so low in the USA it appears that I will go another year without a COLA increase in my pension at all. This can be very hard on expats living on a pension. If the cost of living in the Philippines is 10% (it is not, best I recall its around 4%) but the USA inflation is below 2% I get no increase but have massive loss in the power in spending.
However, the main factor for expats and travelers is not inflation, its the value of the dollar. With unemployment in the USA at 9%, that is the problem area within the US economy, that is where the suffering is and that richer Americans can’t take as many trips outside of the country isn’t and shouldn’t be the main interest of monetary policy. Even though that would be helpful for me personally, the place to concentrate efforts is on the suffering people that have lost their jobs and everything else they own..
I plan to transfer $1000 a month to live off while in the Phils. Even if it goes to 35 to 1 I think I can still live off of 35,000 php per month. Thats still alot of money compared to average filipino standards, right ?
It is a lot of money for most Filipino Jerry. Most Filipino I know spend most of their time trying to find a way to make a few dollars each day.
It would be hard for me to do it on that but I could do it on that. That you’re not living in the city is good. I don’t know if I personally could stay on that. P35 is scary ideal to me, very scary. I’d have to turn the AC off I think. The way my lungs have reacted to that in the past would probably kill me.
I wish I was kidding.
I am maintaining a higher standard of living that you are though and that’s is a good thing to me. You can get a place to rent here for less than $100 a month. I think I’d be miserable in one of those places. I don’t think I could do it.
Many Filipino have no running water. I think that would be hard for me.
The number one factor threatening your stay here is that you cannot take care of Queenie’s family with things like van rentals for them to Cebu City or regular trips to Jollibee. If you’re living in their home, paying the light bill and buying grocery would be reasonable, more would be reasonable.
You can live much better here on $1000 a month than you can in the USA, no doubt about that but it the benefits will evaporate if you try to help too much or if they expect it. That will leave you looking for a new girl. That has ruined some peoples visits here but I don’t understand that. It wouldn’t ruin mine, it would possibly leave me without a steady girlfriend,
Just work on keeping that issue in check. P35,000 to P45,000 is going to sound like a huge amount of money to them.
I know one girl working in a factory in Cebu City. Without overtime, she earns P4000 a month, or so she says. That’s for working six days a week. She almost always gets overtime as she also send P4000 a month home to her parents.
I know another girl making P16,000 a month right now, teaching English. That is very good pay for most Filipino. Most have no chance of making that kind of money.
Bar girls make some of the best money but P16,000 would be a very good month for them. Some of those also hang out online, telling 10 guys they love them and make even more doing that.
I know some Filipino that are oozing cash, they are rich, very rich. Most are not living that way.
Cebu City streets are jammed with traffic at times, someone has to be making money to afford all those cars.
I don’t have a car. I could but it just wouldn’t be wise for me. I would struggle with that bill in my budget, If the dollar goes to 35, I don’t want to even think about that.
I need to work harder.
I’ve known guys here with no income at all. They find ways to get by and stay happy and their health gets better cause they can’t eat much.
Its all in one’s outlook and what one wants from life. It is also about what kind of expenses one cannot do without. I take a LOT of medicine for example and my health wont allow me to live without aircon. I could stand to eat less. 
I had pizza hut this month, I shouldn’t. I had Jollibee last night. I was eating way too much spam, since cutting that way back, my sugar is doing better. I eve had a low blood sugar spell yesterday, feels horrible but that is actually a good sign. I might be able to cut back on meds soon.
Thank you for your post!!
It is nice to know that I’m not the only one in this situation. I’m a student here and I am trying to budget whatever my parents can afford to give me for tuition and daily expenses. Rent, food, and bills are being sent to my cousin so she is the one who handles that. Just my daily expenses alone is already hard to budget. In a month, I probably get anywhere between $200-$300.. Back in 2006-2007.. That was very good, when the rate was still pretty high. Now as it fluctuates around 42-43.. Its getting really hard. I BARELY even ride a taxi now, ever since they raised the flag down and per meter cost.
I remember one time me and 5 of my fil-am friends wanted to watch a 3D movie, but we changed our minds when we saw the price was P250. How sad. Can you imagine? A bunch of american kids cant even afford a $6-$7 3D movie. I told this story to some friends back home and they laughed. But for us, that was just sad.
I don’t want to be a hater.. Its great that the Philippines is doing better, but why does the dollar’s rate have to be affected in the process?? sometimes I just want to cry, I know that wont help. So now I’m trying get into direct sales and try to earn whatever I can just for some extra income. The hard thing for me is because I’m a student, majority of my focus should be on school. Especially I’m on my 4th year and this is the time we have our internships. But if I had more free time, I’d probably do teaching or… *gulp* call centers… Thats probably the last thing I’d want to do.. I’d rather teach english. Oh well..
Could use some advice. Thanks =)
Hi K,
Glad you left a message, great to hear about the life of Fil-am student here in the Philippines. I think you’re Fil-Am?
$300 a month for expenses, not including rent, food, utilities would be manageable. I doubt I spend that much a month on extra’s myself. Though this month I’m still planning on going to Bantayan Island if I get to feeling better. Hopefully soon.
It isn’t that the Philippines is doing better, there is growth in the economy and there is also mild inflation that threatens to worsen. The problem isn’t the rise in the peso it is the fall of the dollar. Read the article on Why Is The Dollar So Weak To The Peso, probably not the exact title but it is on the site. It explains why the dollar is doing poorly.
IDK Rusty I think K was saying his whole monthly budget was $200-300 including rent ect, but I could be wrong. At any rate It’s great to have his perspective on the articles here I lookforward to his thoughts on other subjects.
Yeah, I wish he’d come back.
Great tips, thanks for sharing. You did mention that you found free and low-cost online tutorials, do you mind sharing the links of these please.Thanks
I don’t have any links. I often follow exchange rate news and Google different economic terms. I just don’t remember. Sorry.