Where $1,000 a Month is “Middle Class”

Nicaragua cost of living

$2 appetizer platter at a nice restaurant in Nicaragua

“If you make $1,000 a month, you can drive a small car, take your family out to decent restaurants sometimes, and visit a place like this on the weekends.” That was an offhand comment from my Nicaraguan guide Pablo when we were at the overlook area checking out Lake Apoyo between Managua and Granada. “On that salary, you are middle class here.”

A lot more people are stepping up to that level in Nicaragua as the economy keeps improving and its relatively low crime rate make it a place international companies want to invest. If you’re coming from a developed country though, it’s an incredibly cheap place to live.

I do an annual post and individual country rundowns on the cheapest places to live in the world and there’s one key thing they have in common: most people earn less in that country than most people earn in yours. The big picture really is that simple. If you come from a country where the median income is above $40,000 per year, as it is in the USA, Canada, or Australia, then you’re clearly going to feel richer if you go live in a place where the median income is more like $6,000 a year. Even if you’re just living off a Social Security or pension check.

shopping Nicaragua

1/5 the price of Safeway, Kroger, or Tesco

These official numbers are kind of clumsy, of course, whether you’re talking about median income, per-capita GDP, or some other yardstick. Some “work” isn’t counted correctly, bartered goods don’t figure in, and naturally people under-report their real income if there are tax implications. Still, whether an average worker in Nepal makes $600 a year or $900 doesn’t make a big difference for my point. Compared to the Nepalis you’re loaded, even if you’re making the equivalent of a fast-food burger flipper.

If you’re living in a more expensive place, however, your money is worth less. Your purchasing power is crappy. Per-capita GDP may be almost six figures in Norway, but you’ll pay out the nose for virtually everything you would spend money on. It may be only 1% of that in Cambodia, but you can find a good meal for a couple dollars. In a sit-down place with a waiter. Then in the U.S., you have to factor in health care costs, which are astronomical if you’re not covered by a company health plan. This illogical, for-profit arrangement does not exist in most of the rest of the world.

Which brings us back to my travels in Nicaragua earlier this month. I was working on a few articles on assignment, so I had an English-speaking guide driving me around, one who had grown up in Miami and then moved back to Nicaragua when he was in high school. He wants to get back to the USA at some point, to take his kids to Disney World, but he’ll keep living where he is. His electric bill is usually eight or nine dollars. His house is paid for. His family eats very well on what he makes.

Granada house for sale

House in the center of Granada, for the price of a BMW…

I had coffee with a retired couple living in Granada and I’ll profile them in the book I have coming out later this year. “My pension alone is 3-4 times what the average Nica makes,” Jim told me. We spend around $1,800 a month, which is extravagant by local standards. We live in a big air-conditioned house with a swimming pool and pay $650 a month in rent. We eat out whenever we want, wherever we want. Medical care is so inexpensive here we don’t even have insurance. We just pay for things as they come up. I had to go to the best hospital in Managua for surgery and it was cheap enough that I put it on a credit card.”

Another couple I’ve been corresponding with there has lived in Leon, Granada, and now San Juan del Sur for around $1,400 a month, while having a really good time. They’re sensible with what they spend, but not all that frugal when it comes to having fun. Their housing is only $300 of that.

Flor de Cana

$4 – $8 for a bottle of rum with set-ups in a bar

I like Nicaragua and I could live there, but this is just one country out of many that will have a detailed chapter. It’s one of the best deals, yes, but there are plenty of countries out there where the per capita GDP is 1/4 or less than what it is where most people reading this blog are from. Some of them have pretty good infrastructure too: popular destinations like Mexico, Turkey, Thailand, and Colombia. It’s just that a “middle class life” has a much lower price tag.

After surveying people who have signed up for the Cheap Living Abroad e-mail newsletter, the verdict is in on the book title:

A Better Life for Half the Price

The second and third choices will get worked into the subtitle.

For those who are serious about cutting their expenses in half and upgrading their life in the process, there will be other packages available with worksheets, webinars, and more. Details to follow, but sign up here to get the inside scoop.

Comments
  1. JJ

    If I tried to get by on $1,800 a month just by myself in San Francisco I’d be dumpster diving or sleeping under a desk where I work. Just signed up for the newsletter. I’ve gotta get out of here or I’ll never be able to travel like I want to.

  2. Hank Ryan

    ditto on SF…

    Tim,

    That book title, “Great life for half the price” is a winner.

    Nica was a place we discuss whether we would return to and we are undecided. Lots of good parts.

    Not so good:

    That damn way too salty cheese and the food in general is not so great although we managed with little gems like fish tacos in San Juan del Sur and pico gallo was always good.

    Ometepe was a letdown…too much low value for high prices for “eco” places. Nature is great there but careful with the lake. It is great to see the livestock going for a dip every day but that isn’t all they do and that can get you sick in a hurry if you swim anywhere near there.

    Methinks Colombia is next for us…

  3. Anthony

    Granada comes recommended by a somewhat controversial podcast I have been following for over a year.

    A big house with A/C and pool for $650? That’s insane! Not sure what Mr. Ryan is talking about. If he’s talking about food from restaurants then some things might be tool salty or whatever, but what you think the reactions to our food is with people from another country?

    Some places we would call that perspective…

    All the so-call “eco” paradises are already overrun with hipsters and others that love the idea of “eco” tourism.

    In general Latin America is cheap or roughly 30-40% of what you pay in the US to live. According to a Stoney Brook Univ study, it takes just over $28,000K to live in Los Angeles (2006) but the average rental cost for an apartment is now around $1,000 with one of the cheapest places being the Crenshaw area for $860. – http://www.huffingtonpost.com/2013/09/04/apartment-rent-prices-los-angeles-_n_3868046.html

    However if you eat like a local, you could easily live for $1,000 or about $12-13K a year in most places in Latin America. I even found some places in Brazil that run for about $400US 1 br, unfurnished and the knock on Brazil is that its expensive.

    Sure if you wanna live like a typical upper middle class Paulistanos who send their children to Western private schools, then yes its just as expensive as living in LA or NYC.

    I do have a question for you Tim –

    Have you taken a survey to see how many single men/women are subscribed to your newsletter?

    Lots of travel blogs are geared to certain niches especially if your a single man like me, if you know what I mean.

    Its harder to get some more “wholesome” information that might prove useful to me.

  4. Patricia Freeman

    Want to sign up for the book. Looking forward to it.

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