[Mr. Lee]

The forty something to one exchange rate value myth that is being perpetuated by many Filipinos.

My wife and I were out to dinner with some friends tonight and I was shocked to hear an educated Filipina who just arrived in the states actually think the same way as I have heard many Filipinos think in the Philippines.

As an American, I have heard all too often from my wife's family and other Filipinos in the Philippines just how rich we must be because we get 40 something to one for every US dollar and therefore we can buy 40 plus times as much as a Filipino can with our dollar. This upsets me a lot, but it upsets me even more when I see or hear that falsehood being perpetuated by educated Filipinos. I want to know when was the last time I could buy a gallon of gas in the Philippines for 3 pesos, since gas in the states is now around $3 and so on and so on.

Facts, most items cost as much if not more in the Philippines when paying the correlating amount of exchanged money except for items that relate to labor and even then they can often cost some of us as much because of the so called white man tax.

Gas cost as much if not more in the Philippines than in the states, so yes we get 40 plus to one dollar but it takes the same equal amount of pesos to buy an equal amount of gasoline.

Electric cost more in many areas of the Philippines than in most parts of the states, our electric bill for our condo in Cebu cost more than our electric bill on our home in Florida and our home in Florida is bigger, so the exchange rate really does not matter there either.

Food, when comparing apples and apples and oranges and oranges cost more in most cases in the Philippines than in Florida as well as most other things we shop for including electrical appliances.

So I must ask, if we get 40 plus times as much worth from our dollars, how come it cost us as much if not more to live in Cebu except for labor related items, rents, not needing to have some insurances, public transportation fares and a few other labor related items. Yes, those items save us a lot of money in the overall picture and rents are much lower in the Philippines than in the states, but overall most things cost the same or more if we eat the same things or live like we would in the states. So while overall costs of life in the Philippines for us may be lower, the exchange rate does not factor into those lower costs hardly at all and labor and lack of need for certain items does.

So, I wish to get something straight to all Filipinos and Filipinas who are willing to listen, we do not get any more for our dollars than you get for your pesos, other than lower rents, public transportation costs, and a few other items that in someway relate to labor but if we were to eat the same foods that we ate in the states while living in the Philippines, then it would actually cost us more to live in the Philippines in total.

Also, you may ask why so many expats move to the Philippines and again it is not the exchange rate at all IMHO and is more about a change in lifestyle that ends up costing less to live. Please stop perpetuating that myth.

Sorry, I needed to get that off my chest and I did say sorry!

This post has been edited by Mr. Lee: 16 October 2008 - 10:00 PM

[Boss Man]

Mr. Lee, on Oct 17 2008, 12:56 PM, said:

The forty something to one exchange rate value myth that is being perpetuated by many Filipinos.

My wife and I were out to dinner with some friends tonight and I was shocked to hear an educated Filipina who just arrived in the states actually think the same way as I have heard many Filipinos think in the Philippines.

As an American, I have heard all too often from my wife's family and other Filipinos in the Philippines just how rich we must be because we get 40 something to one for every US dollar and therefore we can buy 40 plus times as much as a Filipino can with our dollar. This upsets me a lot, but it upsets me even more when I see or hear that falsehood being perpetuated by educated Filipinos. I want to know when was the last time I could buy a gallon of gas in the Philippines for 3 pesos, since gas in the states is now around $3 and so on and so on.

Facts, most items cost as much if not more in the Philippines when paying the correlating amount of exchanged money except for items that relate to labor and even then they can often cost some of us as much because of the so called white man tax.

Gas cost as much if not more in the Philippines than in the states, so yes we get 40 plus to one dollar but it takes the same equal amount of pesos to buy an equal amount of gasoline.

Electric cost more in many areas of the Philippines than in most parts of the states, our electric bill for our condo in Cebu cost more than our electric bill on our home in Florida and our home in Florida is bigger, so the exchange rate really does not matter there either.

Food, when comparing apples and apples and oranges and oranges cost more in most cases in the Philippines than in Florida as well as most other things we shop for including electrical appliances.

So I must ask, if we get 40 plus times as much worth from our dollars, how come it cost us as much if not more to live in Cebu except for labor related items, rents, not needing to have some insurances, public transportation fares and a few other labor related items. Yes, those items save us a lot of money in the overall picture and rents are much lower in the Philippines than in the states, but overall most things cost the same or more if we eat the same things or live like we would in the states. So while overall costs of life in the Philippines for us may be lower, the exchange rate does not factor into those lower costs hardly at all and labor and lack of need for certain items does.

So, I wish to get something straight to all Filipinos and Filipinas who are willing to listen, we do not get any more for our dollars than you get for your pesos, other than lower rents, public transportation costs, and a few other items that in someway relate to labor but if we were to eat the same foods that we ate in the states while living in the Philippines, then it would actually cost us more to live in the Philippines in total.

Also, you may ask why so many expats move to the Philippines and again it is not the exchange rate at all IMHO and is more about a change in lifestyle that ends up costing less to live. Please stop perpetuating that myth.

Sorry, I needed to get that off my chest and I did say sorry!

Not sure if I agree with all of the above, I hope I can explain myself here.
My way of thinking is that if I was a Filipino then I would rather have an extra 40 peso more in my wallet than the next guy.
The price of gas, dont know but here in Aus you would be paying 3 times that than in the US, so its cheaper to me.

Food, its a life style thing for you Lee, if you want to live like a westerner then it cost more, be the same if I decide to eat at fancy restaurants here.
Again if I was Filipino then that extra 40 peso would buy me a lot of food.

Why is it most westerners would say that around 1400 US dollars per month is what they can live on in the Philippines, I can't live on that here in Aus so it must be cheaper to live there in the peens?

The thing with Filipinos is that they dont understand that our dollar doesn't buy much in our own countrys, they have no idea of the cost of living in the western world.

[Mr. Lee]

I guess I did not write that clearly. In May when we left the Philippines this year, gas in the Philippines was around p40 per liter and a it takes around 3.78 liters to the gallon, so gas in PI was around p151 a gallon or around $3.43 when gas was about the same price in the USA at that time when we returned.

Many Filipinos seem to think that we get 40 or more pesos for our US dollar and therefore we get 40 times what they do and I just wanted to point out that is not true. We pay the same here or there for many items and often have to pay more for the same items while living in the Philippines.

Example, I like to drink cranapple juice in the morning and it is 2 to three times more expensive in the Philippines, so I have to substitute packets of mango or orange juice.

A pizza at Pizza Hut cost the same or more in Cebu than it costs us in Florida. In Florida they often run $5 specials and the pizzas are larger than those in Cebu for around p300 and toppings cost extra. So in Cebu it cost us almost $7 for a smaller pizza without toppings that cost us $5 in the states loaded with toppings.

I guess what I want to express is that yes rents are less and yes we can use their transportation system and it cost us less than owning a car in the states or even if we do own a car, repairs can be less because of the cost of labor or because parts built in the Philippines can be less because of labor and rents are lower because of a lower cost of building in PI than in the states due to labor but most staples cost more in the Philippines unless we are willing to change what we eat. We do save by not having to have all the insurances and property tax is less in the Philippines so that also makes rents less but if you do a cost comparison of most things, you will not find a saving in the Philippines and we definitely do not get 40 times what we get for our money in the Philippines that a Filipino gets for theirs. In order to save in the Philippines, we must change our life style. Lets face it, a place we can rent for less in the Philippines does not compare to a place that would rent for more in the states, so if it was possible to rent half or one third of a home in the states, then the cost might be a lot closer to the costs of the smaller rentals in the Philippines.

Another example, If we were to make cell phone calls instead of texting, the cost of phone service would then be more in the Philippines because I get 1000 minutes a month included in my service for $39.95, now if I talked 1000 minutes on my Philippine cell then the cost would be around p6000 or around $127 US.

I would really like to have some others say where they feel that they save by living in the Philippines. I have heard people say that they have learned to do without A/C but again that is not living the same. Yes, if we want to give up things and change our life style then we can save a lot but if we tried to live the same lifestyle then it cost the same or more in the Philippines to live as in the states overall.

[Mike S]

Oooooops ........ I think I will disagree also ........ we are currently living on less than $900 US per month here ........ it was costing me about $2800 for basically the same thing in the States with the exception that I had a van ....... but to be fair I do not require the same things I did in the states ....... I do not require A/C here ...... my electric bill is 1/8 of what it was in the states ...... my apartment is much smaller than in the US but I don't need a 1400sq. ft. dwelling here ...... eating out was not an option there or here ... I would rather eat at home ....... cable was much more expensive in the states but I had 230 channels of which I only watched 30-40 ..... same amount as I watch here ...... had cable internet there ... not offered here ...... many of the things required or mandatory there are not so here ....... car insurance .... health insurance and home owners insurance not required for me here .....

IMHO ...... you really can't compare the two countries as apples and apples as they are really miles apart in comforts and necessities ....... you soon learn to cull the desires from the necessities ....... it would be nice to have this ...... but is it really necessary .......

But I do agree with you on the 48 to 1 ratio of thinking ........ way out in left field ....... point in question ...... we just bought a cake today that cost 290p ..... that's $6.17 ........ it would have cost approx. ........ $10 - 12 in the US .......

[Mr. Lee]

Mike S, on Oct 17 2008, 09:11 AM, said:

Oooooops ........ I think I will disagree also ........ we are currently living on less than $900 US per month here ........ it was costing me about $2800 for basically the same thing in the States with the exception that I had a van ....... but to be fair I do not require the same things I did in the states ....... I do not require A/C here ...... my electric bill is 1/8 of what it was in the states ...... my apartment is much smaller than in the US but I don't need a 1400sq. ft. dwelling here ...... eating out was not an option there or here ... I would rather eat at home ....... cable was much more expensive in the states but I had 230 channels of which I only watched 30-40 ..... same amount as I watch here ...... had cable internet there ... not offered here ...... many of the things required or mandatory there are not so here ....... car insurance .... health insurance and home owners insurance not required for me here .....

IMHO ...... you really can't compare the two countries as apples and apples as they are really miles apart in comforts and necessities ....... you soon learn to cull the desires from the necessities ....... it would be nice to have this ...... but is it really necessary .......

But I do agree with you on the 48 to 1 ratio of thinking ........ way out in left field ....... point in question ...... we just bought a cake today that cost 290p ..... that's $6.17 ........ it would have cost approx. ........ $10 - 12 in the US .......

Mike, you actually agreed with me totally. If we are willing to change our lifestyle then and only then does it cost less to live in the Philippines and while the Philippines makes that possible because apartments are lower in costs because they are smaller, if we tried to live the same and eat the same, then it would cost us the same or more to live and that is something many Filipinos do not understand.

We do not get 40 plus times as much for our money, we cut our lifestyles to live there in order to live within that lower budget.

I really do not wish to do without my A/C and because of that, my electric bill in Cebu is higher than in Florida and I do not wish to change my eating habits to live in Cebu, so it actually cost me more for food in Cebu than Florida, etc. etc. etc.

Most expats live for less because they have to fit into their new budget and not because we get 40 plus more for our money.

[Panserhansen]

Mr. Lee, on Oct 17 2008, 03:56 PM, said:

Mike, you actually agreed with me totally. If we are willing to change our lifestyle then and only then does it cost less to live in the Philippines and while the Philippines makes that possible because apartments are lower in costs because they are smaller, if we tried to live the same and eat the same, then it would cost us the same or more to live and that is something many Filipinos do not understand.

We do not get 40 plus times as much for our money, we cut our lifestyles to live there in order to live within that lower budget.

I really do not wish to do without my A/C and because of that, my electric bill in Cebu is higher than in Florida and I do not wish to change my eating habits to live in Cebu, so it actually cost me more for food in Cebu than Florida, etc. etc. etc.

Most expats live for less because they have to fit into their new budget and not because we get 40 plus more for our money.

An american don't get 40 plus for his money, but for a Norwegian in one of the most expensive countries we can in many cases use peso as we use kroner. A few excamples between peso and NOK(Norwegian Krone): 1 NOK=7,35 peso, usual rate 8,50, NOK a beat weak now.

A beer in a regular bar is 50 peso, we pay the same in NOK.
A house costing 4 million peso would cost the same in NOK
Fast food meal 80-90 peso? Same in NOK
20 cigarettes 80 peso or less?(I don't smoke) = same in NOK
Some fresh fruits like mango = same in NOK, sometimes way more
Massage at a gym = same in NOK
Meat and fish(wet market) = same in NOK
Dentists = same in NOK
Taxi = 20 times cheaper
Cinemas = same in NOK

And then you have those things costing about 25 % of the costs in Norway, like:
Gym
Renting appartment
Internet
Cable
Better restaurants
Medicines
Flight tickets

50-75 % of the costs:
wine
exclusive meats, cheese

Something about same price
Electric appliances(good quality brands)

And something we don't pay for at all:
Medical treatment(we'll have our insurances for this)

When we go to the Philippines, we may have a slightly simpler appartment, but expenses like going to a good gym 5 days a week(hopefully!) and having a massage later on same gym twice a week, will cost 4000 peso. In Norway this would cost the same in NOK so I don't do it because I cannot afford. I don't visit the bars frequently because beer is very expensive. If I would, I could do it every day in Cebu. Doing that in Norway, and taking a taxi back and forth would would be impossible.

Some of our lifestyles will definately change, but most for the better of it. I can even reduce my work hours by 50 %.

Panser

[Mr. Lee]

Hi Panser, thank you for posting those costs items. Yes life overall can be less expensive in the Philippines when one takes into account some things like rents for smaller apartments that are often not built as well and the taxis are definitely less expensive but most often are falling apart and the jeepneys cost even less than the taxis but belch pollution, so transportation can definitely be a cost lowering factor and many expats can live less expensive lives because of some of the less expensive things but many things actually cost the same or more and the things that are less expensive are so because they are not of the same standards that we may be used to getting in our home countries.

The main point that I wanted to bring to the attention of many of the Filipinos who visit some of the forums, is that Americans or people from other countries like yourself, do not get 48 times (today's exchange rate) as much as they get for their peso just because at this time we get 48 to one for our dollar.

It really upsets me when my wife's family continually tells us that we have to be very rich because we get that 40 or more to one for our dollars and when I go out to dinner with an educated Filipina here in the states and she makes that same foolish comment and when I read on another forum that comment made by an educated Filipina, I think it is time that we expats do all we can to stop that foolish myth from spreading by trying to educate Filipinos to the real facts of life by expats because letting the myth stand raises prices for us but even more important, it also raises prices overall for the average Filipino to live.

During my time on the forums, I have found that it appears that newspaper people and quite possibly even government officials of the Philippines must read the forums from time to time and I know that a number of educated and some not so educated Filipinos read these forums and if we can educate even a few to not spread that myth, then they can possibly educate some others and so on and so on.

Most expats that I know do live a simpler life in the Philippines but it is not because they get a lot for their money overall and it is because they change their whole lifestyle to live within their retirement budget and people may call me a spoiled American, but if and when I live full time in the Philippines, I want to live basically the same life I lived in the USA and I worked hard my whole life so that I can possibly do that, and I had hoped that it would have cost me less to do it as well, but I have found that while I may save on things like, cable TV costs, bottled water costs, taxes on our condo, monthly maintenance fees, transportation and by not having to have insurances that we need in Florida to protect us for the sue crazy Americans, and some other things, overall we get less for our money. Cable TV in the Philippines cost less but does not include an English speaking local news and we get a lot less channels, so I am giving up a lot of channels that my wife and some that I would like to watch for the lower fees. Taxes are less on our condo but we get less government services, such as police responding if we should need them or garbage to pick up for the people all around our condo who insist on burning their garbage instead and are polluting the air by doing so. Monthly maintenance charges are lower than on our villa in Florida but we also get a lot less, for instance they keep putting off repainting the hall walls that are dirty from when construction was going on and they have not repainted building one outside which IMHO looks like hell and I could go on and on why things cost less and people get less for those lower costs.

Plain and simple, people who move to the Philippines or are going to move to the Philippines, should know that they can live a less expensive life for less money in the Philippines, but in order to do that, they would have to or want to change their lifestyles completely and most expats that I know who do live in the Philippines have wanted to live a simpler life and have done that because they wanted to, and again, we do not get 48 or more times what we get in our own countries because of the exchange rate.

[Mr. Lee]

OK, I have thought of a few things that we do get 50 (the current exchange rate) or more times for our money.

The love and devotion of a great wife or gf who comes from the Philippines.

The smiles and friendly faces of most people on the street and in the malls.

and we can probably travel 50 times farther in a taxi or jeepney than in our respective countries for the same money.

One bad thing we often get is 50 time more requests of us for money from our new families, but luckily not every man who marries a Filipina experiences this one.

We do seem to get many more beggar requests but since things have started to get bad here in the USA also, it is no longer 50 times as many requests and maybe only 10 or 20 times as often, because it now seems most major street corners here in Florida now have either beggars or people supposedly collecting for a cause of one bs type or another and I suspect very little of the money ever gets where it is supposed to.

One such scam now that really pisses me off, is guys wearing camo uniforms and acting like they are soldiers to collect money under false pretenses. I have stopped to ask for their military id and they then have to tell you that they are not soldiers and just collecting for them. BS, it is very similar to the guys and gals who continually call and hound people collecting for the Police Benevolent Association and use a scam line how the money is going to help those who protect and serve, the problem is that as low as 5% ever gets to any police personal who needs it, so IMO give your money directly to those you wish to have it.

[Hoz]

Mr. Lee, on Nov 19 2008, 10:11 AM, said:

One such scam now that really pisses me off, is guys wearing camo uniforms and acting like they are soldiers to collect money under false pretenses.

In our area they stand at intersections and on ramps with signs stating "Vet, need help", or the old "Vet,will work for food". It has been rumored they are dropped off by a van in the morning and picked up later in the day. A begging syndicate.

One guy stands near a local shopping area in camos and with a plastic strap on leg brace. He hobbles around from car to car with a sign that reads, "need operation, VA will not pay".

One afternoon the wife and I drove by his act on our way to dinner. When we exited the resturant we saw the guy running behind the shopping center carrying the brace in his hands!

[Mr. Lee]

Hoz, on Nov 19 2008, 11:16 AM, said:

Mr. Lee, on Nov 19 2008, 10:11 AM, said:

One such scam now that really pisses me off, is guys wearing camo uniforms and acting like they are soldiers to collect money under false pretenses.

In our area they stand at intersections and on ramps with signs stating "Vet, need help", or the old "Vet,will work for food". It has been rumored they are dropped off by a van in the morning and picked up later in the day. A begging syndicate.

One guy stands near a local shopping area in camos and with a plastic strap on leg brace. He hobbles around from car to car with a sign that reads, "need operation, VA will not pay".

One afternoon the wife and I drove by his act on our way to dinner. When we exited the resturant we saw the guy running behind the shopping center carrying the brace in his hands!

We have one couple local who sounds similar, she works one corner and has a sign babies to feed but she has been doing it for over 10 years now, so they must have grown by now and I have never seen any with them, and he works about a mile away and sits in a wheel chair in camo and uses crutches to get to the cars that honk.

The problem is that I see him riding a bike over to bring her water and food because she does better than he does, and I have seen them both eating in a local Chinese buffet. You would think they would be smart enough to at least leave the area to go out for an expensive meal when there are plenty of McDonalds and other cheap fast food places as well as supermarkets right close by that they could buy a lot less expensive food, but maybe they are homeless and that is why, no idea how to handle money.

One point that I would like to make for any Filipinos reading this forum is, we have many poor people here in the USA too and we also have plenty of scammers and knowing the difference between them, is sometimes very hard.

[tropicalpenpals]

One movie worth watching is Caregiver bit of a womans flick but it shows how life "really is" in the UK for Filipinos. We still get people arriving with a belief the streets are paved of gold which in some cases they are pretty much on the money. E.g. Somalians I used to deal with in Central Birmingham generally dont work, poor education and no interest of changing theyre lifestyle why? Because in the UK they get everything free to a standard they would have to be rich in theyre own country for. Same as today I am out viewing brand new properties which are built within the last few months very ultra modern, fitted kitchens 3 bathrooms 4 bedroom. Etc. and they are for social housing = someone who has bred plenty of kids and unlikely to work legally and unlikely to ever work. Why? Because the system allows them to abuse it while the workers pay for everything. What happens in the Philippines I find is the fact I can choose to have things. I dont pay over $3000 just to have my waste collected and Police (that never turn up) per year. I dont have to have a TV license at around $250. I get service when I ask for it, my fruit is fresh, etc etc. I think when you compare the U.S. your right because ive been there aswell and its cheap especially when there are competing businesses and all you can eat buffets. But its all on lifestyle.

This trip back to the UK ive bought :-

Scuba gear
Badminton rackets and net
Tennis uniforms and rackets

Because its all cheap to do in the Philippines with no fancy gym membership. I think there is good and bad with all countries and its all got to be compared on lifestyle and ability to maintain that. Personally my sitting round the house bored beer budget more than enough covers my sports activities instead. Ive also got a personel gym being built above the internet cafe aswell btw. All these things I couldnt do in the UK without hassles. You want a gym membership they want your visa for continous billing. Everything is fast becoming an extra in the UK.

[Tom in Texas]

Mr. Lee, on 17 October 2008 - 08:01 AM, said:

Many Filipinos seem to think that we get 40 or more pesos for our US dollar and therefore we get 40 times what they do and I just wanted to point out that is not true. We pay the same here or there for many items and often have to pay more for the same items while living in the Philippines.
***
The main point that I wanted to bring to the attention of many of the Filipinos who visit some of the forums, is that Americans or people from other countries like yourself, do not get 48 times (today's exchange rate) as much as they get for their peso just because at this time we get 48 to one for our dollar.

It really upsets me when my wife's family continually tells us that we have to be very rich because we get that 40 or more to one for our dollars

Lee, I generally agree with you on this topic.

I think what much of your post is aimed at is "parity" rather than "exchange rate."

"Parity" refers to the "exchange rate" at which two currencies can buy the same basket of goods. Assume the exchange rate is US $1 = P50; if $1 will buy an apple, and P50 will buy an apple, then "parity" exists as to an apple. However, if $1 buys an apple, and P25 buys an apple, then at a 50:1 exchange rate, you would want to come to the RP, convert your dollars to pesos and buy twice as many apples. With respect to apples, the peso would be undervalued at 50:1, as parity would exist at 25:1.

Economists try to get a "basket of goods and services" together and price them in order to determine parity between two currencies. I am clueless on this issue, but have seen reports from alleged experts suggesting that 26:1 would be parity for the peso vs dollar. If this is true, then at any exchange rate over 26:1 we would still get a pretty good benefit in converting US dollars and spending RP pesos. Of course, on any specific item or service, we might or might not come out ahead.

Getting a 1.5 to 1 benefit on the "basket" is nice, but as you point out... it certainly is nowhere near getting a 40+ to 1 benefit.

I also agree with your "standard of living" opinion. I know that I will be able to live much cheaper in the RP than I do in the US. However, much of that will be due to reduced lifestyle. Much of that reduced lifestyle will simply be that in a 3rd world country there is much less "keeping up with the Jones" to worry about.

Most Americans can cut their standard of living by two thirds, and in the RP be living the lifestyle of the top 1%. Wealth is a relative concept. In the land of the blind, the one-eyed man is king.

On your other point, I think Filipinos are correct to assume that most Westerners are rich. Again, by comparison, we are. Even a $1,000/mo pension is many times what an average middle class Filipino family lives on... so, by a loose definition of "rich," $1,000/mo income probably qualifies if you live in the RP.

Notice -- I reserve the right to change my opinions without warning if I decide the other side of the argument is more fun.

Tom in Big D

[Mr. Lee]

Tom in Texas, on 10 February 2010 - 06:07 AM, said:

Mr. Lee, on 17 October 2008 - 08:01 AM, said:

Many Filipinos seem to think that we get 40 or more pesos for our US dollar and therefore we get 40 times what they do and I just wanted to point out that is not true. We pay the same here or there for many items and often have to pay more for the same items while living in the Philippines.
***
The main point that I wanted to bring to the attention of many of the Filipinos who visit some of the forums, is that Americans or people from other countries like yourself, do not get 48 times (today's exchange rate) as much as they get for their peso just because at this time we get 48 to one for our dollar.

It really upsets me when my wife's family continually tells us that we have to be very rich because we get that 40 or more to one for our dollars

Lee, I generally agree with you on this topic.

I think what much of your post is aimed at is "parity" rather than "exchange rate."

"Parity" refers to the "exchange rate" at which two currencies can buy the same basket of goods. Assume the exchange rate is US $1 = P50; if $1 will buy an apple, and P50 will buy an apple, then "parity" exists as to an apple. However, if $1 buys an apple, and P25 buys an apple, then at a 50:1 exchange rate, you would want to come to the RP, convert your dollars to pesos and buy twice as many apples. With respect to apples, the peso would be undervalued at 50:1, as parity would exist at 25:1.

Economists try to get a "basket of goods and services" together and price them in order to determine parity between two currencies. I am clueless on this issue, but have seen reports from alleged experts suggesting that 26:1 would be parity for the peso vs dollar. If this is true, then at any exchange rate over 26:1 we would still get a pretty good benefit in converting US dollars and spending RP pesos. Of course, on any specific item or service, we might or might not come out ahead.

Getting a 1.5 to 1 benefit on the "basket" is nice, but as you point out... it certainly is nowhere near getting a 40+ to 1 benefit.

I also agree with your "standard of living" opinion. I know that I will be able to live much cheaper in the RP than I do in the US. However, much of that will be due to reduced lifestyle. Much of that reduced lifestyle will simply be that in a 3rd world country there is much less "keeping up with the Jones" to worry about.

Most Americans can cut their standard of living by two thirds, and in the RP be living the lifestyle of the top 1%. Wealth is a relative concept. In the land of the blind, the one-eyed man is king.

On your other point, I think Filipinos are correct to assume that most Westerners are rich. Again, by comparison, we are. Even a $1,000/mo pension is many times what an average middle class Filipino family lives on... so, by a loose definition of "rich," $1,000/mo income probably qualifies if you live in the RP.

Notice -- I reserve the right to change my opinions without warning if I decide the other side of the argument is more fun.

Tom in Big D

Tom my friend, I cannot argue with you on most things but I think you are in for a rude awakening once you move to Cebu. Some things are in fact less expensive and some things such as electric are more expensive, so rents and labor items will be much less expensive if you get your wife to do the bargaining but once they see you white face then all bets are off.

I feel that people can in fact have a fairly large house for a reasonable price but not as cheap as homes are now selling for in the US. I also believe that people can have servants but that can often end up a nightmare if you end up with the wrong ones, and then there is owning a car, yes less expensive for insurance but it will be much better to take taxis or to have your wife drive and you hide in the back seat because often when a round eye gets into an accident, then hold onto your bank account but of course that is not all the time but most of the times I have heard about. So the more a person stands out, the more things will cost them and the saving might be on lower property taxes but for that you get almost no services. Try calling a cop if someone is trying to break into your home, or try calling an ambulance if you or someone needs one and then comes the fire services which arrive only after the fire is well on its way and then they often cannot put out the fire. Life in the Philippines can be wonderful if you go into it with your eyes wide open and learn how to fend for yourself, but cheap it is not and it is getting more and more expensive every year we come back, and not to mention the daily power outages.

So the parity between the cost of gas here and the cost of gas in the states is exactly that when converted, no difference or even more expensive in the Philippines and many things seem to be just that but what is more important is that our relative stop thinking that just because we have dollars that we get 40 times as much as they do with their pesos.

Those of you who have never lived in the Philippines will see that it is not that much less expensive to live if you try to keep up the same lifestyle as you would back home.

And last Tom, while $1000 a month would make a person rich compared to Filipino wages, we can never live our lifestyle on that amount and we would have to cut our lifestyle considerably, so I am all about apples and apples and not apples and oranges.

[TheMason]

Tom in Texas, on 10 February 2010 - 06:07 AM, said:

Lee, I generally agree with you on this topic.

I think what much of your post is aimed at is "parity" rather than "exchange rate."

"Parity" refers to the "exchange rate" at which two currencies can buy the same basket of goods. Assume the exchange rate is US $1 = P50; if $1 will buy an apple, and P50 will buy an apple, then "parity" exists as to an apple. However, if $1 buys an apple, and P25 buys an apple, then at a 50:1 exchange rate, you would want to come to the RP, convert your dollars to pesos and buy twice as many apples. With respect to apples, the peso would be undervalued at 50:1, as parity would exist at 25:1.

Economists try to get a "basket of goods and services" together and price them in order to determine parity between two currencies. I am clueless on this issue, but have seen reports from alleged experts suggesting that 26:1 would be parity for the peso vs dollar. If this is true, then at any exchange rate over 26:1 we would still get a pretty good benefit in converting US dollars and spending RP pesos. Of course, on any specific item or service, we might or might not come out ahead.

The 'back of the envelope' parity example that is most commonly used is the Big Mac Index. Compare the cost of a Big Mac value meal at McDonald's in various countries to get a feel for what your money will buy. In Manila, a Big Mac combo meal is selling for 125 pesos, or $2.71 (46:1 exc. rate).

I think you're estimate of 26:1 exchange rate giving parity is dead on.

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I also agree with your "standard of living" opinion. I know that I will be able to live much cheaper in the RP than I do in the US. However, much of that will be due to reduced lifestyle. Much of that reduced lifestyle will simply be that in a 3rd world country there is much less "keeping up with the Jones" to worry about.

Most Americans can cut their standard of living by two thirds, and in the RP be living the lifestyle of the top 1%. Wealth is a relative concept. In the land of the blind, the one-eyed man is king.

I always knew that my lifestyle was a bit wasteful in the US, but I never realized just how wasteful until I moved to the Philippines. It shocked me what I was able to give up and not miss at all when I moved to the Philippines. My lifestyle was downsized, but I hardly noticed at all. My wife and I are moving back to the US later this year. It will be interesting to see if my scaled back lifestyle survives once I'm back in the US.

[Mr. Lee]

TheMason, on 10 February 2010 - 11:48 PM, said:

I always knew that my lifestyle was a bit wasteful in the US, but I never realized just how wasteful until I moved to the Philippines. It shocked me what I was able to give up and not miss at all when I moved to the Philippines. My lifestyle was downsized, but I hardly noticed at all. My wife and I are moving back to the US later this year. It will be interesting to see if my scaled back lifestyle survives once I'm back in the US.

Just do us a favor and check back with us once you settled in and let us know how things progress. I suspect you are going to be surprised and find it hard to live on a low Philippine type budget, but time will tell.

As for me, I am spoiled and I want to live each day to the fullest because one never knows when today might be our last, so I am going to enjoy it while I can and help my wife to enjoy our life too.

[Cebu Experience]

Mr. Lee, on 16 October 2008 - 09:56 PM, said:

The forty something to one exchange rate value myth that is being perpetuated by many Filipinos.
Please stop perpetuating that myth.

Sorry, I needed to get that off my chest and I did say sorry!

haha dude if you get upset over that you have it too easy. Passes Mr Lee some xanax.....

Mr Lee, the cost of food is a tiny fraction of what you pay in the USA. Well, if you get out Ayala Mall that is. I don't spend much time in places like that. According to Jessie, I probably should based on what I hear of the hotties prowling it at night. LOL

I once feed 10 people, all the fish we could eat for about 8.00USD. It was an awesome little roadside place. No, you wont find a bunch of expats there, you'll find Filipino and it was just awesome!!!! A fresh shipment came in while I was there. The old man got out of his boat and gave the cook the fish he caught from the sea behind the eatery.

Things you get from the west tend to be a little more expensive here. Anything home grown will be cheaper. A Westerner can save a ton of money here, housing comes to mind. If you have money to invest, labor is very cheap.

Hey you can even get an "IPOD" for 20 bucks in the Philippines. haha well it works just as well, perhaps for not as long. And I got myself some fine designer sunglasses on the side of a mountain for about a buck fifty. Too bad the decals came off and they became non designer glasses.

Did you get my email with the link to find god?

[love2winalot]

Hiya: A Picture is worth a thousand words. It is easy to say, "My electric bill back home is this, and my rent was this, and my cable was this", and so on. Most people just think you are stretching the truth a little, or a lot. But, actually show then a Elctric Bill, a gas Bill, your cable bill, your rent/mortage receipts, insurance bills, and so on, and now they, "SEE", where all us rich people's money was going each month.

Our In-Laws were in shock when I did this. Seeing is believing.

[softail]

love2winalot, on 17 July 2010 - 10:41 AM, said:

Hiya: A Picture is worth a thousand words. It is easy to say, "My electric bill back home is this, and my rent was this, and my cable was this", and so on. Most people just think you are stretching the truth a little, or a lot. But, actually show then a Elctric Bill, a gas Bill, your cable bill, your rent/mortage receipts, insurance bills, and so on, and now they, "SEE", where all us rich people's money was going each month.

Our In-Laws were in shock when I did this. Seeing is believing.

I did the same thing with my in-laws. Told them what the budget is in the states, they could hardly believe what they were hearing.

Doug and Sally