Part 2 - Living Like a Local

In determining whether your life in Latin America will be less expensive than in the U.S. you´ll need to decide how you plan to live...

Do you plan to be on permanent vacation in Latin America? Will you be jet-setting around all the time or clubbing every night?

Are you an overweight alcoholic or drug abuser? If so, then you´ll probably find food, alcohol and drugs to be cheaper in Latin America. But let´s be honest, gringo. You and I both know that this probably means that you are just going to consume even more...

Do you hope to integrate into the community? Or do you imagine your life in Latin America more like the people in the picture above?

Something I realized living in Panama is that I could live a whole lot cheaper there if I was willing to live and eat a little more like an average Panamanian.

Just a few examples:

A standard Panamanian meal may consist of lots of rice, beans, fried or baked plantains, and a relatively small portion of meat. It is work food - inexpensive and lots of carbs.

An average Panamanian does not necessarily need a huge quantity of beer and alcohol to enjoy a day at the beach.

In Panama City, thousands of Panamanians get around each day on packed buses with no air-conditioning, whereas most foreigners will opt for a taxi. The bus ride costs 25 cents - a taxi ride may cost $1.50 or up to $10 or $12, depending on where you are going and how much the driver decides to rip you off.

Many Panamanians do not have A/C in their homes - or maybe they only use split A/C units in the bedrooms. So rather than cooling the entire house with central A/C, they just cool individual rooms.

Most Panamanians do not use electric water heaters which large tanks of permanently heated water - instead they use instantaneous gas water heaters that are much more economical.

So, if a gringo moves to Panama and wants to live just like he does back at home, he may not find Panama all that much cheaper than the U.S. This is especially true if he is coming from a place like Mississippi rather than Boston - b/c in many cases the price differential between Panama and Mississippi is not all that substantial.

In general, certain "luxury products" tend to be more expensive in many Latin American countries. I´m no economist, but I´d be willing to bet that the explanation somehow goes back to supply & demand :-) It may also have to do with the fact that in Latin America there generally does not exist such a substantial middle class as in the States. So particular products that are not necessarily considered "luxury" in the States may be marketed more toward the wealthy in Latin America. I´m talking about things like electric toothbrushes, high thread-count sheets, and portobello mushrooms. But if you are living like a local, then you don´t use those things anyway.

Finally, I have found that there is not nearly as much of a market for gently used and discount products in Latin America. This market is HUGE in the U.S. - think about Craigslist, Ebay, garage-sales, TJ Max, Ross´s, Marshall´s, Filene´s Basement, thrift shops, etc. There are some options in Latin America - you can buy used clothing at "Ropa America" stores. There are also classified sections in the newspaper and a few websites such as Encuentra24 and Mercado Libre where people sell used goods. But the idea of selling your kitchen table on a secondary market when it gets a small scratch just isn´t as big here in Latin America. Generally speaking, when something breaks in Latin America people either just live with it or try to fix it.

The point is that if you are looking for a flat-screen TV for your apartment in Latin America, you´ll probably be better off buying a new one rather than looking for a gently used model. And since a flat-screen TV is considered more of a "luxury good" in Latin America - you´ll probably pay more for it than you would at Walmart.

Of course, there are certainly counter-examples too all of this. There are certain types of goods - and especially services - that are much less expensive in Latin America than in the U.S. I´ll talk about those in the next post, Part 3 - Goods & Services in Latin America.