Jul 04 2012

Newsletter – Financial Issue – Mid-July 2012

Welcome to our RetireForLessInCostaRica.com Newsletter!

Paul & Gloria

In our Financial Issue:

  • Paul’s Monthly Tip to Live for Less in Costa Rica: Save on Telephone Service
  • How to Choose an Unlocked Phone and Buy a Prepaid Sim Card, by Robert Carr
  • From 11.75% to 12.5% Interest on a 12-Month Certificate of Deposit!
  • Inflation in Central America
  • Featured Article: Our Cost of Living Annual Update




Paul’s Monthly Tip to Live for Less in Costa Rica: Save on Telephone Service

Since our arrival on April 1, 2009, much has changed regarding telephones and telephone service in Costa Rica. In the last year, the market has opened up to competition and reception and service has improved dramatically. Much of what is available in the States is available here, although technically Costa Rica is about a year behind the U.S. As new phones roll out in the U.S. you can be sure that it will soon follow in Costa Rica.

My phone, a very popular Nokia 3G cost $140. I bought it because the reception was better than our 2G phone. I just talk & text on it and my average monthly bill is $16.

I have a plan that gives me 500 minutes and unlimited texting. If I had used other data services, my bill would be a little higher. My service is with Kolbi, through ICE, the Costa Rica government electric/phone/internet company. Three years ago, when I got my 2G phone, Kolbi was the only game in town. Now there are a couple of other choices: Movistar & Claro.

My wife, Gloria, on the other hand, doesn’t spend a lot of time talking on the phone and was given a nice telephone by our neighbors, Lorca and Robert. Because the phone was “unlocked,” she uses the new prepaid service through Kolbi. It costs her only $2-$4 per month, mostly speaking with me when I’m not around. This is a great option for new arrivals in Costa Rica because you don’t need to be a legal resident or have a corporation to buy a sim card, whereas to get a phone line, either a cell or land line, you do.

So, bring an “unlocked” cell phone to Costa Rica. You can get a used Blackberry on E-Bay for less than $30. The key word for your search is “unlocked.” And when you arrive in Costa Rica, get a “pay as you go” sim card. (See more below.) They will explain the plans and options to you at that time. For less than $10 in Costa Rica, you’ll be ready to go. My friend, Robert, brought down an unlocked phone and got a Sim card at the airport with all the services. His bill is about $10 per month, which includes telephone minutes and data (stock quotes, e-mail, Internet, etc.)

I use my cell phone a lot and we don’t have a landline. Land lines are available and some people have them. Sometimes, a land line is included when you buy or rent a house or apartment, and it is the property of the landlord. Otherwise, you would have to be a legal resident of Costa Rica to obtain a land line. It’s good to have a land line as reception is not an issue and the monthly fees are very inexpensive. However, most people just use cell phones. The use of land lines is diminishing as cell service improves.

Inflation in Central America

Costa Rica, arguably, is the most expensive country in Central America. Many retirees find that their cost of living is the same as in many parts of the United States. In some cases, living in Costa Rica can be more expensive. It depends on how you choose to live. If you want a lot of luxury, you will pay for it here. However, at Retire for Less in Costa Rica, we are saving money every month. We have calculated that we save well over 30% over our U.S. cost of living. The high inflation rate in Costa Rica does, however, make it a challenge. Read more about our cost of living in the featured article below.

Following are the inflation rates for several countries, including Costa Rica, from 2001 through 2010:

  • Panama: 27%
  • El Salvador: 35%
  • Guatemala: 68%
  • Honduras: 75.1%
  • Nicaragua: 84.36%
  • Costa Rica: 101.72%

By switching their national currency to the U.S. Dollar, Panama and Honduras have further reduced their inflation in 2010 to 2.1% and 3.5% respectively.

Inflation in Costa Rica started to slow down towards the end of that 10-year period. For the years 2008, 2009, 2010, and 2011, inflation was 5-6% per annum. 2012 is expected to be the same or a little lower; a vast improvement over the years prior to 2008 when inflation always exceeded 10% and, a few times, exceeded 15%.

One of the reasons that Costa Rica is expensive is rising fuel costs. Costa Rica is a small country and must import many products (including fuel). The higher fuel costs lead to higher costs in general because it costs more to transport the goods. So to keep your cost of living down, buy local products as much as possible.

Another big reason for high costs in Costa Rica is the 13% value added tax which is added to both wholesale & retail levels, as well as expensive import taxes.

The National Statistics and Census Institute (INEC), in January, estimated that the average monthly income in Costa Rica in 2010 was approximately $540. How does the average Costa Rican do it?

Source: Tico Times, February 4, 2011


From 11.75% to 12.5% Interest on a 12-Month Certificate of Deposit!

We wanted to inform all of our interested readers that our bank, Coopenae, has just raised interest rates to 12.5% on a 12 month Certificate of Deposit. As luck would have it, our initial 12-month CD at 11.75% came to maturity in late June, just after the rate was increased, and we were able to roll it over at 12.5%. Boy are we happy!

Just so you know, this is a colones account. The dollar accounts pay 3% on a 12 month CD. We got our CD last June 25th and we converted our dollars to colones at 502 colones/dollar. Presently, the dollar is 497 colones, so our earnings are even more significant, though we don’t pay much attention to the exchange rate since we live in colones.

The sad news is that one must be a legal resident to be a CD investor in Costa Rica. All legal residents also now have DIMEX on their residency cards (cedulas). Click here to read our article that explains DIMEX.

You can learn more about Coopenae by watching the slide presentation below.

There are 15 slides in total. To move to the next or the previous slide, just click the arrows in the top right-hand corner of the slide.

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Here are links to our previous articles on this subject:

Featured Article: Our Cost of Living Annual Update

In the 2011 update on our cost of living in Costa Rica, we talked about the areas of savings we experienced over living in the United States. We broke down our living expenses here in Costa Rica, with emphasis in the big areas of housing, food and healthcare. Then we shared a breakdown of our total expenses, directly from a spreadsheet we keep of everything we spend. (If you haven’t read the previous article, you can read it here.) In this article, we wanted to focus on what has changed and what our current living expenses have been for the first six months of 2012.

First of all, let’s talk about what’s changed:

  • Gasoline: Since all gasoline must be imported, and Costa Rica does not have a refinery, it is particularly vulnerable to changes in world oil prices. The good news is that gasoline prices are regulated by a national government agency, so you will pay the same price no matter what gas station you go to, anywhere in the country. The bad news is that increasing taxes have contributed to the high prices for gas. Gas prices rose in March 2012, then dropped in July. The current prices are  744 colones per liter for Super, 699 colones for Regular, and 604 colones for diesel. Translated in prices per gallon, and at today’s exchange rate of 494 colones to the dollar, the numbers are $5.70 per gallon for Super, $5.36 for Regular, and $4.63 for diesel.
  • Imported Goods: Imported goods require more transportation than locally produced items so the increasing gas prices have an impact here as well. We are using fewer imported products as we have found local substitutes for many things. Here’s are the prices we’ve paid lately for some of the imported goods we still use:
    • French’s Dijon Mustard: $6.46
    • Kellogg’s All Bran Cereal: $7.70
    • Hershey’s Unsweetened Cocoa: $7.59
    • Heinz Apple Cider Vinegar, 16 oz.: $2.37
  • Inflation: Overall inflation in 2011 was about 5.5% and 2012 is expected to be the same.

Despite inflation, there are expense areas where our spending actually decreased from 2011:

  • Household miscellaneous items: down 33%, probably because we are pretty much set with most of what we need.
  • Entertainment/travel: down 14.5%. Since we have our beach days more often, we find ourselves taking overnight trips less frequently. And despite the fact that we are staying closer to home, we do a lot!. Just read our monthly “What’s Up With the Yeatmans?” in our newsletters and you’ll see for yourself. Bored? Not us!
  • Personal care/clothing: down 11%. Hair cuts, pedicures, and beard trims are inexpensive here, and as far as clothing goes, again, we pretty much have what we need.
  • Meals out: down 5.5%. I’m cooking at home more than ever, and when we do go out to eat, it’s usually for lunch, and often at our $1 restaurant.

Our spending is basically the same as last year in the following areas:

  • Pet care & food
  • Rent/phone/utilities (our rent has not increased and includes all utilities except telephone)
  • The Value of the US Dollar: Twelve months ago, one dollar bought 498 colones. Today, the value of the dollar is 494 colones, though it fluctuates by a few colones day-to-day.

There are three areas where we have experienced increased expenses over 2011:

  • Transportation: up 33%. However, only part of this big percentage is due to higher gas prices. Paul had a fender-bender accident back in February and we spent $1,100 on body work to repair our car. This affected not only our expenses for that month, but the monthly average transportation expenses are skewed as well. Hopefully after 12 months, this average percentage will be reduced.
  • Health Care: up 20%. This is due to some health problems that required prescription medications that were not covered in the Caja. On average, these medications cost about $1 per pill and needed to be taken several times a day. But considering our monthly Caja insurance payment is only $42/month and these medications were only temporary, health care here is still a bargain.
  • Groceries: up 4%. Not bad at all, and to be expected.

So, here is how we actually spent our money for the first six months of 2012, directly from our spreadsheets.

Again, the anomalies are February, with the increased transportation expenses due to the accident, and April, with increased travel, restaurant, and grocery expenses, due to an eight-day visit from family.










































And here are our totals in each category, and the monthly averages for the first six months:

















So that’s our Cost of Living Update. Overall, we’re pleased and are finding it very manageable to live a good life, for less, here in Costa Rica. But remember, it all depends on the way you choose to live. The above expenses reflect how we live. We live well, though we are also budget conscious; however we don’t feel like we’re “doing without.” We live simply and we’re happy doing so.


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That’s all for this month, but we’ll be back in touch soon!  If you enjoy our newsletter, please share it with your friends.  We hope to see you online!

Gloria & Paul Yeatman
San Ramon de Alajuela, Costa Rica

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