Life, Work, and Living in Latin America

Episode Summary

In this episode of The Expat Files, Johnny Mueller dives into a variety of topics affecting expats in Latin America. The episode begins with Johnny introducing the show, which focuses on life in Latin America, and then he reads an email from a listener named Ralph, who discusses his experience with insurance not covering damages from BLM riots. Ralph expresses frustration with the insurance system and criticizes people with 'socially correct' degrees, suggesting they lack the work ethic and practical skills needed to succeed. He argues that these degrees often lead to middle-class stagnation and that true success requires hard work, sacrifice, and dedication. Ralph also criticizes the current generation for not working hard enough and for being overly influenced by social media and cancel culture.

Johnny then critiques the concept of socialism, arguing that it has never produced anything that makes life more convenient, happier, or comfortable. He contrasts this with capitalism, which he claims drives innovation and competition. However, he also criticizes the form of capitalism that exists in the U.S., calling it 'crony capitalism' where favors, tax breaks, and contracts are given to the highest campaign donors. He highlights the disparity between the wealth of politicians and the average citizen, using examples like Obama's sudden wealth and the lack of approval for rapid $5 COVID testing kits due to the lack of profit for pharmaceutical companies. Johnny then shifts to discussing his personal plans to move to Mexico, citing family connections and the forgiving nature of Latinos towards poor Spanish. He concludes by discussing the cost of living in Latin America, noting that while food prices are lower than in the U.S., they are still rising, and rents are decreasing due to economic factors.

The segment then shifts to an email from Marco, a Canadian listener, asking about the cost of living and quality of life in Costa Rica. Johnny responds by sharing his personal experiences and warnings about potential scams and legal issues for expats in Costa Rica, particularly involving common law marriage and property rights. He also discusses the impact of inflation and food price changes in Latin America compared to the United States, highlighting that while food prices are rising, they are not increasing as rapidly in Latin America as they are in the U.S. He points out that local food production in Latin America is more resilient to supply chain disruptions, making it a better place to live in terms of food affordability.

Johnny then discusses the challenges of living in Costa Rica, particularly for expats, and critiques the country's reputation as an ideal destination. He highlights the legal and property concerns, the overpopulation of expats, and the resulting issues with crime and local resentment. He also contrasts Costa Rica with other Latin American countries, suggesting they offer similar benefits at a lower cost of living. Johnny emphasizes that the positive marketing of Costa Rica is largely based on the experiences of tourists rather than long-term residents, who often have a more negative view of the country. He also addresses the issue of petty crime, noting that expats are frequent victims, and warns about the naivety of gringos in trusting locals.

The segment then discusses the issue of package theft in the United States, particularly in relation to Amazon deliveries, and contrasts it with the situation in Latin America. Johnny shares a personal anecdote about a friend who had his Amazon packages stolen multiple times, leading him to install a doorbell camera. He later discovered a thief who stole the packages and even removed the camera. Johnny references a study indicating that 43% of Americans have experienced package theft in the last year, with two-thirds of them experiencing it multiple times. He contrasts this with Latin America, where package theft is less common due to the way deliveries are handled, such as requiring personal pickup or delivery by motorcycle. Johnny also reflects on the experiences of expats in Latin America, noting that new expats often have an optimistic view but eventually learn from their own mistakes. He offers several suggestions for new expats, including avoiding business partnerships with Latinos unless they have equal investment, being cautious with land deals, and avoiding lending money to Latinos.

In the final segment, Johnny advises expats and gringos on the financial realities of starting a business in Costa Rica. He emphasizes that while the initial costs may seem low, they should be doubled due to potential overruns, bribes, and legal issues. He also highlights the importance of being cautious with Latino lawyers and the broader issue of household indebtedness in Latin America. Johnny provides statistics showing that in most Latin American countries, households spend a significant portion of their income on food and debt, with many families struggling to manage their finances. He warns against lending money to Latinos due to their high levels of debt and lack of financial sophistication.

The episode concludes with a discussion on a study revealing that higher-educated Latin households tend to have more debt than those with lower educational levels. Johnny questions whether this is due to higher income or targeted marketing by financial institutions. He also shares a story about an expat named Eddie, who is frequently asked for loans by his girlfriend's relatives. Eddie uses a humorous and probing approach to assess their financial responsibility, often ending conversations by asking about their savings. The segment concludes with a survey highlighting the widespread issue of complex indebtedness, where payments often exceed household income, and includes editorial commentary on the generational trend of increasing debt.

Episode Notes

In this episode of The Expat Files, Johnny Mueller discusses a range of topics affecting expats in Latin America. From insurance issues and critiques of socialism to personal plans to move to Mexico and the realities of living in Costa Rica, Johnny shares his insights and experiences. He also delves into the challenges of starting a business, the impact of inflation, and the financial struggles of Latin American households. Whether you're an expat or planning to move, this episode offers valuable perspectives on life in the region.

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Topics

Insurance and civil unrest, Criticism of socially correct degrees, Work ethic and success, Criticism of current generation, Social media and cancel culture, Critique of socialism, Criticisms of crony capitalism, Personal plans to move to Mexico, Cost of living in Latin America, Inflation and food prices in Latin America, Cost of living and quality of life in Costa Rica, Legal issues for expats in Costa Rica

Chapters

00:00:00 Opening
00:00:14 Introduction to the Podcast and the Listener's Email
00:00:31 Ralph's Email About Insurance and Civil Unrest
00:01:37 Ralph's Criticism of Socially Correct Degrees
00:02:59 Ralph's Argument About Work Ethic and Success
00:04:01 Ralph's Criticism of the Current Generation
00:04:54 Ralph's Argument About the Need for Hard Work and Dedication
00:05:15 Critique of Socialism and Capitalism
00:07:13 Discussion on the Failure of Capitalism
00:07:24 Personal Plans to Move to Mexico
00:08:50 Cost of Living in Latin America
00:09:52 Benefits of Living in Latin America for Food Affordability
00:10:50 Why Living in Latin America is Better During Inflation
00:11:27 Johnny's Personal Experience with Expats in Costa Rica
00:12:30 Legal Risks for Expats in Costa Rica
00:13:13 Legal and Property Concerns for Expats in Costa Rica
00:13:25 Costa Rica's Reputation and Its Marketing
00:13:47 Comparison of Costa Rica with Other Latin American Countries
00:14:28 Johnny's Real Objection to Living in Costa Rica
00:16:03 Crime in Costa Rica and Its Impact on Expats
00:17:10 The Problem of Package Theft in the US
00:17:46 The Link Between Amazon and Petty Crime
00:18:21 The Situation in Latin America
00:18:52 Expat Experiences and Cynicism
00:19:44 Suggestions for New Expats
00:21:14 Doubling Business Cost Estimates in Costa Rica
00:21:24 Costa Rica's Low Cost of Starting a Brick and Mortar Business
00:22:48 Global Comparison of Household Food Spending
00:24:10 Average Costa Rican Household Debt Burden
00:25:30 Introduction to the Study on Debt and Education
00:26:02 Higher Educated Latins on a Bigger Treadmill
00:27:01 The Latino Household Indebtedness Survey

Transcript

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder Hello there all you ex-pat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started All right. Let's start out today from this very interesting email comes from Ralph from New York He titles it a letter to the editor that will never get printed He says dear Johnny. I'm one of the small business owners who got ransacked during the BLM riots, man

[00:46] Did that get my plan B going on steroids? Yes, Johnny I got ransacked to the tune of 90k in damages, but did you know insurance won't pay? Just another nail in the coffin that got me off the fence to get my plan B going Yes, I've been paying premiums to my insurance company like clockwork for 23 years and they won't pay Of course, they say if you read the fine print and who reads that it excludes acts of God like tsunamis and earthquakes war Civil unrest riots, etc, etc. What else was it but a riot and civil unrest? It's been a few months, but I'm still fuming about it. You know what else gets my goat It's those whiners who say they got the poop end of the stick when they get asinine Progressive PC degrees that will never pay enough to make a good living

[01:33] I'm talking about people with college degrees that will barely make you a living I'd say most of the rioters were people on some kind of government assistance All you got to do is look at the crowd and you can tell they're on government assistance except maybe the organizer There's the irony, huh? Johnny I'm sick of the whiners who want money and success and jobs They like but they never want to do the hard work and put the effort in You can go to college to have fun and party about 80% of the people do that And those kind of degrees are a piece of cake You just show up and get a seat and in some universities They don't even grade you because it might hurt your feelings instead You pass or fail or you can go to college bust your ass and get a degree that really counts And as far as all this civil unrest, I think envy plays a big part in it However, if you want to do great things or build a better mousetrap

[02:19] There will be some suffering sacrifice in a lot of 18-hour days And most millennials and Gen Xers don't want to work that hard Too much studying, not enough hangout time Can't have that Instead, these deluded young Gen Xers get socially correct degrees in things like African-American or Native American studies, cultural anthropology, feminism, etc. Degrees the famous psychologist Gad Sad says are the holy trinity of BS Yep, if you get a socially correct degree, you'll never suffer, sacrifice, or put in 18-hour days You'll never rise above middle class either And for people who put in the 18-hour days and don't hang out on social media That would be physicists, software geeks, engineers, MDs, and why they make the big bucks

[03:04] And those people with socially conscious degrees never will Unless they hit the lottery or slip and fall in the right parking lot And Johnny, you talk about in the past how kids going to university would take any dirty job Just to have money for school or for expenses You're right, but today I don't think I ever met a 20-something whiner Who had dirty fingernails, calloused palms, or sweated it out in the sun With an after-school or summer job Yet they're the ones out in the streets and on anti-social media Getting so offended and canceling people who have real jobs, making real products If those Gen Xers and Millennials are so smart but underappreciated How come they don't just grab the bull by the horns? Doesn't matter what kind of useless crap degree you might have You can learn anything about anything on YouTube and the internet for free

[03:51] Believe me, I've had this conversation with 20-somethings before And they say, yeah, it's easy for you to say You're a success because you're white and privileged and had a leg up A family with money, connections, etc, etc That, they say, is why they're taking public transportation and I'm driving a nice car White privilege, what else? So I say to these young kids, did you see Breaking Bad by any chance? Did you see Game of Thrones? The Walking Dead? Witcher? Of course you did Well, if you do the math, you'll see that took at least 400 hours out of your life And what'd you get for it? I say the next time a hit series explodes in the media Why don't you just get on the net and study graphic design or furniture making Essentials of crypto or hydroponics or solar installations Electrical wiring or internet marketing

[04:37] Because I assure you, everyone cannot be a TikTok star And I also guarantee you, with 400 hours of studying anything You'll be proficient enough to be a no BS expert Even have a successful podcast or YouTube channel on it Of course, to be the best of the best, you'll need to put in that stereotypical 10,000 hours But these days, you have no excuse at all Not to excel in something you like and that the world actually needs There are a million and one things you could do or make that people really want to buy So when did our social system collapse? When did it all fall down? I think it's a symptom of the so-called it takes a village BS Where everyone's supposed to help you and each other and share everything That's pure socialism, man And another thing that really bugs me, Johnny, and shows how stupid people are

[05:23] And what they don't teach them in school When people say capitalism has failed us It's obvious people who say that don't know what capitalism is Every physical thing you enjoy in life was produced by people under the pressure Of competition and freedom to experiment provided by capitalism Not one single communist or socialist country has produced anything to make yours Or my life more convenient, happier, or more comfortable If you can think of something, please let me know No inventions or innovations come out of socialism There is no pressure to compete or excel with socialism As for capitalism, we don't have pure capitalism We have government-sponsored preferential crony capitalism That doles out favors, tax breaks, contracts, monopolies, And backgroom deals to the highest campaign donor

[06:11] Or even more sneakily, big corporations and banks promise shitbag politicians courtesy seats on the Lockheed or General Dynamics or Pfizer board When they retire from Congress Oh, to be on the board of a big corporation What a sacrifice They only meet twice a year in an Aspen resort and get a $2 million salary Or if you're a Bush, Clinton, or Obama You get a half million bucks to speak for a half hour By the way, how is it Obama is worth $18 million all of a sudden? He even has his own Hollywood movie production company Amazing how he could go from Chicago politics where his income statement said he made $180,000 a year And he and his football player wife were worth about $300,000 on paper What's a small leap from $300,000 to $18 million net worth, huh?

[06:58] That's how crony capitalism works And why the US has not approved the various rapid $5 COVID testing kits There's no money in it for Pfizer and Merck So please don't tell me capitalism failed Or capitalism doesn't work Or capitalism destroyed our culture Hey, you can't rule it out But don't say that until we have actual capitalism, please So, Johnny, that's my sob story My letter to the New York Times editor that'll never get published But the silver lining is that I'm getting out of Dodge by summer For good or for bad, my plan B destination is Mexico That's only because my wife's family is from there So I have a built-in network And oh, she speaks Spanish and I don't I'm kicking myself now for not paying attention in Spanish class I took a year of it in high school And I'm kind of gun-shy to use it

[07:45] What with my embarrassingly terrible gringo accent and all Signed Ralph from New York on route to Mexico Well, Ralph, I've got nothing to add I'm speechless That's a first And about being embarrassed to use your crappy Spanish whilst down in Latin America Well, when I first got down, I was in that boat too But one thing you'll notice soon enough Latinos and Latinas are very forgiving Unlike certain places in the world like, for instance, France Where they'll rudely treat you like a retard if you don't get the language thing right Wait, wait Oh no, Johnny said the R word Time to call the social media police Cancel them I'm waiting Are we still here? We're still on the air? I guess so Maybe that's just strike two

[08:30] Anyway, here in Latin America Latinos will cut you tons of slack And they'll always give you a break and help you out If your Spanish sucks You'll see It's part of your gringo advantage They'll never laugh at your bad Spanish Or even behind your back when you walk away Unlike the French So, by all means, no matter how bad your Spanish is, do give it a try Alright, let's talk a little bit about the cost of living Inflation and price creep here in Latin America Now, as much as you might want to disagree with me on this one Up in the states and throughout the first world Food and commodity prices are rising rapidly Though governments deny it But you know how governments lie Sure, rents are going down Because so many places have gone out of business And people aren't current on their rent So, to keep units filled, landlords have to drop their prices And as far as food, the fact is Worldwide agricultural commodity prices are up nearly 40% since August

[09:20] Just look it up Are you experiencing sticker shock when you go to the grocery store? Well, down here in Latin America Where food prices are a quarter to a third what they are up in the states That is stuff that's grown or produced in the country you live in Still, prices down here are on the rise too But not rents, they're going down So, as the Fed keeps printing money And we're more than a year into this COVID stuff You can expect food supply and food chain disruptions on imported foods But much less so for food and produce That's grown and harvested in your immediate area And that's really one of the benefits of being in Latin America Because every town and city has a gigantic market or two or ten And all that stuff's being brought in by local truck farmers Which is absolutely not true if you live in most cities and towns up in the states

[10:06] Oh, there's tons of agriculture all right up in the states But most of it's industrial farming, monoculture Corn, soybeans, etc Seems like all the fruits and vegetables in Walmart Are coming from thousands of miles away Like California, Mexico, and Chile So, it is true The food and commodities prices are going up here in Latin America But they're definitely not going up any faster than they are for you up in the states So, if for example two years ago an avocado for you up in the states costs a buck And down here it costs 25 cents And now it's two bucks up by you Well, it's going to be 50 cents in Latin America So the price ratio remains the same Though everything's going up And where it ends nobody knows One thing's for sure Inflation's rearing its ugly head And this will not end well But for sure you'll be much better off living in Latin America

[10:53] All right, here's an email from Marco He says Hey, Johnny Longtime Canadian listener and fan here Wondering if you have any thoughts on Costa Rica That you can share from an expat perspective And we all know the cost of living is higher in Costa Rica Versus the rest of Latin America What do you get back in return? Better health care, lower crime in short The good, the bad, the ugly, and the great on Costa Rica Or as Canadians like to call it Costa Rica In fact, that's one way you can spot a Canadian right off When they say Costa Rica Where that comes from Who knows, eh? Well, Marco, you're a long time listener So you probably know how I feel about Costa Rica You know, I lived there nearly three years myself Long time ago But I lived there before the gringos really took over I personally got ripped off there by a business partner Who was Canadian, believe it or not

[11:40] And I watched every single one of my friends And acquaintances down there Get ripped off in one way or another too Most often, believe it or not, from gringos Or Latino lawyers And did you know in Costa Rica They've got a common law marriage thing going Where a lot of gringos get scammed After they move in with their girlfriends And break up for whatever reason And even though the law says That if you've been living together for three years or more It's a common law marriage The judges, being Costa Ricans themselves And fully invested in the idea That gringos have lots of dough And are easy marks too They've been known to hand out judgments In favor of the lady When a couple's only been living together for six months So if you're caught in that situation Where you broke up with your girlfriend Who you've been living with No matter how short or long the time frame

[12:25] She's got two years after the date she left Or you kicked her out Or she kicked you out To petition the civil court for half of everything you've got And I've known a few gringos Who had bad breakups And had to sweat it out for two years Just hoping those papers never get served And I also know a couple of gringos Who left the country Just to avoid that mess With one gringle friend of mine Flying back for a month and a half To the states to do some business And when he came back to Costa Rica He couldn't get back into his own apartment The locks were changed And his supposed soulmate Had moved in her brother, her mother, and her grandma And when he went to court The judge said she was within her legal right Because she'd been living with him For over two years And was just as much an owner of the place as he was Now every latin country has slightly different rules About the common law thing But most of the time

[13:11] The judges will rule in the lady's favor Especially if you have a kid or two Even if they're not your kids Best way around that Don't have any substantial property in your name Have it in an SA corporation Or even in your lawyer's name Because half of nothing is nothing But then again if you're talking about Costa Rica The lawyers are a big part of the problem Now you hear a lot of gringos and expats Say there's nothing like Costa Rica It's just so beautiful It's got that fantastic tropical jungle like atmosphere But yet it's kind of tame Tamed of course by the tens of thousands of gringos there And brought up the first world speed Well let me tell you There's at least 10 other latin american countries That are just as beautiful Just as tropical Just as many cool things to do If not more But somehow Costa Rica's got this reputation

[13:57] It's from gringo marketing of course That there's no other place like it Well sorry to clue you in But you could find everything that Costa Rica has And more in Mexico, Guatemala, Colombia, Brazil And quite a few other countries And the cost of living is much less too And geographically what Costa Rica's really missing Is the Altiplano So it's always pretty hot Now San Jose's up around 3000 feet above sea level Not quite in the Altiplano But you do sweat less at 3000 feet than at sea level However my real objection to living in Costa Rica is That the place is so overrun with gringos That people have become jaded Imagine you live in a small town in Wisconsin, Ohio, Illinois And in the last 10 years Just loads of wealthy Koreans moved into your country

[14:45] And started setting up shop everywhere Or could be wealthy Italians Or wealthy people from India I assure you it will build resentment and get on your nerves When everyone piling in has more money and means than you have And they start turning your city into a version of where they came from And there's really no way for you to get a piece of that And you end up working for them Because your whole economy depends on them being there You know what that does to the locals It makes them jaded, false, and insincere Now I'm not saying all of them are But all you have to do is talk to practically anyone Who's lived in Costa Rica for more than a year And you'll hear all kinds of negative stories So then where does all that positive marketing and promotion come from? Well it's from the vacationing first world tourists Who come back with a really great experience Because they're only there for a couple of weeks at the moat

[15:30] And of course when you're on vacation You're in a completely different state of mind You've got the rose-colored glasses on You take pre-planned tours Stay in upscale resorts and hotels You have those nice pre-planned hand-holding Kumbaya, jungle, beach, hiking, and river rafting excursion experiences You've got the rose-colored glasses on the whole time And when you get back home You just can't rave enough about the place But as far as a plan B If you want to know what it's really like Talk to someone who's been living there more than a year You won't get real information for people who just pop in and out on vacation And Marco you asked about crime Well it's true Costa Rica is low on the scale of violent crime But it's very high In fact it's worse than a lot of other Latin American countries On petty crime, robberies, extortions

[16:15] Every gringo I know who's ever lived there has been a victim Whether it's your cleaning lady, gardener, the guard in your gated community Stealing tools, bicycles, laundry detergent Yep that's right, laundry detergent Caught my cleaning lady doing that once Might even be your own lawyer Scamming you with bogus charges To Costa Ricans you are the chicken that needs plucking The thing is we all come down sort of naive Gringos are noted for trusting people I've heard Latinos tell me that many times But after a year or so in country Us gringos and expats get wise and harden up fast Well some of us do and others get really skinned And we go back home with our tail between our legs But you know it looks like petty crime is up everywhere I mean there's an article today in the New York Times The headline says 90,000 packages are stolen in New York City every single day

[17:04] And most of those are Amazon packages left in a porch or a breezeway In fact just the other day my brother in Chicago told me He's had his Amazon packages stolen from his porch Three separate times in the past year So he installed one of those doorbell cameras That you can monitor with your cell phone Now during the day he's away a lot And sure enough about two weeks ago He got a notification on his phone That someone was ringing the buzzer If it was the UPS guy delivering some Amazon packages Ten minutes later he got a notification on his phone From his motion detector He couldn't believe it A guy walked up stole his packages And when he got to the curb He turned around ran back up to the house Pulled out a screwdriver and swiped the doorbell camera So I guess in the last few years Petty crime, in the US anyway, is directly proportional to the rise of Amazon

[17:51] Though I have to admit my brother doesn't live in a four star neighborhood He could alright But he's got a bunch of duplexes in a mixed area And he lives in one of them He's the landlord but insists on doing the repairs and maintenance himself He likes fixing things so it gives him something to do By the way this article says in the States 43% of Americans shopping online experienced package theft in the last year And two thirds of that 43% have had packages stolen multiple times So then what's that got to do with Latin America? Well at least you won't get your Amazon or online package orders stolen Because you actually have to go down to the courier office to pick them up personally Or when your packages arrive you just shoot them a message And they'll send out a guy on a motorcycle with your package And you pay an extra two or three bucks for that

[18:36] Now I order stuff online I've been doing it for years And I've never once lost an item And only one item and all that time came damaged A glass bottle yeah glass Bottle of liposomal vitamin C Busted to smithereens but they replaced it So anyway But a lot of us guys who've been in Latin America a long time We can get pretty cynical One big problem I see all the time is when a long time expat gringo Meets an extremely excited expat gonna be And the seasoned expat sees all those signs of a chicken waiting to be plucked Sometimes you see yourself in that person Anyway newbies are upbeat and excited and they've got a hundred questions Hell when I first came down I did And sometimes your answers will make you sound like a pessimist or a cynic But it seems their sense of wonder and excitement being in a new country and all

[19:25] Overrides all the warnings and cautions you give them Seems they have to make their own mistakes and get ripped off a couple of times to learn that lesson In any case I've come up with a few suggestions for newbie expats But most of the time they're not listening So they fall into the same traps that me and so many other expat gringos do when we first arrive Suggestion number one Never become a business partner with a Latino Unless he's got equal skin in the game That is he's put some resources into it God you don't know how many gringos and expats partner up with Latinos who've got zero skin in the game And all they promise and it seems really big to you at the time Is that they know the system They know people They're connected They can make things happen that you can Because you're a gringo or your Spanish skills suck And you know if that were actually true it does sound great

[20:11] But rarely is it actually true However if that Latino has just as much skin in the game as you do He's invested his own dough then he's got just as much to lose If he doesn't come through Suggestion number two If you're going to settle in a country like Costa Rica or any other place That's well on the gringo tourist trail Don't trust gringos or anyone with deals that are too good to be true Especially land and property deals That is unless you don't mind buying a piece of beachfront property With dubious paperwork and has probably been sold To a couple other gringos who thought they hit the jackpot too Here's another suggestion and this one's one of the hardest ones to keep Never lend money to Latinos or Latinas And if you do always know that there's probably a 90% possibility You're not going to get it all back So if you do lend someone money Think of it as a gift

[20:57] Because that's what it will probably end up being Here's another suggestion that most people don't heed But it's almost always true If you're starting a business However long it takes to get the right paperwork together To get it up and running and open Your lawyer will estimate that for you Well you're in the land of manana time So you should double his estimate Same thing goes for what it's going to cost to open that business Whatever your estimate is You should double that too Now you long time listeners have heard me say It's ridiculously cheap to start a brick and mortar business down here And as for internet businesses That's usually beyond ridiculously cheap So for example if you decide to open up a bar and restaurant If you're up in the states something like that might cost you 200,000 bucks Or a lot more but let's just say 200 grand Now if you open that same kind of bar and restaurant in Costa Rica let's say

[21:45] You might crunch numbers and figure it'll be about 30 grand Hell of a deal right? Well I'm saying you should double that Make it 60 grand That just seems to be the way it goes with any business here Still way below first world prices But that seems to be a big problem with almost every gringo and expat Who takes a shot at opening a brick and mortar business They underestimate the overruns and sometimes the necessary bribes And lastly don't trust your Latino lawyer Unless you've known him for a long long time Or he's got a nice track record with other gringos and expats And everyone agrees he's an honest guy Speaking of Costa Rica Marco You know because there's so many gringos there There's a lot of good organized data coming out of the place Because gringos are good record keepers And one of the things that's really bothersome About the Latin culture in general is that they're so indebted

[22:33] Hey you know most US citizens are in debt up to their ear balls too Especially with this Covidia thing Did I say ear balls? Now here are some statistics I'm sure you never heard before I'm not talking about big mortgage debt like in the hundreds of thousands I'm just talking about credit card debts and loans The fact is as of 2020 there are only eight countries in the world Where people spend less than 10% of their household income on food You know grub You got the UK, Switzerland, Ireland, Austria, Canada, Australia, Singapore and the US That means if food prices shoot up People in those eight countries certainly aren't going to be hurting that much Then there's Latin America Where in most of those 20 countries The average household spends 30 to 40% of their income on food For example in Costa Rica it's 30% and Guatemala 40%

[23:22] So that means when Latin American families take out loans Or end up on credit or a payment plane They really get strapped So then why bring this up? Well if you're a gringo with a soft heart And some Latino you know hits you up for a loan If you think you're actually going to get paid back You should ask the guy how many other businesses or people he's into for a loan Because if he's the typical Latino He's paying off or is on the hook for at least three loans And I got that data from a new study that just came out From the Office of Consumer Finances, the OFC A survey conducted throughout Latin America during November of 2020 Since we're talking about Costa Rica In their survey of indebtedness of Costa Rican household Of which 1,200 families were surveyed from all over the country Ages 18 to 65 years old

[24:08] They were right in line with other Latin countries The average Costa Rican has 2.5 to 3 debts they're paying off right now Not including a house mortgage With more than half of those families Paying from 30 to 60% of their household income Just paying off those debts So if you want to be an optimist and you want to be kind Let's say the average Costa Rican is paying around 30% of his household income for debts And 30% for food That means he's got 40% of his income left to spend on everything else However, it says at least 25% of Costa Rican families Spend more than 60% of their household income on debt service So if you add the 30% they pay on food They've got almost nothing left for anything else That's one out of four people

[24:54] So the lesson here is everyone wants nice modern things And the marketers and the creditors have won that game Especially in the third world When the vast majority of the population are not that sophisticated When it comes to debt Debt service Budgeting Numbers and finances Yeah, right like most Americans are Bottom line most Latinos are deep in a financial hole With little hope of getting out from under it Which is why 90% of families have no real savings at all Now where have I heard that before? All right About this household indebtedness thing We mentioned the unsophisticated homeowner often gets sucked in By marketers and credit card companies The surprising thing though When you read the synopsis of the data It says when reviewing the data based on family educational level

[25:41] It seems people with more years of study People with more diplomas and degrees Tend to have more debts than families with lower educational levels Now I don't know if that makes sense or not But that's how it turns out Perhaps it's because people with higher educational levels Are more targeted by banks and credit card companies Because they tend to make more money than the average person So bottom line higher educated Latins are on a bigger treadmill So just keep that in mind if you ever find yourself being pitched by a Latino for a business idea Oh and keep that in mind when one of them hits you up for a loan Now expat Eddie who's been very successful in business He tells me he gets hit up for loans all the time by his girlfriend's relatives And he does help out the deserving ones once in a while Fully knowing he's never going to get the dough back

[26:27] But he tells me he always asks this one question when someone hits him up for a loan He asks so then why doesn't the bank lend you the money? And inevitably the guy will say because I don't qualify To which Eddie will respond You mean I should lend you the money even though All those financial wizards at the bank say you're not a good risk Then Eddie will ask him How much money do you have in a savings account at the bank? And that Eddie says is usually the end of the conversation Though sometimes Eddie does give him the money He asks those questions because he wants to see him squirm a bit You know work for the money he says By the way that Latino household indebtedness survey It concludes by saying this quote There's a high percentage of the population that has a complicated indebtedness issue To the point that in many cases the payment of installments exceeds their household income

[27:18] Hmm how is that possible? Then there are some editorial comments One of which says unfortunately history shows us that every generation becomes more indebted Than their parents' generation Sound familiar? It should