#151 – The Expat Files: Practical Tips for Living and Traveling Safely in Latin America

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

[00:03] Hi everybody, I'm Johnny Mueller and you're listening to the expat files living in Latin America. The show that tells you what it's really like to live, work, play and or retire in Latin America. I tell it just like it is, not the version they give you in those glossy travel magazines or the picture they paint for you in those international traveler websites where they're only trying to sell you something. What's it really like for expats living in Latin America? Well if you stick around a while you'll find out. So, let's get started. Before I get started I want to remind everybody to go to my new website www.expatwisdom.com for some brand new expat audio stuff, blogs, tweets and some very cool free reports like my 17 undiscovered Latin American cities and places that are well off the radar and perfect

[00:51] places for expat wannabes to check out. If you're thinking about living, working, playing and or retiring or doing business down here in Latin America, talk about the gringo advantage. These 17 places are just overflowing with it, so do check it out. Now here's an interesting email and I'm sure it's on a lot of people's minds these days. I mean with people who are serious about coming down here to do the expat thing. Listen to this. Dear Johnny, we are seriously thinking of becoming permanent expats but we want to come down to Latin America and explore a while first. But what should we do beforehand? Should we have transferred all our money offshore first? Or just bring debit cards and some cash and then later transfer the mother lode? Maybe you can give us wannabes some tips on what we should do before we make the big trip

[01:38] regarding finances. Anyway thanks for the show. Okay let's start with the debit and credit card bit. You know debit cards are exactly what I recommend so you should bring down one or two. And I always recommend that you hide those things in your special pouch, that secret little zipper pouch that I mentioned back six months ago on one of my shows. It's about passport size and has a loop on it that goes through your belt and then the pouch itself is tucked into the front of your pants right where your pants zipper is. And right in that pouch is where you should have your money and your passport and your driver's license and IDs and stuff. And here's why. If there is a robbery attempt, these macho latin guys are very leery about touching anyone in their crotch area. I've heard of people getting robbed and patted down but they're never that thorough about it. Especially since if it is a robbery it's going to be some low class macho guys doing it.

[02:26] And these guys have a tremendous aversion to the appearance of being gay. And the guy frisking you will suffer great indignities at the hands of his partner or partners in crime. If he ever wants to stick his hand even near your crotch. Because you see like everything else in Latin America, the social moors are 10, 20, 30, even 40 years behind the times when it comes to the acceptance of gays and the gay lifestyle. I mean you know how it was back in the states some 25, 30 years ago. Even now up in the first world when it comes to teenage boys, one of the more common insults they have among themselves is mocking each other for being gay or acting gay. I guess that's a universal cut down amongst all teenage boys really. Though up in the first world it's pretty much a stupid joke, down here in Latin America they take those things quite a bit more seriously like they did 30 or 40 years ago in the states. The fact is, when the lower and middle classes down here in Latin America call each other

[03:13] gay, them's fighting words down here. And that actually works in our favor in a security sense. And anything you put in that secret zipper pouch will go unmolested 99% of the time. And just for the record, you're not at all likely to be assaulted or robbed if you just stick to a few simple rules and I talk about them all the time on my show here. Like for example, keep a low profile, skip the jewelry, the authentic designer clothes and the Rolex too. Make sure if you do buy a car, you don't go for one of the high end models like a BMW or Mercedes or Range Rover. Stick to a common late model car, like a Toyota or a Nissan and no one will screw with you. I mean, if you were a crook, who would you rather rob, the guy with the Range Rover, the Rolex and the leather briefcase or the guy with the 3 year old Toyota and the Naga Hyde fanny pack? And speaking of fanny packs, I'm going to repeat this again, your fanny pack is your

[04:02] decoy. It's nice to keep an old wallet in there with 20 bucks or so and some expired credit cards because if there's one thing I know about criminals and I've heard this over and over again, you can't play dumb with these guys and get away with it. You can't say to the crook, hey, I know this is hold up but sorry buddy, I just haven't got anything valuable on me right now. So sorry man. Well, if you know anything at all about crooks you know this, they never walk away completely empty handed. It's a point of pride and sometimes they get evil when you play dumb. They're used to getting what they want. You have to offer them something worth their trouble and you don't want to give them your mother load of course. So if you're stupid enough to put your passport, your big money and your real credit cards in your fanny pack, that's what they're going to get. But you stick a wallet in there with some fives and ones and even a better idea, load it up with the lowest denomination Costa Rica note, the 1000 colony bill which is only worth

[04:49] about 2 bucks. So you load some US $5 bills in there and about 10 1000 colony notes and you're in business. With that kind of money bulging out of your wallet, you really look flush. And unless you get held up in Costa Rica, the thieves will think they got a pretty good haul. Because it's like this, if you ask someone from Nicaragua or Salvador or Ecuador or Peru what they think the dollar exchange rate is with Costa Rica and colognes, the average guy in the street just hasn't got a clue. They don't know if it's 5 to 1 or 5000 to 1. Only people that go to Costa Rica regularly realize it's around 500 to 1. So anyway, that's your decoy, your fanny pack. You'll probably never get any trouble like that but just in case. Oh yeah and by the way, in that fanny pack you should have a tiny little flash drive with high definition scans of your passport, your license and your debit and your credit

[05:35] cards. And it wouldn't hurt to have your airline tickets scanned and in that flash drive too. And by the way flash drives these days come with encryption and passwords so make sure you take advantage of that. And speaking of passwords, it seems these days a lot of people like to use their Yahoo or their Hotmail or their Facebook or Google passwords for their emails for everything. But really that's not a smart thing to do at all. Now you've got that password all over the web and most of the time people pick passwords that are way too easy and insecure. In fact, I know a guy personally, an engineer nerdy type guy who was at an embassy type party in Nicaragua along with me and the discussion actually did get around to passwords. And after everyone was well lubricated he made a claim and said he'd bet anyone $100 that he could break into anyone in that room's email without a password.

[06:23] In other words he was saying he could crack their passwords. And being that it wasn't an embassy party, there were some tough looking first world military guys there and even some guys that looked a little like black ops types. And guess what? When my nerdy engineering buddy threw out that $100 challenge, two tough looking military guys with no necks took him up on it. And by the way that nerdy engineering buddy of mine was down there doing IT computer network stuff for Telefónica, a huge Spanish telephone company that has big stakes in a lot of the local telephone companies in Latin America. Anyway he pulled out a laptop and got into these guys emails within 15 minutes. He made $200 bucks that night. The score? Nerds won, Jarheads zero. And later on he told me he almost never loses that bet, especially with embassy, military

[07:09] and pseudo military guys like that who are a bit macho. And guess what? Surprise surprise, their passwords are macho too. And after seeing that I asked my friend, well then what's a good password combination to use? And here's what he said, well you need one that you can remember of course even if you're drunk. But nowadays we all have passwords for 10 or 20 different applications. And he suggests not to use the same password so whatcha gonna do? How can you remember 10 or 20 passwords? And here's his password trick that he says almost never fails. Think of the year and the city you were born in and use that as your password. For example, Rockford, Illinois 1971. In this case just Rockford 1971 in upper or lower case, it doesn't matter. Your choice. And in order not to use that same password for the other applications you might need

[07:55] passwords for, just add one number to the date. For example, Rockford 1972 will be the next password that you use. And then Rockford 1973, 1974, 1975 ad nauseam. So even if you're at a site and you forget the exact number after Rockford, just start with 1971 then go on to 2, 3, 4, 5, you get the idea. So think of it, there's a password you'll never forget. Your year of birth and the city of birth. And then he said, you know, now that I've told you that little password secret, I'll bet you think that I can find your password really easily if you do that. And he said if you're worried about people catching on to that, just select a city adjacent to where you were born. Instead of Rockford, Illinois, use let's say Springfield, Illinois. So it would be Springfield 1971 as your basic password.

[08:41] Enough said about that. Anyway, here's another good thing to know. Once you're in a Latin country, you never really have to carry your passport around with you again. Just go to your lawyer's office or any lawyer's office and ask him for a certified copy. They'll make a scan, put some stamps and signatures and seals on it and you carry that around with you in your pouch. And you leave your passport in the lock up at the hotel or you can leave it with your lawyer. Every lawyer will provide that service. And by the way, you can do that with your driver's license too. You can get a certified copy of that and never have to carry that around with you either. So remember this, certified copies will work within any Latin American country. But of course, you'll have to dig out the originals if you're going to pass into an adjacent country by a land border or by air. Obviously, that's the only way you can get from country to country with your real passport

[09:27] in hand. And by the way, those certified copies that you got in one country, let's say in Ecuador, they'll work in every other country too. If you're in Bolivia and you get stopped by the cops or get into a car accident, for example, and you pull out a copy of your passport and your driver's license that had been certified in Ecuador, you don't have to worry about a thing. That won't matter a bit. You'll have no problems with the cops or anyone else checking out your documents. They're certified copies and they're in Spanish and these guys can read. And by the way, if you ever get into a car accident or have any other trouble like that and a cop or another official asks you for your real passport and you just give him that certified copy and he gets a little bullheaded about it and wants to see the real one, you can just advise him of one Latin American simple fact of life. And that is that every hotel you go to advises you to keep your passport and ID documents

[10:14] with them for safekeeping. And U.S. State Department travel sites say the same thing too. Don't travel with your real passport and your license, etc, etc. Leave them at the hotel and travel with copies. But what I'm saying is you should travel with certified copies and you'll never have a problem. And I can make a real strong statement to support this because in my over 20 years down here in Latin America and in all my encounters with government officials and transit cops and stuff, they never blinked twice when I pulled out a certified copy of my passport or my driver's license. I never had to tell them that my stuff was back at the hotel or in the house or whatever because they never asked. They just accepted my certified documents without a question. But however, there are a couple exceptions to that rule and one is opening a bank account down here. You have to bring in your original passport to get that going.

[11:02] And by the way, anyone can open a regular passport account down here by just walking in flashing your passport, filling out some forms and depositing 50 or 100 bucks depending on what bank you're in. And if you can't speak Spanish and you're off the tourist trail, you just go to the international department at the bank where they do the wire transfers and the international letters of credit. You'll always find some good English speakers there who will help you fill out the forms and get your account opened. They're glad to help a gringo in distress because like I said, when you're off the tourist trail, you've got that gringo advantage going for you. But by far, the best way to open a bank account down here is to have your own lawyer come in with you and he'll do it all. And what's nice about having your lawyer do it is that he'll take you to the bank that he knows is the most solid in that city or country. Most likely the one that he trusts the most and he's banking at too.

[11:50] Because after all, when you look in the yellow pages in any big city down here in Latin America, you're going to find 15 or 20 banks and which one should you choose? I mean they all have oddball Spanish names except the few international ones like Citibank, Bank America, Scotiabank from Canada and there's always one or two big European banks in the mix too. And getting back to that email question about banks and stuff, about that mother lode he was talking about. And I hope a lot of you out there have mother lodes because I don't, I have more like a teenage mother lode. Anyway, if you remember that email, he's asking where should he keep his mother lode. Well I never recommend that you put your mother lode in a Latin bank. But it is okay to put your mother lode in a bank that has first world branches. Or a first world bank like Citibank or Bank America that has branches down here in Latin

[12:38] America. And just as an aside here, I absolutely hate Citibank. And why? Well it started with the fact that they were too big to fail and have had all those spineless corrupt Washington politicians in their pockets for years. So you can well imagine that anyone who knows the Citibank story has nothing good to say about him at all and probably thinks they are sophisticated backstabbing crooks just like I do. However that doesn't mean you shouldn't put your money there. And I know that sounds hypocritical but think of it this way, they were too big to fail in the last crisis and it'll be too big to fail in the next one. So no matter how crooked and despicable they are, you don't want to put your mother lode into a bank that has a lesser chance of surviving when the next crisis comes. Just because you hate Citibank. I mean would you rather say I told you so with your money still sitting safely in some

[13:23] bank like Citibank? Or say I told you so as your bank goes into receivership. And sure you're going to have to open a small bank account down here in one of the Latin American banks that your lawyer suggests. Because you'll have to do business in the local currency and banks don't like to trade dollars for the local currency if you don't have an account there. And by the way do remember that ATM machines down here work with your debit cards and credit cards and the ones in the big cities and tourist areas always dispense dollars. But as a rule most ATMs down here only dispense $200 a day and up to $300 a day in the local currency. And of course you can buy things all day long with your debit or credit cards too including meals at restaurants, car rentals, bus and train tickets. You name it you can pay it with plastic down here.

[14:09] But is it a good idea to pay for things with plastic like so many of the locals do? Well that's another discussion completely. Now if you're paying with things with a credit card that you got up in the first world that's one thing. And it's actually pretty safe and reliable no matter what you've heard. Because at least you can look at your statements online and they're going to be in English. So you can figure out if you've been overcharged or you've been charged for something or a service you didn't get or you have additional charges you just can't figure out then you can just dial an 800 number and hash it out on the phone in English. Though the irony is the customer service department is probably located at a call center down in Nicaragua. But that's the way of the world. Another option is to come down here open a bank account deposit a little money and get a debit card down here. And here's the thing if you don't have an active local business that has an account

[14:55] at that bank you'll have to have someone co-sign for you. You can open the bank account by yourself but no one's going to give you a debit or a credit card without a co-signer. And your lawyer will be your co-signer. He'll do it every time. You don't have to worry about it. If you're his client he'll be your what they call fiador. And just a small point here even if you've got a lawyer down here you don't want to push him too hard by asking him to co-sign for you on a credit card like a Visa or Mastercard. Because then he's on the hook if you don't pay or you skip or you die or something. But a lawyer will always help you out by signing as a co-signer for your debit card because with a debit card down here anyway you can only spend as much as you have in the bank and no more. And I know it's a little different up in the states. You can overdraw now on your debit card and they really kill you with the charges and interest rates. But down here that's not a common practice yet at all.

[15:42] Banks don't let you overdraw on a debit card which is something really in your favor. Especially since if you get a credit card down here or a debit card your statements will come in 100% Spanish. And if you have trouble reading your credit card statements up in the states in English and I'm sure everybody does. Imagine what it's like down here in Spanish. I can speak and read passable Spanish and I've been down here 20 years or so and I still can't make head or tail of these credit card statements. So for me and you can take a lesson here I have a local Latin American bank account with a Visa debit card. Not a credit card. And I don't know how it is up in the first world but a debit and a credit card look exactly the same down here. Only you and the people at your bank know whether the card you're holding is a debit or a credit card. The places that you might use that card have no idea if it's a credit card or a debit

[16:29] card and they don't really care. They just run it through and if it clears you make your purchase. If it doesn't well you're out of luck. Now as far as my bank account down here I don't like to keep any more than a thousand dollars in that account. On occasion I've headed up to five but you're pushing it if you're keeping bigger amounts in there. Because it's no secret in every Latin American country that banks fail quite regularly down here. I mean not every week or every month but in every Latin country that I've ever been in. I've watched it as one big bank or another, teeters a bit and then bites the dust. First there's the rumors on the street and then the accusations in the paper of mismanagement or outright fraud. And then the bank officials are seen in the papers and on TV making statements saying their bank is as solid as the rocket Gibraltar. And then a couple of weeks later the rumors heat up, there's a run on the bank, the lines

[17:15] of depositors trying to get their money out go around the block. Then finally one day the doors just never open again. Then a week or two later the board of directors and the big wigs of the bank are summoned by a court subpoena to explain their actions in front of a review board and most of them never show up. They flee the country and the missing dough shows up in all kinds of foreign bank accounts in a lot of different people's names. With a high percentage of those foreign accounts being connected with those guys on the former board of directors of that bank who are now on the run. I can't tell you how many times I've seen that exact same scenario played out. And yes all Latin American banks have deposit insurance like the FDIC in the first world. But that insurance is very lightweight compared to the first world and it might only cover the first 10 grand of the deposits that you had in that bank. And if you have any more than that, well you're out of luck.

[18:01] Not to mention that it's quite common that it takes up to 3 years to get that 10 grand back from the government, if you get it back at all. So once again as for your mother lode, keep it in a first world bank or a branch of a first world bank down here and use a local bank just to put a little money in now and again because you're going to have to do business with the local currency. Especially when you're off the tourist track when most people don't take dollars. But of course banks always do. But like I said you have to have a local bank account because they just won't change dollars with anyone right off the street. But it's a different story in the high volume tourist areas like Costa Rica, Panama, Cancun and stuff. There it's all about the gringo dollar so you go into any bank just with your passport even if you don't have an account and they'll change your dollars. But guess what? You always get a little crappier exchange rate in the tourist areas.

[18:50] When you're off the tourist trail you get the exchange rate that's published in the paper every day, the rate that the central bank of that country determines is the correct exchange rate for that day. But let me warn you here, in those tourist towns you often get screwed on the spread. In those tourist towns the spread between buying and selling dollars against the local currency can be anywhere from 2 to 20%. And the closer the spread the better the deal for you. That means a 2% spread is very good. A 20% spread you're getting ripped royally. Now generally when you go into a bank you'll see a board that gives you the currency spread. It'll say for example, let's say for a bank in Guatemala, that they'll buy dollars from you at 7.5 quetzales per the dollar. And they'll sell dollars back to you if you give them 7.7 quetzales per the dollar.

[19:37] Which is about a 2.5% spread which is actually pretty good. But in tourist spots all over Latin America sometimes you'll see a massive spread. And with a big spread the more dollars you buy and sell in one of those towns the more it hurts. And when you're on the tourist track and bars and restaurants and hotels is where they really nail ya. Though I'm not talking about Guatemala here because Guatemala is basically off the tourist trail. I'm talking about places like Costa Rica and Panama. And the fact is in Guatemala 95% of the bars and restaurants won't take dollars. Which is an instant sign that you are off the tourist track. But if you're in a place like Casa Mel or Playa del Carmen or Costa Rica 95% of the places do take dollars. And they'll take a nice big slice idea every time. They'll never give you that nice published conversion rate that you see in the paper every day.

[20:23] That number determined by the central bank. The locals will always gouge you if you pay in dollars. That's why if you can you should always pay in the local currency. Oh and here's another thing about debit and credit cards. Like I said before you can get a debit card if you have a bank account down here. But you can't get a regular Visa or a MasterCard credit card that is unless you have a business incorporated within the country. Or of course like I said before if you get your lawyer to cosign for you. But that would be pushing it. But banks will waive that steady income requirement I mentioned before. And even the requirement that you have a business if you deposit a nice big chunk of cash in their bank like 100 grand or so. Which like I said is not recommended. But expats do it all the time and I know some who have. And speaking of businesses if and when you do start a business down here in Latin America

[21:10] just like you do with a business in the first world you'll have to have that business tied in with a local bank you know for payroll deposits and checking accounts and stuff. And just as an aside even if your business a long time and you're doing quite well don't expect the local bank that's handling all your transactions to ever give you a line of credit. That's pretty much a first world phenomena. And down here a line of credit is reserved only for those companies that are big and or have had long standing accounts with that bank. And the only way you're going to get a line of credit from these guys is if you golf with the general manager or you marry the loan officers daughter. In other words forget about it. But since it's common that business startups down here can run a quarter or even less than what it might cost to set up a similar business in the first world well chances are you won't need a line of credit.

[21:56] Which is just another little part of that gringle advantage that I always talk about. Okay now let's talk about everybody's second favorite subject. Cash and let's talk about it in regards to traveling around Latin America and exploring like the writer asked about in that earlier email. You should always have an emergency stash of cash ready and available in your zipper belt that I talked about on one of my past shows. You know it's a regular belt looks like a regular leather belt and has a zipper that runs up the back that no one can see but you know it's there and you can get about a thousand US dollars in there in hundreds. And of course it's always nice to have a few hundred dollars or more stashed in that passport pouch that I talked about earlier in the show. Now if you want to secretly carry a lot more cash on you you could go to any big bank airport or currency exchange and buy some of those big 500 euro notes or even better yet those

[22:46] 1000 Swiss franc notes. Because just think of it one of those 500 euro notes is worth over 600 dollars and one of those thousand Swiss franc notes is worth about a grand. So effectively you could easily get 10,000 US dollar equivalent in Swiss francs in your little money belt and you probably could get another 20, 30 or even 40,000 equivalent US dollars in your little passport pouch. Now I'm not trying to give you any funny ideas here especially since the US has those regulations about moving currency out of the country it's 10 grand you know. And by the way if you're taking out more than 10 grand and report it like you're supposed to do no problem it's completely on the up and up except for the fact that the government now has a record of you taking out a larger than normal quantity of cash. So that means you're bound to be on some big brother list or two after that.

[23:33] So I'm not recommending you do any of that but I am saying it's possible to bring out a lot of money in small quantities using those 500 euro notes and those thousand Swiss franc notes. And yes these days all through Latin America every bank will now take and exchange euros and every bank that's at an international airport will accept and trade Swiss francs too. Though honestly I don't know why anyone would walk around with that kind of money it still just might be a good idea to have a thousand Swiss franc notes stashed somewhere on you. Or you can do what me and a lot of long term expats do. We carry a one ounce or smaller Canadian maple leaf or cougarand on us at all times in case of emergency. Because for one thing they're universally known and there's a hundred and one places in any big city that'll buy it back at nearly spot price. And today a one ounce coin like that's worth over fifteen hundred dollars.

[24:21] And it's very small and portable and easily hidden. I've been carrying one around myself for about twenty one years now and I've never had to use it but times aren't getting better they're getting worse aren't they? So if anything it gives me a very nice feeling of security. Because in times of crisis when things get worse guess what happens? Gold goes up. Oh and by the way speaking of gold first of all we talked about the fact that if you take more than ten thousand dollars out of the country you have to fill out all kinds of forms at the airport reporting it. Which means you'll get on all kinds of big brother lists and the government will probably be watching every move you make from now on as if they aren't already. Anyway did you know that one ounce gold Canadian maple leaves and one ounce gold American eagles are worth about sixteen hundred and fifty dollars each today. They have no value in a coin collection as new mismatic coins because they're newly minted

[25:10] and only have value for their gold content which is exactly one ounce. Now remember what I said today's value is about sixteen hundred fifty dollars for one of these coins. That means of course if you have six of them in your pocket and you go on an airport to fly out of the country you're carrying a little over ten thousand dollars. Which means you have to fill out one of those currency reporting papers right? Well if you want to you can but guess what you don't have to not technically. Listen to this. If you look at the back side of any one of those coins it says right on it fifty dollars. Now no one's ever been able to give me a proper answer as to why it says fifty dollars on Canadian maple leaves and American eagles when they're produced today and their value is well over thirty times that. Anyway fifty dollars is stamped right on those coins and the US and Canadian government have

[25:57] to stand by that. So if you were to go to an airport in the states with two hundred of those one ounce gold coins the stamped face value on those coins would be exactly ten thousand dollars. Which is the limit that the US government allows you to take out of the country without reporting it. But the gold value in those coins would be over three hundred and thirty thousand dollars. More than thirty times more than what's allowed. But if a customs official were to ask if you're carrying legal tender over ten thousand dollars you can honestly say and with a clear conscience no and actually prove it to the guy by counting the coins in front of him and showing him the fifty dollar mark on each one. Now of course I don't know anybody who's ever done that but personally some twenty five years ago I brought two hundred one ounce coins like that from the United States to

[26:42] England and when I walked through customs I had them in a little plastic box and they asked me to open it they looked inside and said what's that for and of course this was before nine eleven so there wasn't the scrutiny that there is today. And by the way I think at that time the price of gold was around three hundred and sixty five dollars an ounce not even close to what it is today. Anyway I told the guy they were part of my personal coin collection and they waved me right through. And guess what expat Eddie did the same thing very recently he had twenty gold coins that he flew out of the states with worth about thirty grand so they were over the limit but they did ask him at O'Hare Field what are you doing with these things and he said the same thing they're part of my personal coin collection and they waved him right through. So there you have it folks not to give you any ideas but by all means do check out those gold coins and if you're afraid of bringing a big stash of them out of the country just

[27:30] slip five or ten out at a time. You've been listening to The Expat Files living in Latin America coming to you each week from somewhere south of the border and don't forget you can email me on anything at all about Latin America The Expat Files at gmail.com once again The Expat Files at gmail.com. See you next time, nos vemos.