Episode Summary
In this episode of The Expat Files, Johnny Mueller begins by addressing a correction regarding the names of the extra month salary payments in Latin America, specifically the 'bono catorce' for July 15th and 'alginaldo' for December 15th. He then discusses the implications of hiring local workers, noting that many prefer to work off the books to avoid government systems like Social Security and national health care, which are often seen as corrupt. Johnny highlights the low benefits of these systems, with retirees receiving only a small monthly amount, and contrasts this with the lack of government oversight in Latin America. He also touches on the financial burden of taxes and withheld income for workers on the books, and addresses the issue of credit card debt among professionals, revealing that police officers have the highest percentage of credit card debt relative to income.
Johnny Mueller then discusses the financial struggles of police officers in Latin America, highlighting their low salaries, high taxes, and reliance on credit. He explains how these officers often live in poverty and resort to bribery to make ends meet. He also touches on the broader issue of deforestation in the region, noting that while it's a real problem, some gringos are investing in hardwood tree planting as a way to profit from the situation.
In the next segment, Johnny expresses frustration and sadness over the use of subpar materials in construction in Latin America, particularly the proliferation of asphalt shingles and fake hardwood floors. He criticizes the reliance on first-world products that are poorly suited to the region's climate and highlights the availability of high-quality, traditional materials like real Spanish terracotta tiles and rainforest hardwood. He also shares anecdotes about encountering skilled local artisans creating beautiful, handcrafted furniture from these natural materials.
In the final segment, Johnny discusses his experience with a furniture seller in Latin America, highlighting the potential for good deals and the unique opportunities available in off-the-tourist-trail regions. He contrasts the pricing and quality of furniture in Latin America with that of the United States, emphasizing the value of locally made, sustainable products. Johnny also mentions his upcoming expat wisdom seminar, encouraging listeners to attend for more insights and practical advice. Additionally, he addresses an email from a listener asking about the viability of Guatemala as a long-term living option amidst global environmental and financial challenges, explaining that while these issues will affect the region, it remains a relatively safe and sustainable place to live due to its low cost of living and cultural advantages. Johnny concludes by discussing the broader opportunities available in off-the-tourist-trail Latin American countries, noting the lifestyle and economic advantages they offer to expats.
Topics
Correction on salary payments, Work off the books vs. on the books, Social Security and health care systems in Latin America, Taxation and withheld income, Credit card debt among professionals, Financial struggles of police officers in Latin America, Corruption and bribery among Latin American cops, Deforestation and its impact on the environment, Investment opportunities in hardwood tree planting, Economic challenges faced by families in Latin America, Construction materials in Latin America, Use of subpar materials
Chapters
00:00:00 Opening 00:00:32 Correction on Salary Payments 00:01:13 Hiring Locals and Extra Month Payments 00:01:46 Social Security and Health Care Systems 00:03:48 Taxation and Withheld Income 00:06:00 Credit Card Debt Among Professionals 00:06:15 Cops in Latin America Face Financial Struggles 00:09:09 Cops Resort to Bribery Due to Financial Struggles 00:10:04 Deforestation is a Real Issue in Latin America 00:10:40 Gringos Invest in Hardwood Tree Planting 00:12:28 Pella Windows and Asphalt Shingles in Latin America 00:13:15 The Cost-Cutting Consequences of Using Asphalt Shingles 00:14:51 The Case Against PVC Simulated Wood Flooring 00:18:15 Furniture Deal in Latin America 00:19:23 Why Avoid Mass-Produced Furniture 00:20:28 Guatemala as a Long-Term Living Option 00:22:25 Opportunities in Off-the-Tourist-Trail Countries 00:24:00 The Economic Vulnerability of First-World Tourists and Expats in Latin America 00:24:20 The Reality of Life for Most Latin Americans 00:25:36 Recommendations for Expats Living in Latin America 00:26:24 The Economic Crisis in Argentina 00:27:19 Special Report on Argentina's Economic Crisis
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 I wonder Hello there all you expat 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, before we get started today, I'd like to make a little correction concerning last week's show Remember, I mentioned that there's two extra month salaries for your average Latin American person That's on the books. That means he's paying taxes and signed up for his own government's Social Security system, etc
[00:49] Now if you remember I said the extra months pay comes on July 15th and December 15th Well, that's correct, but I got the names reversed the July 15th Extra payment is called the bono catorce and the December 15th payment is called alginaldo That's all ginaldo just had those two names reversed that that it matters, right? Okay, now that you got that straight if you plan on hiring latins and putting them on the books You'll have those two extra months payments straight in your mind However in that regard do note that if you do start a business down here in Latin America and you hire some locals many times They'll say well, I don't really want to be on the Social Security system I don't want what they call a knit number, which is a government tax number just pay me cash and that'll be fine
[01:39] Now let's know when they're off the books They don't get to participate in the Social Security system or the so-called Socialized medical health care, but they don't seem to care because they know both of those government institutions are corrupt failed systems Now if you don't trust your government up in the States, you ought to talk to a Latin down here You ain't seen nothing yet Latins except ones that work for government have zero faith in their government and it's completely justified Now often when I tell people that they do have Social Security and national health care First world people are surprised when gringos for example see how poor the average person is down here They wonder how such systems can even exist as for government runs Social Security in Latin America
[02:24] If you're eligible for it You've been paying in for a certain amount of years when you retire you get anywhere from about ten to a hundred bucks a month Yep, that's it. The fact is I've never met an average Latin American middle-class guy that retired and made over a hundred a month And by the way from time to time you see on TV and in the local papers old-timers marching and picketing outside the presidential palace and such because they haven't received that gigantic Social security benefit for months and months and sometimes you'll see old-timers marching because the checks bounced Some system, huh? And you know young people in Latin America almost never think about retirement just like young people in the States never do I didn't When I was 20 25 years old back then
[03:10] I didn't give a rip about Social Security and would have gladly been off the books if I could have been but you know Up there if the government catches you they'll tear you a new anus However down here in Latin America, they've got no militant IRS or labor police Anyway down here a huge percentage of young people don't want to be on the books either Mostly because like in the US the government withholds money out of your check for their Social Security Not to mention Latin governments will withhold something like 10% for income taxes, too And since most Latin American countries have a national health care system, which is also beyond putrid They have to kick in for that So the average Latin American on the books gets about 10 to 20 percent of his check withheld every month and people are always
[03:57] Whining and complaining about that sound familiar. Oh, and by the way This question often comes up with gringles and expats who start businesses down here in Latin America They say look if I've got some latin is working off the books because they don't want to be on the books That would mean then that I don't have to pay that extra two months salary required by law because hell they're off the books Right to which I say yes and no because if you have a really good worker and that bono catorce and it Aguinaldo payment come along sometimes generous gringos will give it to him anyway And sometimes your employee off the books will even ask you for it So then you have to really judge it on individual cases But obviously they're off the books for a reason so you're not obliged to do it And yes, Latin countries do have labor boards that employees can complain to and get you the employer in hot water
[04:47] If some labor laws aren't obeyed, but obviously if your workers are off the books They've got no leg to stand on and they're the ones that could be in trouble then right now Speaking about getting amounts withheld from your check down here in Latin America Just this week I read in a very large Latin American journal of a certain university study that examined about 20 big banks in Latin America looking for clues as to which segment of Latin American workers are in the most Debt as a percentage of their income and the results very surprising You're never gonna guess what career path in Latin America leads to the most amount of credit card debt now Remember anyone down here in Latin America who has a bank account at all can get a debit card
[05:33] But we're talking about credit cards now and note that's not easy to get an actual credit card You have to have a steady job not to mention professional references like from a lawyer or an accountant However, people who own their own businesses or have professional careers like architects doctors nurses, etc They can get credit cards relatively easy in many cases just like up in the states They're pre-approved. So I'll ask you again What career path in Latin America leads to the highest by far percentage of credit card debt relative to income? Well, no use guessing because you won't get it. It's Policemen the cops who'd have thunk, huh? Now as this report shows cops all over Latin America are in very bad credit trouble
[06:19] In fact the average cop in Latin America makes about five hundred dollars a month and since he's on the books Definitely about a hundred of that. He never sees because between social security the national health and taxes automatic Withholdings are from 15 to 20 percent of a cop's paycheck So cops down in Latin America survive on about a hundred bucks a week or 400 a month But as you'll see they don't bring home nearly that much now The big problem here is that cops have always been afforded a nice line of credit from most banks Considering it's generally a very stable profession cops remain cops for years even decades down here That said the first thing that happens when a cop gets out of the police academy down here, which lasts from three to six months
[07:07] Yeah, right. I know what you're thinking since most of these guys only have about a 10th grade education Hell hairdressers down here have a longer training period than cops so then draw your own conclusions about the Professionalism and brainpower of your Latin men in blue or black or whatever certainly instills confidence, doesn't it? Anyway, there's one thing that Latin cops know is that as soon as they get out of the Academy they can go down to one of the big three banks in their country and instantly get a credit card a Real credit card not a debit card and believe it or not according to this very recent study The average cop isn't so much debt Not just with credit cards either because department and appliance stores are quick to give credit to cops, too
[07:52] so the report goes on to say sadly about a third to a quarter of all cops in Latin America only bring home about get this a hundred bucks a month and 10% of cops are so much in debt. They bring home less than 50 bucks a month So then the question is how does a cop and his family live on a hundred bucks a month or less? It is the custom down here in Latin America for everyone in the family to chip in to the general family pot So if mother's a checkout lady at the grocery store She's making 250 or 300 a month and Juanita was maybe out there selling choco bananas on the street corner Bringing down maybe 80 or 100 bucks, too Then you've got sister Juanita selling Avon or Amway to the neighbors and pulling down another 80 to 100 a month
[08:39] You get the idea Anyway, a middle-class family down here needs to make about six or seven hundred bucks a month just to scrape by so that the family is Not on the edge of the abyss and at the end of every month not close to falling apart at the seams Now remember if dad's only bringing home a hundred bucks a month out of his normal 400 bucks a month salary What do you think's gonna happen? Well, I'll tell you what he's a cop He's got a uniform and he's gonna do what most cops down here do when chronically short on cash He's gonna hit people up for bribes especially around the holidays not to mention when you're only bringing in a hundred bucks or so a month as The so-called head of the family. It's a real self-esteem killer, especially in this very macho Latin American world
[09:25] So everywhere throughout Latin America, you've got corrupt depressed cops Which tends to escalate family and drinking problems, too So just thought I'd shine a little light on a problem down here that never really revealed its roots until now Okay, now said about that now in the things that drive me nuts department Here's something that gets on my nerves every time I see it in the newspaper or see an ad for it on one of the big Billboards along the highways here well first let me preface this by saying that Latin America has some of the finest rainforest hardwood in the world and Y'all up there in Kalamazoo in Cleveland might be reading that Latin America is being heavily Deforested and that soon enough rainforest hardwoods are gonna be extinct. Well, the deforestation part is certainly true
[10:11] Especially down in places like Argentina and Brazil where there's massive jungle hardwood clear cutting going on for mining and Cattle-grazing and agriculture. It's a shame. I know but it's not necessarily the end of rain forest hardwood In fact, I still see many fantastic hardwood trees every single day as I drive around through Latin America They're everywhere. In fact, many gringo expats are getting in on the act and planting hardwood tree forests themselves I know of two people doing it right now. In fact, each of these guys has over a hundred thousand teak trees Now both of these guys have told me confidentially that if this is not their retirement. It'll certainly make their kids rich Now I personally think that giving riches to your kids like that's a very stupid idea
[10:58] But I've met a lot of gringos who are affected with that disease But I also know it's dangerous to bring it up in conversation with them because they're very single-mindedly stubborn about it They think somehow they're doing their kids a big favor. Well, they're not Anyway, that said there's obviously huge money in hardwood forests. You can get in on it quite easily It doesn't take much you could buy or rent some untillable land on the side of a mountain if you like It doesn't matter the trees don't care and about the trees Well, the saplings are very very cheap pennies apiece However, you got a 20 year wait at least before you make a single dime You'll be sitting on an investment that makes zero money for a long long time But like I said in the past show just one of these tree trunks whether it's kahoba or mahogany or teak
[11:48] Whatever could easily even these days go for ten thousand US dollars which is why after about ten or fifteen years you need to have your forests guarded 24-7 and Because of that clear cutting down in Brazil, etc Those prices are absolutely guaranteed to skyrocket now The part that makes me mad even sad is the fact that when you look at building and construction magazines down here, etc Where they show construction projects and the latest greatest hardware and materials a lot of it coming from Europe in the US like for example, Pella windows. Yep. Believe it or not. They're down here now, too And yes, unfortunately the proliferation now of asphalt shingles And you know crazy as it sounds naive latin builders snap that stuff up because they think well
[12:33] It's from the states its first world must be good. It's that gringo advantage or in this case disadvantage Remember asphalt and fiber shingles are killed by excessive Sun and down here You've got the Sun on steroids You think it's hot in the summertime in Nevada when you install asphalt or fiberglass shingles down here They virtually melt into your roof in the first couple of months Then a little while after that they get so hot that the monomer out gases and after a year or so They get stiff and brittle like shingles 10 or 15 years old up in the states So anyway, if you're driving past a nice new construction project down here in Latin America When you do see asphalt shingles, you can be sure there are a lot of corners being cut
[13:20] So if you like the place don't buy rent and by the way down here in Latin America those real Spanish Terracotta tiles are dirt cheap, too So why wouldn't you want to use them sure they're a little bit more expensive than asphalt shingles But they look a million times better and could last a hundred years or more But I digress because that's not my real gripe The sad thing that I was referring to before is the fact that first world companies have now landed in Latin America selling fake parquet and fake hardwood floors and People are buying it because it's heavily advertised as a first world product. In fact, let me translate this little blurb right here It says are you tired of water spots on your beautiful wood floor? Nevermore our new innovative imported European PVC floors that simulate wood
[14:11] Will eliminate your water spotting headaches and then it says this guaranteed 100% virgin PVC product, which means not recycled comes in a variety of wood textured finishes I mean, come on. I ask you is that not the worst idea of the decade? You're down here in Latin America where you can get tea and cow bun mahogany and Palo Blanco You name it the same stuff. They've been using for hundreds of years in churches and cathedrals fabulous hardwood that you could get down here for the price of pine in the States and You mean to tell me you're gonna buy? 100% PVC Simulated wood flooring instead of the real thing that's growing right down the street or even in your own backyard
[14:58] I'm telling you anyone who buys into that idiot idea Deserves to live in a synthetic house made of PVC and by the way Here's my answer to their ad where it says in big letters now install our 100% PVC synthetic wood flooring and get a 10-year guarantee that you'll have no more water stains And here's my answer to that. Why don't you idiot Latin contractors and architects build your roofs So that they don't leak your dumbasses You only get water stains on your beautiful wood floor if you're rough leaks because you're a second-rate architect or a builder Alright time for a few deep breaths now Anyway, you got to know things like that drive certain gringos nuts
[15:46] Especially gringos who know about construction in the States people would just die to use hardwood floors But they're too damn expensive not because they're prone to water damage because they're not if your roof is made properly Okay, enough of beating on that dead horse All I'm saying is don't fall for it if you're gonna build something down here a remodel use the real thing You're nuts if you don't I mean come on our fender and Gibson and Martin guitars Switching from hardwood to PVC when hell freezes over maybe anyway, bottom line down here, you can build with stone and marble and granite and jade and Real terracotta tiles till you're up to your ears in them and of course rainforest hardwood The kind of materials only the very wealthy can afford up in the States now
[16:34] If you don't follow that advice you deserve to live in a drywall cookie-cutter track house Oh, then don't forget to ship down your bathtub virgin and those velvet Elvis and matador paintings, too You're gonna need them. Oh and by the way for all you expat wannabes and gonna bees up there since we're talking about rainforest hardwood Often when I'm driving out in the boonies I'll run across a little shack usually a kind of a tin roof bodega They call them and there'll be a little sign that says carpenter ea or carpenter Oh, which means carpenter and usually you'll see beds or dressers outside on the street stuff for sale And many times it's just kind of trashy junk But sometimes being that in a past life I was kind of an amateur woodworker myself when I see a really
[17:22] tremendous piece of craftsmanship Sometimes I stop and take a few pictures and ask the guy what he wants for his furniture and just as an example the other Day, I was driving way out in the boonies. I mean hours away from any big city I stopped my car in front of a lonely little carpenter's shack like that and Snapped a few pictures because this guy was such an artist. This guy had a complete teak hardwood bed carved so Meticulously, I mean it wasn't my style. It was more like a florid century Victorian style but nevertheless, it was beautiful Anyway, he had a king-sized bed out there two matching end tables a lowboy dresser and a full-sized dresser Not only that he had a beautiful matching dining room table along with ten
[18:10] Beautiful teak chairs and I'm telling you just that king-sized bed I'm sure would have gone in the States for at least five thousand bucks So I asked the guy even though it wasn't my style what he wanted for it and he said 3,000 bucks and he'd throw in delivery anywhere in the country now. I'm thinking well 3,000 bucks That's not such a great deal in Latin America And when I hemmed it hot a bit and started gearing up to go into my bartering mode Suddenly he said oh, I'm not talking about just the bed I'm talking about everything the dining room set the dressers the end tables the chairs the whole works three grand now We're looking at twenty thousand bucks all day long if we were up in the States now Like I said before it wasn't my style of course the wood was but the design wasn't then he said
[18:58] You know just bring me a photo or a sketch of anything you want and I'll make it now I was curious and when I asked him where he got the wood from he pointed to a stand of trees behind his property They were growing right there a one-stop shop convenient, huh? Anyway, as I was walking towards the car. He said the whole thing right now 2,500 so I'm just bringing that up to illustrate to you What goes down here in Latin America and why you should not be buying your furniture at Walmart or at Sears or any? Junk that's made in China because down here for pretty much the same price you could buy something That's sure to become an heirloom That said if you're coming down to my expat wisdom seminar that starts on January 10th I'll draw you a map and give you this guy's complete information and you can do some deals yourself
[19:49] Perhaps you could be the gringo middleman and sell his stuff on the internet Looks like it could be another tremendous gringo opportunity if you get the logistics straight and speaking of my expat wisdom seminar We're looking at just a little under two weeks before our liftoff So I'm still getting emails from people who are trying to shuffle around their schedules to work it out And yes, I still have a few openings So just go to www expat wisdom comm click on this seminar link and sign up now It's time for an email. It's from Devon or it could be Devon Anyway starts out Johnny. Love your show been listening for several years Clearly you feel that parts of Guatemala are very good choices for a long-term living Is there a show perhaps where you elaborate on it, and why?
[20:38] You've heard a lot on PRN and elsewhere about the global environmental collapse and overall major climate shifts going on as Well as the major financial issues that are worsening by the day through of course Richard Martin Gary null Carolyn Baker Guy McPherson, etc These issues are and will continue to affect Guatemala in negative ways that being said Why is it that you see Guatemala as somehow surviving all of this and maintaining itself to be a relatively safe and sustainable place to live over the next 5 10 maybe 20 years also Any show I could listen to that goes into detail about living in Argentina I've heard a little about it most of which sounds quite appealing if there are no shows about those specific questions
[21:23] What are your cliff notes and thoughts about them? Hope to raise some funds to come to one of your seminars very soon and follow that up with a big move south of the Border just working on getting an extra 20 to 30 thousand to take with me As for me I work with very rare and beautiful stones found in one spot only in the mountains of Northern, Utah My website is Utah onyx calm That's Utah onyx calm if you know of anyone who would like a truly beautiful Translucent and luminous stone for their kitchen bathroom other rooms or even outdoors. This is it Really looking forward to meeting you By the way, you're welcome anytime to use my timeshare in Cleveland when you can no longer resist the magnetic attraction of that town
[22:10] Well, thanks Devin for that offer, but I don't think I'll be checking out that timeshare anytime soon And normally I usually don't give plugs to businesses unless they have some expat angle But since you sound like a real artist, I don't mind doing it this time. Okay, let's hit it First of all, I occasionally talk about Guatemala and do my seminars sometimes there because it's way off the gringo tourist trail So therefore you do have a tremendous gringo advantage going for you if you ever get there But that's also true of so many other Latin American countries like Nicaragua Honduras Salvador Peru Bolivia Paraguay any Latin country off the gringo tourist trail is gonna have a very low cost of living compared to anything up in The first world and also with your first world sensibilities You'll be able to spot opportunities and do deals that no Latin America never thought of
[22:59] Simply because you were brought up in a very competitive completely different kind of environment Because you see down here in Latin America off the gringo tourist trail most people still are on siesta time You'll notice some businesses still close their shops from 12 to 2 or even 3 in the afternoon And many of them are not open on Saturdays and almost no one's open on Sundays except the big shopping centers Where you have many first world franchises now that are open seven days a week in some ways It's like going back in time 20 30 or even 40 years So don't think I'm just strictly talking about Guatemala though There are many great places and many great opportunities for expats there and there are some very bad places in Guatemala, too Places I never go in myself
[23:44] You just have to know the difference and as far as how these off the tourist trail Latin American countries are gonna survive after the next Financial or economic crisis blows up in the first world Well, the fact is if you're living on the gringo tourist trail like for example in Costa Rica or in Cancun You're really gonna feel it because they depend almost Exclusively on first world tourism and first world dough coming in and you know traveling and discretionary Spending are the first things that first world people cut out when there's an economic crisis If you come down here, you'll notice again off the gringo tourist trail that most people 40 to 60 percent of Latin Americans Don't even have a clothes dryer a dishwasher a decent car or even hot running water in the house Not to mention you'll see a hell of a lot of driveway chickens running around
[24:30] So you're talking about a big percent of the culture that's living very close to the earth They are not depending on first world gringo money for their livelihood Are you kidding only about one in 20 Latins off the gringo tourist trail has ever even spoken a single word to a gringo In his whole life and about the climate and climate change Latin America has every single climate you could possibly imagine They've got the stark desert climates. They've got the rainy humid coastal climates They got that altiplano region with constant spring like weather and they've got the high mountains where sometimes they even get snow and Don't forget in over 80% of Latin America. There's four growing seasons So you just push a twig into the ground and come back two weeks later and it's sprouted. I can vouch for that
[25:20] I've seen my gardener do it a million times so anyway I don't recommend gringos come down to a big Latin American city and live in a high-rise unless you've got some permanent source of outside income a Retirement income a pension and annuity or an internet business of some sort What I recommend is you get a place a little bit outside of a city where you can have some land and grow some Avocados etcetera, etcetera have your own well or collect your own rainwater and be kind of self-sufficient even go solar Then you really don't have to worry at all or depend on anyone when the international financial system crashes Believe me It's you first world people and especially your kids who are really gonna suffer down here in Latin America It only harshly affect that five or ten percent of gringo wannabes who are following closely in the footsteps of the gringo
[26:07] materialistic society as in Accumulating heavy debt, etc etc and the rest of the Latin population Well, they'll just get more driveway chickens and grow more tomatoes now Devin you mentioned Argentina Obviously, I have missed a few of my shows lately where I really dissed the place You couldn't pay me to live there now. It's absolutely falling apart economically They've got a massive corrupt bureaucracy and they're trying to push their own version of Big Brother down the throats of their own Citizens by way of price controls currency controls travel restrictions And that's just for starters and now Argentina's government's going after foreigners and tourists In fact, I spoke about that just about two or three shows ago So bottom line the only possible way for expats to live a nice life in Argentina is to have an outside
[26:56] US dollar income source because you're gonna have a hell of a hard time making money in a local economy. That's crashing In fact, I have a very very sad and sobering eye witness report about what happened on the streets The last time the country took a big dump a little over 10 years ago. In fact, this report is difficult to read It's so depressing So if any of you guys and gals out there want that special report Just slip me an email at the expat files at gmail.com or Johnny at expat wisdom.com And I'll send it right over to you bottom line If you want to take two steps backward in your life, just move to Argentina South of the border Down Mexico you've been listening to the expat files living in Latin America coming to you twice a week from somewhere south of the border
[27:42] Email me the expat files at gmail.com and don't forget to check out expat wisdom calm To sign up for your free reports on Latin America. See you next time nos vemos