Living in the Philippines on a pension or fixed income means you might see your spending power decrease. Of course, this is true anyplace and has long been a problem for seniors. I’m not exactly a senior but I’m knocking on the door and now ride in the same boat as they do. I retired early, around 45 due to disability caused by lupus. That’s an autoimmune disorder where your immune system becomes confused and attacks your own body. Mine’s not too bad but over the year it has taken its toll.

When I arrived here in February of 2008 the dollar was at the lowest point since I lived here. It was lean month but only because I spent most of my money on the way over.  It was a month of lots of dried fish. It stinks but its good haha. One problem, it’s mostly air and bone.  Bones that you can crunch and swallow. I could eat a trainload of them and I think I’d still be hungry.

Things soon got better for me though but now they have declined financially for me. I plan to recover though.  That happened because of my online business. I believe is the best way to support yourself when you are in the Philippines. You can learn how by visiting here.  That’s the same free course I signed up to get me started.

The problem of living on a pension in a foreign land though can and has for me, taken on dimensions that are specific to my living in the Philippines. I think I know why.

Monetary Policy and Low Inflation in the USA Devastates Finances for Expats

A huge part of these problems comes from the quantitative easing in the USA. The USA has intentionally set out to lower the value of the dollar. They were very successful at this, in the Philippines the dollar fell from P50 to P40 over about 18 months, I think. While this is a good thing for Americans that live in the USA and especially for any export business it’s a horrible thing for expats. Too much quantize easing will cause inflation and it always makes the price of oil rise.


When the financial crises hit the USA and most of the world, at first, I thought this would drive the dollar up. It would haveCebuView Hotel except that the USA started printing money and lowered the cost of lending money to banks to nearly zero. Quantities easing is commonly referred to printing money but they don’t really print more money.  It’s all done through computers. No new currency is created.

This really isn’t very complicated. Most of our pensions are tied into the inflation rate. The inflation rate in the USA has been very low and deflation was a concern for a while. That means little to no cost of living allowance increase for those of us living on a pension.  If I recall correctly, most of us in the USA got no increase in our pension for two years, got a slightly helpful increase one year and almost no increase in in 2014. Being objective, I can understand that. That doesn’t mean I like it.

But in the Philippines, we’ve seen much higher rates of inflation. During my first year the rate of inflation approached eight percent. This year it has been as high as 4.5 percent. One month back in 2008 it was nearly eight percent.  My cost of electricity in Bogo Cebu went from P7000 to P10,00 and sometimes P15,000. Once I had a bill of P20,000. The higher inflation in the Philippines is calmative. One year it goes up 4 percent, then next year another 4 percent is added to that. Over five years, that’s approaching a 20 rise in the cost of living.

Philippines annual inflation rate accelerated to 4.5 percent in May of 2014 from 4.1 percent in the previous month, driven by higher food, utilities and housing costs. It is the highest rate in thirty months, approaching the upper bound of the central bank’s target range 3 to 5 percent.

Inflation in the USA

http://www.tradingeconomics.com/philippines/inflation-cpi

On the other hand US inflation has been mostly under 2% for the last few years and is currently at about two percent.

US Dollar to Philippines Peso Exchange Rate

 Graphic Source

Banks stopped lending, in an effort to get them to lend, The US Federal Reserve Bank, commonly known as The Fed, started creating new money. They don’t do this by printing more bills. That’s very expensive. Instead they create money with computers.  That’s kind of scary huh? It will be scarier if North Korea ever detonates an EMP over the USA. I hope we have some super-secret technology in place to defend against that or our anti-ballistic missile defense system is more advanced than we know. I do believe it is just a matter of time before someone tries it. It will knock out virtually all electronics in the USA.


Rusty and Jermain in the PhilippinesThe Fed creates money by buying back its Treasury Bills or T-Bills.  Banks are required to keep X amount of money on hand for every dollar it lends out. For example, they can lend out five dollars for each one dollar they have on deposit. This creates a snowball effect when they send money to another bank.

It works something like this: Bank A loans Mr. Smith $1 and he buys a new car with it. The car dealer puts the cash in their bank and now that bank can load out another five dollars. So that one dollar equals 20 dollars in new money.

The banks still wouldn’t loan but having all those T-Bills back in the Fed’s vaults and simulated cash back in the banks that creates a surplus of cash and a lower value for the dollar.

This lower dollar helps exports and since there was no growth within the USA, there needed to be new growth from someplace. Otherwise, the economy would contract and not just slow down to near zero. That too had limited effect because the financial crises was worldwide.

I’ve seen the dollar command as much as fifty pesos during my time living in the Philippines. It was at fifty-five peso per dollar about two years before I got here. The dollar was around P48 for a long time.  The dollar has been below forty-five pesos now for a long time. It was right around forty pesos per dollar a lot. Seems the central reserve bank of the Philippines doesn’t want it to go lower than that or it might have. It was in that range for quite some time.  Right now it’s just under forty-four pesos per dollar.

This is a massive difference for expats. I have not calculated it lately but the difference between 48 and 40 pesos per dollar will pay your electric bills and maybe your rent! When the dollar is at 48 peso then if you send $2000 you will get 96,000 pesos. If the dollar is at 40 pesos per dollar then you will get only 80,000 peso. So you lost $333 dollars and my rend was under $300 so this is a major blow to a person living on a fixed income.

Personal Issues Affecting My Finances

 I find that my own experience provides the best information and that’s why I share it. I want you to have the best information. A couple of years ago my website was getting 3000 new visitors per day.  Google made some changes, my sight got penalized for building backlinks along with millions of others and I watched the traffic to my website fall by 2700 visitors a day to only 300 and then later to less than 200 total people per day.  That was heartbreaking and knocked the wind right out of me. I was on my way to being well off and in a matter of hours it was all gone. The best Philippines expat site on the net went away for all practical purposes. If you’re on the net and Google want rank you on page one, you’re done. I was ranked on about page 20.

Oh, people are still building links but mom and pop operations are playing a very dangerous game if they do it.  It nowMom and Child in Haiyan Evacuation Center takes an expert with a lot of experience to build links. This doesn’t come cheap and is way out of my price range. People try to sell you tools and tell you what percentage of links to have with certain keywords.  While that has some basis in truth to it, it’s seriously flawed. That percentage of links you can build changes dramatically per type of website or market niche. So those of us running low budget operations are in danger of being pushed off the web completely. Building links for most of us will work for a little while, then Google slams you into oblivion.

This websites cost me over $200 a month and now I sometimes lose money that I can’t afford to lose. I will lose money this month. Right now, I have less than 8000 pesos. My rent is paid. Everything is paid except my food and I have to make a trip to Bogo City because I have an $800 check there waiting for me. It has taken five months for it to arrive in Bogo City and I have to go get it. I sent someone to the post office to get it and the post master will not release it to anyone but me or Jessie. If he can release to Jessie, he could release to someone else. After all, he had me on the phone. Once I do get it, I have to send the check to the USA for deposit. Most of the money is already spent but it might put another $100 in my pocket which is enough to get me through the month. I’m not sure I have enough if I don’t get that in the bank this month. Book sales are way down this which puts the hurt on me in a big way.

Whatever happens, I’ll be okay. I’ll make it work. Kind of frustrating that I have some very interesting people I could meet if I could afford to go meet them. With cash running this low, I don’t even eat unless I really need to. I’ve not eaten anything today but it feels like my blood sugar is high.

What does it Cost to Live in the Philippines In 2014?

 I found a new Filipino restaurant to go eat at. It’s right across the street. I thought it was closed until I saw someone come into the hotel with food from there.  Their prices are low based on what I’ve seen and they have fish. I need to be eating fish instead of all this pizza and friend chicken. That’s a heart attack waiting to happen. I wish I liked vegetables but they make gag. There is nothing I can do about it. I was born this way haha.

Living in Cebu on the StreetsIn other words, I cut back all I can.  I constantly have people telling me that living in a hotel is too expensive. That’s just not true. I pay P24,000 a month for my hotel room. It includes a decent Internet connection, all electricity, cable TV, maid service and water. Plus, I’m in the heart of Cebu City, a taxi ride to the biggest mall in the city cost me P100 or about two bucks. That’s the same cost to my doctor or to Mandaue. I am close to everything here.

An apartment in Lapu Lapu would cost me about P10,000 but the utilities mentioned above would cost me a lot and its far from everything. Prior experience tells me I would spend about P10,000 on electricity but some expats report under P5000 for an apartment I Lapu Lapua. I don’t what it would cost me. A taxi ride from there would be close to P500 or more to the places I mentioned above. There are v-hires you can use to SM Mall and then get a taxi to where you’re going. The V-Hire is very cheap only around P30. It could take an hour to get to the city and hour to get back. Most often about thirty minutes though.  I might save a little but chances are good it would also cost me more money.  Also, I have no landlord to deal with and so far my experience with those has not been fantastic. I get treated much better here at CebuView Tourist Inn. I am also in a very interesting area of town, providing me with much to write about and to photograph.  There is another mall about three blocks away but I’ve not gone there yet. I’m so lazy ha ha.

I use to say that living in the Philippines comfortably requires about $1000 USD a month. I have considerably more than that and it use to be able to have extras. I don’t think that low number applies any more. I’d say at least $1200 a month if you don’t have medical expenses. I have more than P10,000 in medical expenses to pay for each month. So now most of my cash is gone once I pay rent, utilities and medical. That leaves me with no fun money to see the rest of the Philippines.

I could get a cheaper room in this hotel and not have an Internet connection. They are hard to find in a hotel at my priceSexy Filipina in Bogo City range. If you know of a cheaper rate with a decent Internet connection, by all means share it with me. For me, $1500 is the bare minimum it cost for me to live in the Philippines in 2014. That’s kind of depressing ha ha. So I need to find a happier topic to write about.

I do think this is an important article though. It will tell you of the long term outlook for you if you decide to move to the Philippines. Even if you have enough money to start to have a life full of adventure things can change. They have for me. I’m still happy, I still have the most potential for opportunity here and things have a strongly likelihood of improving for me too. There are some things going on that I can’t talk about, that will likely increase my income. No I’m not doing anything wrong at all, quite the opposite. It requires anonymity. I also expect to get my online income back up. Traffic on this site is starting to increase and Google is finally starting to rank it. The dollar will get back over 45 to 1 and the cost of living in the USA is still going to be much more. Can you rent an apartment for $200 or $30 a month without government assistance? I can do that here.  Plus I can date beautiful women. Maybe I’ll marry one someday. Trust me, I’d have to live with them for a long time first. Growth will return to the USA, bringing inflation and larger cost of living increases for retirees. In closing. I know other expats are having the same problems I am with their purchasing power. Loss of my business income created a double hit for me. I invite you to leave your comments or ask your questions in the space provided below and if you find this article worthwhile, please share it on your social networks.

By Rusty Ferguson

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