Stickman Readers' Submissions April 18th, 2005

Living On 759 Bucks

Most if not every foreigner that has spent multiple vacations or more than a few months in Thailand will eventually face one common question —- SHOULD I move to Thailand? I am sure almost everyone will ask “DO” I want to move to Thailand?
And the answer is inevitably yes. But “SHOULD” I move to Thailand?

The answer is “IT DEPENDS”.

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I remember when I first looked at moving to Thailand. It did not take very long to realize BOTH my “potential” standard of living, savings, and “real” earnings would drop. Being the type of person who cared more for financial
security and money than “happiness” at the time, I chose to stay in the West. I still choose the West for the money and financial security, and I have no qualms in saying this. I also have a new reason to want to stay in the West
now for at least half of the year. The reason is simple —- it is the West, it is better, and I don’t want to stay in Thailand too long (no more than 3 months at a time). Thailand is great and it is where I want to vacation regularly at,
but I don’t want to be there all year long.

Why don’t I want to stay in Thailand too long? Because it is like a strong cognac even with a fine and smooth flavor. Too much of it will make you sick. Thailand is the same. The place is best appreciated in smaller quantities, or else you will
tire of all that is great about it, and that would be a real shame.

Am I the only one that has noticed how polluted the Bangkok air is around the “core” areas of Sukumvit and Patpong? After staying for more than a week, I always seem to get sick, tired, and I am sure after 7 years of visiting that it is
the air pollution. The streets smell, garbage is all around, and the idea of finding a park as nice and clean as my part of the States is impossible in the “City of Angels”. I am convinced that full time residents of Bangkok must
pay with at least 5 to 7 years of their life span. Who knows how much of my life I may have already lost with trips and stays over the years! Hopefully, the time in the West in between allowed a chance to recover, but that is perhaps just wishful

Why is it wrong to choose money and financial security over happiness? I know it sounds ironic for a foreigner to say, given Thais and Thai bargirls especially seem to choose money over “happiness” so many times. However, it is true, if
we Westerners look honestly within ourselves, that money is a prime motivator for the majority of the professional types. It is also true that many punters of the Thai red light districts are well paid professionals.

Why would you spend all those long hours in politicized offices climbing corporate hierarchies? It would be a naïve man that said it was only to prove something to himself or for the experience. We work for the money, and except for the truly short-sighted
or extremely shallow, the money is at least partly for financial security later in life. In reality, most bargirls are quite short-sighted (per my observations and experiences) and few really choose money and financial security over happiness.
Most actually choose one fat and unattractive old guy over a younger less unattractive guy for the extra money the older guy may have in his moderate retirement account. I doubt the majority are choosing between true love with prince charming
who lacks any Baht and Donald Trump.

For lawyers, doctors, and highly compensated IT workers, your salaries in Thailand would be substantially less than what it would be in the West. Assuming you find a job at all, it may pay well relative to the rest of the Thais or locally paid expats.
However, there is rarely any validity in the assumption that when the lower cost of living is considered that you are essentially making the same money and coming out even. This is a false assumption. If you convert the earnings and some fixed
savings percentage back to Western currency (USD for example), things do not come out even at all. 100,000 Baht per Month DOES NOT EQUAL $8,000 USD (with a 1:39.5 exchange rate). Some things are cheaper in Thailand but other things are more expensive
in ABSOLUTE TERMS, despite the currency exchange rate. Many punters wanting to believe they are not coming out behind seem to intentionally “misunderstand” this reality.

Let’s consider an example. A Thai McDonald’s hamburger meal costs about 99 Baht and you make 100,000 Baht per month. You eat 3 hamburgers a day for 360 days, which costs 129,600 Baht. The ratio of food expense to gross annual salary is 8.91%.
A USA McDonald’s hamburger meal costs $3.50 and you make $8,333 USD per month (that’s $100,000 USD annually). The ratio of food expense to gross annual salary is only 3.78%. If you live in a more expensive part of the States or the
West, perhaps you will pay $6.00 per hamburger meal (doubtful, but let’s over-assume anyways), which results in 6.48% of your gross annual salary. Now, if you want to say Thai food is cheaper, please note I have already assumed you are
only paying 297 Baht a day for food. If you pay less, you are really slumming it in Thailand’s open air restaurants and street vendors. Anyone saying this is a not a drop in their standard of living will need to really explain how they
lived in America, Canada, the UK, etc. They will also need to explain why the urine and feces ratios of Thai food on streets are ok when it is substantially higher than those found in most Western nations, by virtue of information provided by
the Thai government.

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Let’s now look at housing costs. Let’s assume expat Bob pays 4500 Baht/month plus 800 Baht in utilities in Bangkok. This is not exactly high end living and it costs 63,600 Baht annually or 5.3% of annual gross income.

Compare that to similar housing and space in America and it would be $750 with utilities in my part of the States. The housing cost ratio would be 9%. Remember a Bangkok apartment is quite small by Western standards before arguing rental costs. In reality,
it would be hard to compare at all except in abnormally expensive Western cities like NYC, as most Westerners don’t exactly make it a point to live in single rooms “Thai style”. “Normal housing costs” in the
USA would result in about 12% for housing. Note that the “normal housing” would likely be a house the Western OWNS. How many farang in Bangkok actually own their housing? And if they do, it won’t be a house unless they own
through their Thai spouse or a shell corporation.

Clothing costs are a wash I believe. I am not talking about “Thai grade” clothing at MBK, but true Western grade clothing. Good jeans run 1200 to 1600 Baht or $30-40 USD. Good Nike shoes run 2200-4200 Baht or $55-95 USD. What is the difference
unless you want to buy the cheap knockoffs or 200 Baht shirts? And who is going to argue that MBK clothes are just as good, if they have really lived in Bangkok and tried to wear these clothes into a Thai office? For this reason, I’ll assume
$3,000 USD or 118,500 Baht for clothing.

Now comes the two great offsets to the cheap Thai housing where you live in a box! Entertainment costs in LOS would have run me at least 12000 Baht per month (3000 Baht a week) for a conservative life of going out for a meal and drinks 3 times a week
with a date. And no, I could never live at this low budget level nor have I ever succeeded at doing so. That is assuming no bargirls or someone “to take care of” financially. That makes entertainment run 12% of gross income. In the
USA where I live, a good meal and drinks for two would run $50 for two, which results in annual entertainment costs of 7.2% of annual salary. Now, who is going to argue just eating and drinking with a date 3 times per week is just ridiculous and
not enough for entertainment? Great, I agree with you if we are talking about living in Thailand. How can you assume you can get away with doing so in Thailand, where there are so many attractions from resorts to street whores at discount prices?
Be honest, the average single foreigner will spend much more than 12% of gross income on “entertainment”. In the West, it is quite normal for a busy professional to just go out three times a week, given they are busy. It is also
not uncommon for single guys to go out to find a girl and just get totally drunk on $30-50 USD. I did it and I still do on “guys night out”. I spent a whopping $20 just this weekend and my Thai half spent $15 while visiting a popular
club. And if a foreigner is “taken” with a Thai wife or girlfriend in Thailand, I am doubtful the girl would even allow him to spend only 3000 Baht per week on expenses. The bargirls are great at using other people’s money.
The poor “good girls” have all their friends to entertain with your money. The rich Thai girls are going to spend because well, they are rich, and in Thai society the man pays.

The last great offset is retirement costs. For those that work for financial security, there is always the issue of money set aside for retirement. Your retirement costs will be whatever you have left over after all your other costs. Let’s see
what this means for our two guys, Bangkok Bob and American Larry.

Bangkok Bob’s Costs (Baht)

129,600 Food

63,600 Housing

118,000 Clothing

144,400 Entertainment

455,600 Total

Bangkok Bob’s Ratio of Costs to Gross Income 37.97%

Taxes (assumed at 40%) 480,000 Baht

Savings 264,600 Baht

Savings Rate 22%

American Larry’s Costs

$8,333 Food

$12,000 Housing

$3,000 Clothing

$7,200 Entertainment

$30,533 Total

American Larry’s Ratio of Costs to Gross Income 30.53%

Taxes (assumed at 40%) 40,000 USD

Savings 29,467

Savings Rate 29.47%

With the above figures, it is clear that EVEN when I assume the higher housing costs for American Larry, he still saves more than Bangkok Bob does. Here are the important things to note:

  1. Taxes are progressive in Thailand and in most Western countries. To say you can pay less than the average legal Thai taxes means you are cheating. Yes, you can always come out ahead by cheating the government, but this is not an illustration for cheaters or those that hope money will appear when you get old. After all, you are a farang guy and not a bargirl, are you?
  2. Bangkok Bob saves in Baht. American Larry saves in USD. Let’s say they both save to retire in Thailand. Let’s say they save at an exchange rate of 1:39.5 and that they both are going to save until they can make a 10% return on their savings to live off of 30,000 Baht per month in the future when their exchange rate will drop to 1:25. How long will it take Bob and Larry to get there?

    1. It will take Bangkok Bob 13.6 years to save the required 3,600,000 Baht. The exchange rate does not hurt him as he is ALWAYS earning and saving Thai Baht
    2. It will take American Larry 4.87 years to save the required 3,600,000 Baht at an exchange rate of 1:25. Larry only needs to save $144,000 USD. As the currency exchange is actually closer to 39.5 right now, it would actually take Larry closer to 3.01 years if he started right now.
    3. Notice that if you reduce the Thai tax rate to 30% (it won’t get any lower if you are on salary (hard to hide income in an office job), it would still take Bangkok Bob 8.10 years, and I doubt he can get his taxes that low (to 25%) legally. If he owned a company he could, but if that were the case why is he only making 100,000 Baht per month?
  3. It is true that I am assuming American Larry to be a massive saver. After all, he apparently has no major credit card bills, no big car payment, and no kids to send to school. However, have you noticed that neither does Bangkok Bob? If we add on all the same expenses, the story is not going to change, except that both of them will have to work longer. However, the reality that American Larry can get to retirement faster in Thailand won’t really ever change!!! Why? Because the exchange rate even at 1:25 will be in massive favor of the foreigner working outside Thailand. It is basic math and economics. Anyone that disagrees should state clearly up front that they believe the exchange rate will drop below 1:25. I don’t think the debate will need to continue after that statement.
  4. I have never lived like Bangkok Bob. I have heard stories of guys who have. I know one guy who does. I hear a lot of guys who claim they do but their expenses don’t support their words. I have and do live like American Larry and can retire two of myself in Thailand right now. This is nice, because it means I can actually retire on 60,000 Baht monthly or better yet, earn a much safer 5% annually and get 30,000 Baht monthly.
  5. If you make less money in the West and you plan to teach English for 25,000 to 40,000 Baht per month, you likely won’t save anything while living in Thailand. However, in the West, you can still save 5-18% of your income. In this case, would you prefer eventual retirement with money in the West or Thailand? Or would you prefer to have nothing and be penniless in Thailand. I suspect the answer to stay in the West is even more obvious at the lower income levels, unless you prefer to have your fun now and be a pauper later.
  6. From my experience, anyone that has earned the money to retire in Thailand full-time probably never will. The American Larrys of the world tend to keep working and to save for more, like the ability to travel back and forth as they wish. The Bangkok Bobs of Thailand often never save, and few likely save so much when making 100,000 Baht. So in the end, this analysis is really for the savers who might otherwise get confused by stories of “it’s ok to make 25,000 Baht (per month) teaching English in LOS, because things are dirt cheap here!”. The truth is that you are selling your future away for a bunch of cheap hookers and beer chang.
  7. Make your money in the UK, Australia, or wherever you are from. Make it in the West and spend it in Thailand. That is what the Thais really want and that is also what you should want. You can come back to Thailand to give away all your money to that teeruk bargirl and her herd of dead buffalos later! (LOL).

So what is the bottom line? Well, if you are a punter, do you prefer to get your bargirls and easy sex now, and work a long time while doing so? Or do you prefer to work 3-4 more years in the West, then live off 30,000 Baht per month, which can get you
a moderate sex tourist life style in Pattaya?

And what if you are a genuine clean tourist? Do you prefer to live the rat race in Thailand for another 13 years (while losing 5-7 years of your lifespan from the pollution) or work 3-5 more years in America to avoid working ever again?

The answer is obvious for someone making a good professional salary and with moderate financial planning. Forget Thailand for now. By the way, at 1:39.5 Larry can soon retire on $1200 USD per month in Thailand! That is $759 at a 1:25 USD exchange rate.

As the old saying goes, you cannot have your cake and eat it too. In this case, punters need to remember you cannot get your hair pie today and retire young. Just beat your meat for a few more years and you can have all the pie you want in a few years!

Stickman's thoughts:

I'm in NZ at the moment, so no silly comments from me on submissions for a week or two…

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