We retired in July 2017 and have been traveling ever since. One of our reasons for retiring early was that we felt there were ways we could live significantly cheaper than we had been while employed.

Initially, this meant moving to Mexico. We have a house available to us in Mexico where we can live rent-free*. It’s not a completely free living arrangement, since there are the other usual expenses associated with living anywhere, primarily utilities, but these expenses are lower in Mexico than they are in the US. The house is not in a tourist area, so food costs and other living expenses are not inflated. Aside from the cost of traveling to Mexico, the actual cost of living there is very reasonable – at least it is for someone who has savings and pension income in dollars; it’s not as easy for locals who earn pesos.

After almost five months in Mexico we discovered another living arrangement that would allow us to continue to live at very low cost and NOT limit us to living in Mexico, and that is house sitting. Our experience house sitting is described in more detail in other posts.

Now that we have nearly a year of experience, we have some expense data that we can share. We have been tracking every expense for eight months; we did not track our first two months, as we were traveling across the US and then in transition mode and we didn’t feel that period would be representative of ongoing expenses.

Our expense tracking begins with our first full month in Mexico, September 2017, and continues through April 2018. Our average monthly living cost, with just a few exceptions**, is $1,880/month. This includes four months in Mexico and four months in the US, and it includes everyday living expenses as well as travel costs.

I won’t deny that we are cautious about our expenses, e.g., we are not traveling first class, but at the same time we honestly do not feel deprived. The $1,880 monthly average includes a three-week driving trip from Mexico to California to Kentucky, a week-long side trip with family members who visited us in Kentucky, and another three-week trip from Kentucky to New York City to Massachusetts. It includes lodging, eating out, gasoline, tourist activities. We don’t dine at expensive restaurants, but we do eat out on the road, as well as frequenting coffee shops. Then when we are in whatever location we currently call home, we mostly cook at home, enjoying whatever we desire made with good quality ingredients.

One thing missing from this analysis is what we spent when we were both working before we retired. Unfortunately, we did not track our expenses back then. However, I know we were spending everything we were earning, and not putting any more funds into savings than we are now.

The bottom line is, we are living very contentedly, seeing more places than we would have imagined, and spending less money than we expected!

*A note for those who don’t have a rent-free house available to them: in the town where we live, a small, bare bones, older apartment could be rented for as little as $20 per month. A more realistic living arrangement, but still below what most Americans are accustomed to, can be had for $150-$200 per month. Prices go up from there, and if you want to live in American-style comfort in a location frequented by tourists, it will cost significantly more, approaching American prices.

**While I consider the $1,880 monthly expense number to include “all” of our spending, there are a couple of things left out of this number:
• The mortgage on our house (primary residence) along with other expenses associated with homeownership. The reasoning for this is the house is rented out and the rent covers these costs. That’s a separate budget as I see it.
• Some of the remodel costs for the house in Mexico. I considered these as optional, one-time expenses, not ongoing living expenses.
• Tuition and living expenses for our kids in college. I consider these as temporary, and also not representative of our regular living expenses.
• We set aside some money into savings each month for large future expenses, such as when the car needs to be replaced. The amount set aside varies, and instead of including the amount of the savings in our budget, we would reflect the actual cost of any such expenses when they occur.