Rule No. 1: Never lose money.
Rule No. 2: Never forget rule No. 1. ~ Warren Buffet
NOTE: This was written some months ago, and has already appeared at Top 10 Costa Rica. Things have not changed since I wrote it, and ICE has never responded to our complaints, nor have the folks at Tico Times ever followed through, despite numerous emails to the editor and the assigned reporter.
(Part I of II)
When we started the process of applying for residence here in Cost Rica as pensionados, one of the provisions with which we had to comply was to show proof of a monthly income (pension) of at least Six Hundred Dollars ($600.00). We were able to do this, and that fact alone helped us to be well on the way to legal residence by the time it became necessary for us to actually move here (check back on old posts on my blog to see the sequence of events).
We knew, as does anyone anticipating retirement, that one day we would be faced with the reality of an ever rising cost of living, while our income remained at whatever level it began. That is what is meant by the term, ‘fixed income.’ The sad fact of life that we have now had to face is that it already appears that the rising cost has started much sooner than anticipated, and in a place where we thought we would be somewhat protected – Cost Rica. You see, when we started that process, the cost of living was pretty reasonable here. But, sadly, that is no longer the case.
One of the things we used to brag about to friends and family back in the states, and one of the major factors in our belief that the cost of living was reasonable here was that – for many years – electricity was cheap here. Guess what? Not only is it no longer cheap, but the cost of electricity was already too high by the time we arrived here in late April of 2009. Worse, it continues to climb and there is no rational explanation for this.
The reality is that Ticos still do not make much money themselves. The reality is that every business of any size that I have ever seen in this country employs way too many workers. The reality is that I have yet to observe any truly efficient organization in operation in this country. The reality is that Costa Rica brags to the world about its ‘soon-to-be-reached-goal’ of carbon neutrality, while blithely overusing pesticides and herbicides at a truly staggering rate. The reality is that Costa Rica – despite truly draconian laws to regulate these things – allows a multitude of over-polluting vehicles to ply its very bad roads, highways, streets, and byways. The reality is that everything costs too much here!
First, did you know that nationwide there is a 13% sales tax in place? On each and every single item purchased across the entire nation! I’ll bet you that is just about the highest you will find anywhere! Second, did you know that just about every item one might want to purchase in a hardware store, or an electronics store, or a department store, or a novelty store, or a variety store, or even a ‘big box’ store has to be imported into the country? (And, worse, most of the stuff sold in these stores is imported from China, so you can imagine the quality of the goods). Because of that importation, you should be aware that Costa Rica imposes large import duties and taxes, and – of course – you, the consumer, have to pay for the transportation costs.
To go back to the lack of efficient organizations here, I know that I have touched on this before, but you should be aware that it is not possible for a new business owner to operate efficiently because Federal law requires that job duties be very sharply defined and limited. That is why it is necessary to deal with three people in order to purchase one small item in a hardware store, or any of the others listed above. Now, some family businesses can get away with only the business owner dealing with customers, but that is always going to be a small business, where you are likely to make only one purchase at a time, anyway.
The goal that I have been heading towards here today is this: Remember that magic $600.00 income level that has to be proved each month? Well, it is reaching the point where we should be able to do this by showing the folks at Immigration (when it is time to renew our cedulas) just one monthly receipt, the one for electricity. For the month of January our light bill hit ₡235,983.00 (that’s $471.97 at 500 to the dollar, but since the dollar continues to fall, it was more like $476.00 at the time I paid the bill).
That is frighteningly close to the amount I have to be able to prove having changed, and suggests that serious measures need to be taken to avoid total disaster. I keep hearing of Ticos and ex-pats who pay less than ₡15,000 per month, and I readily admit that we do use things they obviously do not. I know that we have an automatic washer and an electric dryer, we have ceiling fans throughout the house, and even on the front porch (hardly ever use those, though). We have fluorescent (long tube type) light fixtures in the kitchen, both bathrooms, one closet, and the guest bedroom. We have a large, American refrigerator. And, then there is this list: toaster, waffle iron (got its first use since we moved here just today, though), coffee maker, blender, and an electric skillet (that gets used a lot), plus a microwave oven that gets a lot of use. My computer is on most of the day, into the night, with an all-in-one printer/fax/copier, large monitor, and a router, all working constantly. Large screen plasma TV, and when we are not watching TV, we usually are watching a movie, either streamed (very poorly) or from a DVD, or the PC’s external HDD. The stereo system, connected to a CD changer, goes much of the day. Let’s see………what else? We do have a 220 volt window unit air conditioner that has not been used for more than a year simply because of what its use did to one month’s light bill. One large yard light burns from dusk to dawn, and there are three motion sensor lights on all night.
Compare us to the Ticos, and you’ll see that they may have a single light bulb hanging from a wire in the ceiling, only a suicide shower head for hot water, maybe a Tico style washer, but no dryer, small (very small) refrigerator that has to be manually defrosted, a Tico style coffee maker that makes only one cup at a time, maybe one outside light that only gets turned on with noise or visitors, no PC, no TV (or only local channels, used for short periods of time), and, that’s pretty much it. No wonder their light bill is so small.
Meanwhile, day by day, our dream of life in paradise is turning into something else, and I can’t say I like what it is turning into. Wish us luck.
Here is what ICE currently charges for electrical consumption, per their website:
Primeros 200 KWh a ¢ 67/kWh
De 201 a 300 KWh a ¢124/kWh
Cada kilovatio adicional ¢139/kWh
And, in American Money, that is:
$0.13 per kWh
$0.25 per kWh
$0.28 per kWh