Controlling Personal Expenses...


Years ago, in our zeal to shed unwanted pounds, Fran and I joined Weight Watchers.  The key ingredient in making the Weight Watchers system work requires you to write down everything you eat.  This technique is called "journaling."  It works because it forces you to be aware of every morsel of food you consume.  This way you will know why your pants are fitting so snugly around your waist! 

The same holds true for your financial success living in Costa Rica.  In order to know how much it costs to live here, you need to know where every single colone is being spent.  Establishing a budget and tracking your expenses is the key to your financial survival and that's what this article is all about.

One day, while having afternoon cocktails with our neighbors, the topic of discussion centered around how much it was costing us to live in Costa Rica.  Our neighbors stated (very quickly and emphatically) that they were living on $1000 a month, but their house was paid for.  That made no sense to us because we were living on $2000 a month (after deducting our monthly rent of $500).  We knew their lifestyle and about what they spent and there was no way in hell they were spending $1000 to live.  So why the disparity?

As we continued to probe, we learned that items (for which they generally paid for in cash) were somehow forgotten about.  They just never thought about that random 7000 colone lunch or the 9200 colones dropped for veggies at the local Feria.  As we began to learn, our friends were spending much more than a $1000, they just didn't realize it.

Perhaps ignorance is bliss but when someone asks me how much it costs to live in Costa Rica, my answer is going to be based on fact and not blind conjecture.

Budgeting - New Ground for Frandy

In the 38 years we've been married, we never lived under a budget.  That's a sad thing to admit but it's the truth.  Everything we netted from our paychecks was eventually spent.  Thank goodness we had the foresight to put the maximum away in employer matched savings plans, otherwise I'd be writing this article from inside a North Carolina homeless shelter!

We built our Costa Rican budget based on a review of how much we were spending back in the States.  We poured through everything to come up with our expense categories and amounts and used this as a basis for forming our CR strategy.   In all honesty, some things were just guesses but other forecasts were based on significant research and valid data.

The key to our success was the accurate and somewhat obsessive zeal to capture the cost of everything we purchased.  This would included anything from a 150 colone highway toll to a 500 colone café to a 30000 colone dinner for two.  There were no exceptions - we tracked every expenditure.

When we visited the Feria on Friday and used cash for our purchases, we brought a small pad and pencil and wrote down everything purchased.  As an aside... we also compared the prices of items purchased at the Feria to those same items at the local supermercados.  The feria was at least half the price and twice the quality.

After months of diligent data entry it became quite apparent that some of our guessing was spot on and some was way off.  Strangely, our food expenses were about the same in Costa Rica as they were in the US.  Admittedly, it grew a little when we moved to the beach as did our beer and wine consumption.  I guess there is something about going to the beach with a beer or watching a sunset with a glass of wine that makes it all justifiable.  And even though gasoline costs nearly double in Costa Rica, our fuel expenses were lower.  Chalk it up to less driving and more walking.

The bottom line is we are dealing with solid, empirical data that affords us a barometer from which we can now measure our spending habits.  If we have to make adjustments, we now have the data on which to base a sound decision.

For Your Accounting Pleasure

If you are so inclined, I am attaching a sanitized version of my Excel Workbook along with some brief instructions on how to use it.  I'd be interested in hearing back from you whether or not you find it useful and also if you have suggestions on making it better.  But please keep in mind, I do not provide any technical support.  If you use the spreadsheet, you need to know a little about Excel.  :-)


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