Economic Woes

Maybe the title should be, “Watching your dreams disappear.”

The first year of retirement I made money faster than I could spend it. Even with multiple trips, home renovations and a new car, I ended the year ahead. I thought, “Damn, why didn’t I retire earlier?”

That has all changed. The plans for spending six weeks or more in Europe every year, maybe buying another piece of property, adding an entertainment pavilion or another casita; they’ve all evaporated.

Instead of eyeing a beach house, I’m planting a garden. Instead of perusing travel sites, I’m reading garden blogs and talking to neighbors about learning to can what we produce. We’re building a compost bin out of old wooden pallets. Travel outside of Mexico is temporarily off the board.

As I tried to salvage my portfolio, I thought I was making a brilliant financial move when I converted a bunch of dollars to pesos when the peso fell from 10:1 to 12:1. Two days later it was 14:1. (Instead of making 20% on my money, I could have made 40%.) Well, exchange rates are like the stock market; one can’t really time them exactly.

And I’ve found these neat little things called “CETES” which are Mexican government backed securities where your capital is protected and they pay about 7% APR after taxes. They mature every 28 days and the interest is deposited directly to my checking account, giving me the option to roll over the capital or withdraw, as I see fit. So far, so good. As long as there is not a revolution I should be ok.

Just when my money is at its lowest, governments seem to be coming to me for more.

My property taxes went up 300%. (But to put it in perspective, I was only paying about $300 USD per year. Now it looks like it will be about $900 USD.) I’ve written letters and today I went to the assessor’s office with a lawyer. It is not over yet but it looks like there is no way out. I guess the good news is that the assessor told me that I should be able to sell my property for three times what I paid for it only four years ago. (I asked him to find me a buyer.)

And now the state of California seems to think that I owe them income tax even though I don’t live or work there any more. Something about earning income from a California based company. (Yeah, well some of the properties are in California and some are in Oregon. Two are in Nevada. Does that mean that Oregon and Nevada are going to come after me as well?)

The current state of affairs in the U.S. also has an enormous impact on Mexico. After Oil, Mexico’s second largest commodity is U.S. dollars sent to Mexico by Mexicans working in the U.S. Many of those Mexicans work in the construction industry. Many of them are now out of work. (I sure that is part of the reason that the peso has lost 40% against the dollar. Dollars are now harder to get.)

But when it is all said and done, I still consider myself lucky. I have no debt and a house that is paid for. My overhead is low. I live in a beautiful place with an amazing partner. We have a wonderful circle of friends. We have our health.

If this is just one of life’s wake-up calls, so be it. I can find pleasure in nature, focus on being grateful for what I have rather than cry over what got away. I believe that I can hang on.

However, Go Obama! (I don’t want to have to return to work when I’m 60.)