4%.  Maybe more.

So, you’ve followed the jlcollinsnh big three:

You’ve avoided debt

You’ve spent less than you’ve earned

You’ve invested the surplus



by Sergey Gusev

Now you’re sitting on your stash and wondering just how much you can spend each year and not run out.  This could be stressful, but it really should be fun. You might even be cheeky enough to ask, “What percent of his own stash does jlcollinsnh spend?”  We’ll get to that.

You don’t have to have read far in the retirement literature to have come across the “4% rule.”  Unlike most common advice, this one holds up to our beady-eyed scrutiny pretty well, even though it is really very little understood.

Back in 1998 three professors from Trinity University sat down and ran a bunch of numbers.  Basically they asked what would happen at various withdrawal percentage rates to various portfolios, each with a different mix of stocks and bonds, over 30 year periods depending on what year the withdrawals were started.  Oh, and both with adjusting withdrawals for inflation and with not adjusting withdrawals. Whew.  Then they updated it in 2009.

Out of the scores of options, the financial media seized on just one of these models:  The 4% withdrawal rate, 50/50 stock/bond portfolio, adjusted for inflation.  Turns out, 96% of the time, at the end of 30 years such a portfolio remained intact.  Put another way, there was just a 4% chance of this strategy failing and leaving you destitute in your old age.  In fact, it failed in only two of the 55 starting years measured:  1965 & 1966.  Other than those two years, not only did it work, many times the remaining money in the portfolio had grown to spectacular levels.

Think about that for a moment.

What that last line means is that in most cases the people owning these portfolios could have taken out 5, 6, 7% per year and done just fine. In fact, if you gave up the inflationary increases and took 7% each year you would have done just fine 85% of the time.  Most of the time taking only 4% meant at the end of your days you left buckets of money on the table for your (all too often ungrateful) heirs.  Great news were that your goal.  Also great news if you anticipate living on your portfolio for longer than 30 years.

But the financial media knows that most people don’t like to think too hard.  By reporting the results at 4% they could report on just about a sure thing.  Roll it down to 3% and we have as sure a thing as we’ll ever see short of death and taxes.  Oh, and that’s giving yourself annual inflation increases.

While 1965 & 1966 were the last and only two years where 4% failed, remember that more recent start years have not yet had their own 30 year measurable runs.  My guess is that if you began your own withdrawals in 2007 and the early part of 2008 just prior to the recent collapse, you will have hit upon two more years in which the 4% plan is destined to fail.  You’ll want to scale back.  On the other hand, if you started with 4% of your portfolio’s value as of the March 2009 bottom, you’re very likely golden.

Here’s the Trinity Study Update.  The prose is a bit dry, it is written by PhDs after all, but don’t feel you need to read it closely.  What you should take a close look at are the very cool charts showing how differing scenarios play out.  If you want a detailed answer to the question of what percent works for you and your own unique situation and attitudes, you can figure it out here.  Plus, you’ll need to refer to those charts to follow along in the rest of this post. So go ahead. Take a look. I’ll wait.

Here’s the Cliff Notes version:

    • 3% or less is a near sure bet as anything in this life can be.
    • Stray much further out than 7% and your future will include dining on dog food.
    • Stocks are critical to a portfolio’s survival rate.
    • If you absolutely, positively want a sure thing, and your yearly inflation raises, keep it under 4%.  Oh, and hold 75% stocks/25% bonds.
    • Give up those yearly inflation raises and you can push up towards 6% with a 50% stock/50% bond mix.
    • In fact, the authors of the study suggest you can withdraw up to 7% as long as you remain alert and flexible. That is, if the market takes a huge dive, cut back on your percent and spending until it recovers.

When you look at the article you’ll see it has four charts.  The first two look at how various portfolios performed over time and at various withdrawal rates.  The difference is the second one assumes you increase your dollar withdrawal amount each year to account for inflation.  So if you look at Chart #1 and at the 50/50 mix with a 4% withdrawal rate, you see you have a 100% chance of your portfolio surviving 30 years.  Chart #2 tells you that if you take those same parameters but give yourself inflation raises, your portfolio’s chance of survival drops to 96%.  Makes sense, no?

Charts 3 & 4 tell us how much money remains in the portfolios after the 30 years have passed and this, to me, is really compelling stuff.  Again, Chart 3 assumes a straight percentage withdrawal and Chart 4 assumes giving yourself inflation raises.  Let’s take a look at some examples.

Assume a 4% withdrawal rate on a portfolio with an initial value of $1,000,000.  Here’s what you’d have left (median ending value) after 30 years:

Chart 3:

  • 100% stocks = $15,610,000
  • 75% stocks/25% bonds =  $10,743,000
  • 50% stocks/50% bonds= $7,100,000

Chart 4:

  • 100% stocks = $10,075,000
  • 75% stocks/25% bonds =  $5,968,000
  • 50% stocks/50% bonds = $2,971,000

Very powerful stuff and it should give you a lot to feel warm and fuzzy about as you follow The Simple Path to Wealth.

As you look over these charts, one thing that should become very clear to you is just how powerful and necessary stocks are in building and preserving your wealth.  This is why they hold center stage in my Portfolio Ideas.

What is likely less obvious, but every bit as important, is the critical importance of using low-cost index funds to build your portfolio.  When you start paying 1-2% or more to active mutual fund managers and/or investment advisors all these cheerful assumptions wind up in the trash heap.  Blogger Wade Pfau in this article says it best:

“For an example of this, the 50-50 portfolio over 30 years with 4% inflation-adjusted withdrawals had a 96% success rate without fees, 84% success rate with 1% fees, and 65% success rate with 2% fees.”

In other words, using the Trinity Study projections with portfolios built from anything other than low-cost index funds is invalid.

So, now to answer that question:  What withdrawal percent do I personally use in my retirement?  I confess I pay so little attention it took a few moments to figure it out and even then it’s not exact.  But this year my best guess is it is running somewhere north of 5%.  If you are a regular reader, this casualness probably surprises you.  But there are mitigating circumstances:

1.  I have a kid in college.  That is a huge annual expense, but in 1.5 years it goes away.  The money for it is figured into my net worth, but it is also earmarked as “spent.”

2.  Since my retirement, my wife and I have accelerated our travels and the related spending has spiked sharply. Not to be morbid, but at my age I am more worried about running out of time than money.  If the market were to tank in a major way, this is an easy expense to adjust.

3.  Sometime in the next few years we will have two nice new income streams coming on-line in the form of Social Security.

4.  Most importantly, I know I’m well under the 6-7% level that requires close attention.

Within that 3-7% range, the key to choosing your own rate has less to do with the numbers than with your personal flexibility.  If as needed you can readily adjust your living expenses, find work to supplement your passive income and/or are willing and able to comfortably relocate to less expensive places, you will have a far more secure retirement no matter what rate you choose.  Happier too I’d guess.

If you are locked into certain income needs, unwilling or unable to ever work again and your roots go too deep to ever seek out greener pastures, you’ll need to be much more careful.  Personally, I’d work on adjusting those attitudes.  But that’s just me.

My pal, Mr. Money Mustache, did a fine piece on this a while back.  It is as good an explanation/defense of the 4% rule I’ve yet to read. Nothing, of course, is guaranteed. That why we all need to remain flexible, alert and, well, Mustachian.

Last Spring I dealt with a lengthy comment from reader “ddrem” describing the disastrous position the world is in today and calling into question my portfolio recommendations accordingly. (See: https://jlcollinsnh.wordpress.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth)

No worries.

sea by Gusev


by Sergey Gusev

Not only will we muddle thru, it is my belief we are on the verge of another great bull market. For lots of reasons, not the least of which is simply these things go in cycles and the drumbeat of pessimism (always a bullish sign) seems unusually high.  People seem to believe the world will end on their watch. But it never does. It is the dark that sets the stage for the dawn.

If I’m wrong and the dawn is still a ways off, that’s OK too. There are lots of adjustments I can make and options to explore.

4% is only a guide. Sensible flexibility is what provides security.

fiscal cliff

You can’t turn on the TV or radio or pick up a newspaper these days without being confronted with scary talk about the Fiscal Cliff and the doom that awaits us should we hurdle over it into the abyss.

This is (mostly) a financial blog.  I intentionally avoid politics, primarily because that subject turns so ugly so quickly.  So I thought long and hard about whether to broach this subject.  It treads dangerously close to the political line where I simply do not want to be.  Yet, this Cliff business does have financial ramifications.  So, here goes….

Are we really going to go over this Fiscal Cliff?


Will going over the Fiscal Cliff be the disaster we’ve been lead to believe?

Depends on how you view our nation’s (the USA for my international readers) debt and deficit.  The greater these problems are in your mind, the better going over the Cliff will be.

How can going over the Fiscal Cliff be a good thing?

Well, you need to understand the two things that will happen.  One, the Bush-era tax cuts will be allowed to expire.  That means a tax increase for everybody and more revenue for the government.  Two, dramatic across the board spending cuts will automatically take effect.  This will lower government spending.  Both these things will happen on a scale unlikely to be accepted by either party thru negotiation.  This great scale of increased taxes and reduced spending will have the greatest possible impact on reducing our debt/deficit.

Gee, that sounds great!  What’s the problem?

That depends on who you are.  If you benefit from a program that gets cut, you probably won’t like it.  When you have to pay more taxes, you won’t like that either.  Oh, and some economists think the combination of reduced spending and increased taxes could trigger a recession.

But our politicians will reach an agreement and save the day, right?

Could happen.  But my bet is we’re going over.

But why?

Because to reach an agreement would mean both sides will have to take something, tax cuts or spending programs, away from their constituents.  That’s something no politician likes to do and few have the stomach for it.  Plus, both sides win by letting us go over.

Both sides win?  How’s that?

These are smart people.  Both sides know that we need to cut spending and increase taxes.  Both happen when we go over the Cliff.  When we do both sides can blame the other for not coming to an agreement to avoid it.  Plus, then they can get back to doing what they really like to do.

Doing what they like to do?  What’s that?

Why giving stuff to their constituents, of course.

Ah, OK.  How’s that work?

Think of it this way:  Going over the Fiscal Cliff is essentially hitting the big Reset Button.  Taxes spike up and spending programs across the board get slashed.  Both happen more dramatically than anyone really wants or needs.  So now the politicians can get to work restoring the favored tax cuts and spending programs that have the broadest support.  In the process, they get to look like heros.

Now I get it…

Right.  Instead having to explain why they raised your taxes or cut a program that provided jobs in your city, they can tout how they cut taxes and increased spending on those critical programs we all love.

Wait!  Doesn’t that get us right back where we started?

Not immediately and not if they’re smart about it.  This will be a great opportunity to leave those tax increases and program cuts everybody really wanted in the dust without having to take any responsibility for them.

Wow.  These guys really got lucky the way this is going to work out.

Lucky? Maybe not so much.  Remember, these are the same folks who designed and created the Fiscal Cliff in the first place.

Warning:  As always I encourage and welcome your comments.  But anything remotely touching on partisan politics, either side, will be deleted.  This is not the place.

ecuador map

If you’ve been reading the last few posts focused on my recent trip to Ecuador, you know one of my objectives was to take a look at property for sale both in Cuenca and in and around Bahia on the coast.  I like looking at property, it is an excellent way to get a feel for a place and we are seriously considering relocating in a couple of years.  All good reasons, and the fact that it gives me material for this post is just icing.

Back in February of this year I presented my way of running the numbers in the rent v. own analysis:  https://jlcollinsnh.wordpress.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/  I like this approach better than others because it is simpler and it focuses on evaluating the choice you are actually making rather than some academic exercise designed to prove a point.

If you haven’t already, you might take a moment to give it a read as it lays out the thinking behind the analysis of a couple of Ecuadorian properties to follow.  Go ahead.  I’ll wait…

OK.  If I’ve learned anything from putting up that post it is that people have very strong emotions wrapped around their personal decision to rent or buy.  In it I was candid about my own inclinations.  I have a bias towards renting.  As soon as I can unload the house I own, I’ll happily go back to the carefree and blissful renter’s life.

But I’ve also owned at various times in my life, so I’m not unsympathetic to the appeals of having a place you can call your own.  While we were raising our daughter the school system, lifestyle and neighborhood we wanted were all most easily accessed by owning.  Now those days are past and my wandering spirit is getting antsy.   I’m not a putting down roots kinda guy so the flexibly of renting has an outsized appeal.  For others putting down roots is vitally important and so owning has, for them, its own outsized appeal.

Regardless of where your personal inclinations lie, I think it is vitally important to run the numbers.  At least if achieving wealth is important to you.  If you are going to own a house, or not, it behooves you to know what the financial implications are.

For instance, in my case, running the numbers tells me that owning my house costs a $5-8000 annual premium to renting the apartment I have my eye on.  That’s steep by any measure.  Given that the apartment is the far more appealing living arrangement to me, my path is clear.  But so far, the market has kept me trapped.  This, too, is an important lesson:  It is almost always far easier to buy than to sell.  Houses, cars, appliances….just about anything. Something to keep in mind when the buying siren’s song is calling.

While renting holds more appeal for me than owning, and my guess is that once this house is sold I’ll never buy again, never say never.  I am first and foremost a financial guy.  If running the numbers in some future situation points to a fiscal owning advantage, I may yet again pull the trigger.  Living in Ecuador may present just such a scenario.  For the purposes of the analysis below I’ve used the asking price for both sales and rental.  Negotiations would lower both, but we can assume in proportion.  Let’s take a look.

Property #1.  Cuenca Condo: 2-bedrooms, 2.5 baths.  Veranda.  ~1500 square feet.  $162,000 to buy/$800 per month to rent.

tomebamba river

Tomebamba River View

This is a beautiful property in a solid brick building about two years old.  Finishes are top quality and it comes furnished, also to a top quality level.  Needs nothing, as they say.  It is on the second floor and the veranda provides a lovely view across the street to the river and the park that runs along side it.  Using the formula from my February post:

— $5670 opportunity cost. This is the 3.5% dividend our 162k could be earning in VGSLX.  Opportunity cost is frequently overlooked and is often the largest cost of all.  If you really want to know what the numbers have to tell you, its inclusion is critical.  What it is and why I use VGSLX as my proxy are both explained the February post.

— $1252 in annual cash expenses comes from these:

  • Heat and AC costs: 0.  Buildings in Ecuador don’t have heat or AC.  Neither are needed.
  • $1128 HOA (home owner’s association) fees @ $94 per month.
  • $124 real estate taxes per year.  No, I didn’t omit any zeros.

–$6922 total annual cost of owning and operating the condo.

v. $9600 annual rent @ $800 per month =

— $2678 annual premium to rent.  Advantage:  Owning.


Property #2 is in one of those tall white buildings above

Property #2.  Bahia Condo: 3-bedrooms, 3 baths.  Veranda.  ~1600 square feet.  $145,000 to buy + $10,000 to renovate/$800 per month to rent.

This condo is on the 4th floor of a solid brick building about 16 years old but the finishes are poor quality and showing their age. It comes serviceably furnished, but I’d want to upgrade were I to live in it.  As a rental you could get by, but upgrades would bring more rent and the rental figure I use below assumes the upgrades.  It faces the Pacific Ocean and the view from the veranda is pretty spectacular.

— $5425 opportunity cost. This is the 3.5% dividend our 145k purchase price and 10k estimated renovation cost could be earning in VGSLX.

— $1825 in annual cash expenses comes from these:

  • Heat and AC costs: 0.  Buildings in Ecuador don’t have heat or AC.  Neither are needed.  Temperatures in Cuenca range from about 60-80F and on the coast from 70-90F.
  • $1200 HOA (home owner’s association) fees @ $100 per month.
  • $500 special assessment for painting the building.  As this is a 16-year-old building my guess is these ‘special’ assessments will become a regular thing.  In Ecuador HOAs tend not to build contingency funds from the monthly dues.  Special expenses are a handled with special assessments.
  • $125 real estate taxes per year.

–$6750 total annual cost of owning and operating the condo.

v. $9600 annual rent @ $800 per month =

— $2350 annual premium to rent.  Advantage:  Owning.

Two things immediately leap out to me:  The lack of HVAC costs and the super low real estate taxes.  Looking at the numbers we ran last time on my house v. renting, these alone go a long way toward tipping the rent v. own balance. My real estate taxes in NH are over $8000 annually and heating oil runs over $2500 a year.

So clearly the first thing you should do upon arrival in Ecuador is buy yourself a home, right?  Well, lots of gringos do exactly that, but your pal jlcollinsnh is going to suggest you carefully consider a few things first.

1.  The “gringo tax.”  Like many overseas retirement havens, the gringo tax in Ecuador is a very real, if unofficial, thing.  Now, if we are talking a $2 taxi ride and the driver is asking for 50 cents more than he’d charge a local, my advice is don’t sweat it.  Pay the man and feel good he has a bit more to bring home to his family.  If we are talking about a 150k house, I get a bit more hard-nosed.

2.  There is no MLS (Multiple Listing Service) in Ecuador.  You’ll get no listing sheet with the price clearly shown. The price is whatever the realtor or owner tells you it is and that number may be, in fact very likely is, different than what they told the last person or will tell the next.  In my short time looking I’ve had one realtor tell me an apartment cost 145k and another 90k for the same place.  With a couple of new American friends I looked at a rental for $750 per month.  It had been offered to friends of theirs two weeks earlier for $950.  One gringo owner told our realtor he was only interested in selling at “the gringo price, not the local price.”   Purchase price or rent, it is very difficult to determine the actual market value and very easy to overpay.  Of course, a mistake made renting is lots easier and cheaper to correct.

Cuenca apartment

Nicely furnished Cuenca Apartment.  $750 a month for us, $950 for the people who saw it before us.

3.  There is no set way or commission percent realtors get paid.  It depends on the deal they strike with their seller and/or buyer.  Maybe the seller pays the commission.  Maybe the buyer.  Maybe both.  In some cases the seller will set the price and the realtor’s commission is whatever more she can sell the place for.  If the seller wants 100k and you can find a gringo just off the boat to pay 170k, 70k is your commission.  By the way, don’t think for a moment dealing with gringo sellers and gringo real estate people will avoid these situations.

4.  You shouldn’t be buying property in any market you don’t first understand.  Because there is no MLS, any given realtor will only be aware of the few properties available to which they are personally connected.   No one person can or will show you everything available at a given time.  To really understand this market takes much more time and effort than here in the USA.

5.  Ecuador is a 3rd world country.  As such dramatic political changes can come swiftly.  If push ever comes to shove, no politician will favor the needs and interests of expat property owners.  As one expat told me, “While things are great now, we are only ever one election away from a presidential order expelling all foreigners.”  From what I can tell, in Ecuador that’s highly unlikely.  But I’ve known enough people over the years, my wife included, who have fled revolutions with only the clothes on their back that I don’t  take it lightly either.

6.  Even the most adamant proponents of homeownership concede to have a chance of making it work financially you need to live in the place at least five years.   Ecuador is no different.  Yet I heard several stories of gringos who arrived, bought and three months later were back in the USA having decided the reality didn’t match their dream.  And stuck trying to sell.

7.  This is, for all practical purposes, a cash market.  Mortgages are tough to come by for locals and near impossible for expats.  Rates, assuming you have excellent credit, start at 15%.  If you have the cash, you are in a strong position.  Most American expats are renters.  Some because of point #5 but many others because they are living on Social Security month-to-month.  Something you can quite comfortably do here, BTW.  The other buyers are wealthy Ecuadorianos who also have cash.  But remember, this is still a poor country and those folks are few.

8.  You should never buy property without a clear understanding of how and to whom you’ll be selling.  It is well to remember that as attractively priced as stuff looks here, when the time comes those expats and locals with the cash to buy from you may be few and scarce.  In Ecuador, as in the USA, cash buyers are rare.  The difference is, in Ecuador they are virtually the only buyers.

That all sounds pretty grim, but the truth is the place calls to me.  If in a few years we make the move, here’s my approach:

1.  I’ll put our best and most treasured stuff in local storage here in NH; sell and dump the rest.

2.  We’ll move to Ecuador, probably Cuenca to start, with a couple of suitcases and set up month-to-month housekeeping in an apartment/hotel like Apartmentos Otorongo where I stayed for part of this past trip.

3.  From this base I’ll focus on finding a furnished rental like Condo #1 above.  This I’d rent for a year.

4.  During that year I’ll look at lots more property, both to rent and to buy.  I’ll talk to lots of expats about what they own/rent and how they found it.  By the end of this time I should have a very clear idea of what true market values look like.

5.  I’d also travel extensively in Ecuador this first year.  It’s a spectacular place and I want to see it all.  At each step I’d be evaluating where in the country to settle.  Cuenca and/or the coast look like the right places now, but who knows?

6.  At the end of this year+, I’ll also have a much clearer idea as to whether Ecuador itself is just a couple of year fling or the place I use as my traveling base for the rest of my days.

7. Based largely on the answer to #6, I’d make the rent/buy decision.

8.  Assuming we decide to stay for the long-term, the last decision is whether to pay to have our stuff shipped or to buy new furnishings locally.  Since I have little emotional attachment to the stuff I own, and since beautiful local art can be found and absolutely gorgeous wood furniture custom made for less than shipping costs, that looks like the path I’d take.

Despite all my cautionary points above, I love what I’ve seen of Ecuador.  I wouldn’t be so seriously considering relocating there otherwise.  I think the country’s future is very bright and they are on a strongly positive path.  My biggest dilemma really is where to settle.  I’m a city guy and I love Cuenca.  It’s small enough to be comfortable and large enough to have the amenities that make cities a joy.  Plus it is wonderfully walkable.

san-clemente beach

On the other hand, there are several beach towns up and down the coast with a very appealing laid back vibe.  Beautiful sandy shores that seem to stretch forever dotted with little beach shack restaurants serving seafood and local beer.  Not a bad way to while away some time.  One coastal expat described his town as what Cabo San Lucas used to be twenty years ago before it got overrun with yachts and multi-million dollar homes.  He hopes it doesn’t happen to the Ecuadorian coast but if it does he figures he’ll just cash out and find the next unspoiled place.  Not bad figuring seems to me.  Hmmm…..

Maybe I’ll rent in Cuenca and buy a little beach shack on the coast….


That title question was posed by a blog reader and, since I obsessively track expenses anyway and my guess is if you’re a reader of jlcollinsnh you’d be curious, it suggested a fun and easy post topic.  Since I was actually there only 27 days, that’s $134.83 per day.  But you could do it a lot less expensively and below I’ll point out how.  Of course, you could spend much, much more too.  But you don’t need my help for that.

But before we get into the specifies, I want to share this cool story with you.

If you’ve seen the movie “Romancing the Stone” you might remember this scene:

Kathleen Turner (Joan Wilder) and Michael Douglas (Jack) find themselves in a small Columbian village and at the door of the local drug lord seeking transportation.  It’s looking grim as the drug lord sticks a huge pistol in their faces and his armed and sinister looking compadres are closing in.

Jack:  “OK, Joan Wilder, write us out of this one.”

Drug lord:  “Joan Wilder?  The Joan Wilder?!  I read your books!  I read all your books!!”

I’ve never personally met one of my blog readers.  Of course I know those friends and family who read it.  And I’ve had coffee with two other bloggers who read mine as I read theirs.  But I’d never met a person who’d independently found the blog and started reading it with no prior connection to me.

After a long day of bus rides and planes I landed at the Quito, Ecuador International Airport around 9 pm.  Since this ain’t my first rodeo and I knew I’d be dragging, I had arranged for someone from The Travellers Inn where I was staying to meet me.

The Travellers Inn

Sure enough there was a young man waiting for me as I emerged from Customs holding up a sign with my name on it.  Shamefully, especially since he didn’t stick a pistol in my face, I have forgotten his name.  But, as I said, I was dog tired at the time.

He put up graciously with my bad and broken Spanish on the walk to the car before switching to his own perfect English.

“I read your blog,” he said.  “I read all your posts!”

Airfares:  $1046

American Airlines flew me Boston – Miami – Quito and back for $812.

Lan Airlines flew me from Quito to Cuenca for $80.

Aero Gal from Cuenca back thru Quito and onto the coast at Manta, then Manta to Quito for the flight home, $154.

Lan and Aero Gal are both Ecuadorian airlines and are absolutely first rate.  The planes were new and, unlike American airline companies, they haven’t jammed every possible seat into the cabins.  I actually had comfortable leg room and was served a tasty empanada snack and drink (even though all of these in country flights were less than an hour) by flight attendants who were bright, friendly and gracious.  Not because it’s in their job description but just because they are bright, friendly and gracious people.  It was like what flying in the USA used to be like in the 1960s.

Hotels:  $1137.65

Not much you can do about the airfares we didn’t already do, but if you wanted to take this trip for less than I spent, cheaper hotels and hostals would be a place to start.  The hotels I stayed at were mid-range or better.  You could easily shave $5-600 off here.  Of course, you could also spend lots and lots more.

My night at the Travellers was $47 and included an excellent breakfast.  The room was clean, simple and in an old converted house.  Private bathroom and a good shower with plenty of hot water, which is not always the case in South America.

Cheryl’s farm house

The next several nights were spent with Cheryl at her farm.  By way of thanks for her hospitality, I took her and her boyfriend Rich out to eat a couple of times for a total cost of $27.50 (accounted for in the restaurant category) which made this the bargain of the trip.

Her EcuaTruck.

Been rolled once by the farmhand’s son and so now has serious character ground in.  Fortunately with no one in the bed.  It is the local custom to stop when you see someone on the side of the road and offer a ride.  They hop up and tap on the roof when they want to be left off.

Her place is about 2.5 hours out of Quito near the tiny town of Santa Elena, far up a very rough rock and dirt road. We had a great time and laid out plans for the Retreat.  I can report now that this will almost certainly happen. Date: September 7-14, 2013.  In addition to Cheryl and myself, two additional presenters will be on board.  Both are seriously interesting guys I look forward to hanging out with and I bet you will, too.  We’re still massaging the details and when the time comes I share them with you in a post right here.

I stayed here.  Join us for the Retreat and you will too.

As part of my relentless dedication to you, my readers, I then spent two nights at the El Encanto Resort.  We plan to hold the Retreat here and I wanted to be sure the rooms, service and food were up to par.  Work, work, work.  They were.  One example:  The resort is built into the side of a ridge and it is about a 45 minute hike down to the river and waterfall.  It is a bit steep and a somewhat tough climb back out.  When I made my way back to the top, Veronica the resort chef was waiting for me at the trail head with big smile and a glass of fresh lemonade.

Two nights and three meals a day: $124.

From there I made my way back to Quito and flew on down to Cuenca for a couple of weeks.  This was the longest stop of my trip and for good reason.  Check it out:


Photo by:  Dario Endara

Home in Cuenca for 16 days was Apartmentos Otorongo at a cost of $500.  I had a small apartment with a kitchen so I had a place to stock and prepare food for the rare occasions I felt like staying in.


My apartment was the door on the far left in the back of the photo, second floor.

There is a lesson here:  The longer you settle in to a place the less expensive per day the accommodations become. Otorongo is run by Xavier y Samara Montezuma, their family and staff.  Just wonderful people and within a day or two it felt like home.  Sara and Angelica took especially good care of me and they put up with my broken Spanish.  


The last five nights were spent on the coast in the town of Bahia.  Patricio Tamariz was my host at his Hotel Casa Grande, which is exactly like it sounds like:  A grand home converted into a hotel.  It is located near the tip of the peninsula shown in the photo above.  Easily the most luxurious place of my trip it was also the priciest at $466.65 or $93.33 per night.  But as is frequently the case, you get what you pay for.  This is a first class place.

Each morning began with a unique and tasty breakfast served poolside by the genuinely friendly, caring staff. Ecuadorians are remarkably hospitable.  I am impressed enough that it is high on my list as a destination for Retreat II.

Oh, and if you go try to spend some time over coffee with Patricio.  Fascinating guy who, among other things, served as the Executive Director, Ecuador Tourist Authority.  He’s traveled all over the world presenting the charms of his country.  He has endless great stories well told he’ll share in flawless Spanish or English, your choice.

Inside Casa Grande

Patricio also owns and operates Chiriji (Chee-Ree-Hay), an ecolodge/archeological site with bungalows on a pristine Pacific Coast beach.  I’ve not been to it, but I’ve met people who have.  Those conversations have convinced me I need to go.  These pictures, too:

Food and water:  $44.   

This covers the bottles of water bought during the trip and the groceries with which I stocked my Cuenca apartment. Milk, cereal, cheese, sausage, yogurt and such.  Also, stunningly good freshly baked croissants for a dime each.

Restaurants:  $479.

I took most of my meals in restaurants.  The most expensive meal was in a first class Cuenca restaurant with two other expats I’d met.  We all had filet mignon and downed a couple of bottles of pretty good wine.  Shared a dessert, too. My share was $30, fully $10 more than the next most expensive meal.

The least expensive meals were “platos del dia” in local Ecuadorian joints.  Juice, soup, meat (or chicken or fish), rice, vegetables and most often a dessert.  A banana or scoop of ice cream is typical.  $2.50.  If you focused on these places you could cut my restaurant tab by 2/3rds or better.

Tours:  $515.

As regular readers know, I am not a fan of tours.  But I took two on this journey and only one was a mistake.  The $500 one.

Visting Refugio Paz de las Aves was definitely not a mistake.  This bird reserve is run by Cheryl’s pal Angel Paz and his family.  His story and that of the reserve is seriously cool and well worth checking out by clicking the link.  For $15 you get to show up at dawn and hike down the trail to various viewing stations where you’ll get to see cool birds like these:

Cock of the Rock

Photo by Crijnfotin

I don’t know what this one is, but I saw it.

We also saw several others, including about a dozen different types of hummingbirds.  In addition to the birds, we sighted four French birders armed with cameras and three foot lens.  These, it seems, are also common in the Reserve.

Back at the house, a great breakfast is included.  We had strong coffee and Bolons, balls of mashed plantains with meat and cheese in the center.  Yum!  Since I was a friend of Cheryl’s it took more than a little effort to get the Paz family to accept my $15.

The remaining $500 was the price for a three day real estate tour I signed up for.  From the moment I found it I had serious misgivings.  It was offered in an e-newsletter on Ecuador I subscribe to.  This thing is filled with relentless self promotion and sales pitches by the author, normally a red flag.  When I emailed for more information, getting my questions answered was like pulling teeth.  Even then, the answers were frequently vague and unclear.  More red flags.

I stepped away from it for several weeks, but ultimately pulled the trigger.  Since I had only a few days on the coast and wanted to see some property while I was there, the concept perfectly fit my needs.  The email stating the hotel would be discounted to $65 per night sealed the deal.  Of course, that turned out not to be true.  I remain unsure if the promoter was simply clueless or just lied outright.

I landed at Manta airport figuring there was a maybe 50% chance that someone would be there to meet me and working on my plan “B”.  Over the next three days I heard even more bitter complaints from the other people on the tour.  None of us knew precisely what our $500 covered.  Some thought hotels.  Some thought meals.  Nope.  Not even, for instance and as it happened, the return trip to Manta airport after it was done.

For all these reasons, I’ll not be naming this tour operator here.

The irony is, the tour itself turned out great.  This is due to Xavier Gutierrez Salazar, the Bahia local who actually took us around.  Xavier is an extremely knowledgeable guy, especially concerning the ecology of Ecuador, his main passion.  In addition to running the occasional tour, he is a real estate broker, operates a shrimp farm, is an environmental activist and launched Green Global Solutions to promote environmentally friendly and sustainable projects.  Oh, and he is developing just such a beach house community on the shore a bit north of Bahia.

When I stepped out of the Manta airport, Xavier called my name.  I guess picking out a big ugly solo gringo isn’t that tough.  He was there with his cousin Jorge and his drop-dead gorgeous wife, and mother of his four beautiful little girls, Maria.

We had great fun together running up and down the coast all day and eating lunch at little beach side shacks with beer and seafood.  Each evening he took us to small, friendly, inexpensive and tasty local places for dinner.  He’s one of those guys who knows everybody, local and gringo alike.  Often we’d stop to meet and chat with them.  One night after dinner we approached a small house.  Music and singing could be heard a block away.  Knocking on the locked door, Xavier called out whatever needed to be called out.  Inside was a small group — Ecuadorians, Americans, a Nicaraguan and an Australian — singing, playing music, talking in English, Spanish and the odd mix of both.   We had dessert.  Someone brought out a bottle of the local liquor.  Clear as water and clearly with the kick of a mule.  Never has my Spanish been better.

My advice, should you go:  Skip the irritating $500 middlemen.  Contact Xavier directly:  nxcoastal@gmail.com  Tell him I sent you.

Ground Transportation:  $255

The big expenses here were the $45 taxi each way for the 2.5 hour trip from Quito to the farm, $30 taxi from Bahia back to the Manta airport, $18 bus from New Hampshire to Logan Airport going out and $100 for a car to take me from Logan back home on my return.  I splurged on this last because I knew by the time I landed I would have been up for 36 hours and flying all night.  The balance was taxi fares around Cuenca which are mostly $2 a ride.  I also tried the city bus but that was only a quarter.

Odds and Ends:

Chocolate.  Ecuador produces what is likely the finest, purest chocolate in the world.  But it ain’t cheap.  The two bars I brought home cost $18.

ATM fees:  $4.50.  For one withdrawal. Yikes!  But cash is king in Ecuador.  Credit cards are only accepted in the more expensive places and then with a premium of 3-4% to cover what the cards charge the merchant.  Makes better sense than, as the USA merchants do, building the fee into the price and charging it whether you use a card or not.

By the way, Ecuador uses the US Dollar as their official currency.  If you’ve ever wondered what happened to all these coins…

Sacagawea Dollar

..they’re in wide and popular circulation in Ecuador and you’ll hardly ever see a dollar bill down there.  So unpopular are they in the USA, that last year when I tried to spend the leftovers I brought back the sales clerks didn’t know what they were.  Took some convincing that they really are US money.

Laundry:  $7.20.  Dropped off and picked up.  Done twice.

Book:  $10.  Madrigal’s Magic Key to Spanish by Margarita Madrigal.  This book came highly recommended by an expat I met in Cuenca and now I highly recommend it to you.  If you are interested in picking up Spanish.

Tips:  $20.  

Charity:  $100.  Cheryl has the habit of helping her frequently very poor neighbors.  Since there is no charitable organization pulling expense money off the top, every cent goes to helping.  Plus, these are people she knows and she can see the impact up close.  While I believe in more formal giving, I prefer this up close and personal approach when it presents itself.  BTW, we’ll also be giving at least 10% of any retreat profits in this fashion.

Want to do it for less?

Were I traveling as I did in my 20s, I’d go the hostel route and shave about $600 off the hotel bills.  The restaurant costs could easily be cut in half, saving $240 and with more use of buses ground transportation would drop by $130. Skipping the real estate tour, chocolate and book saves another $528.  Total saved $1498, cutting the trip cost to about $2138 and you’re still tipping and giving away some money to help others.

See you in December….

Posted: October 21, 2012 in Life

View of the Valley from the Retreat

As you gathered from the last post, I’m off to Ecuador until December.  When I get back you can look for posts on Deflation, Target Date Funds, Withdrawal Rates, running the rent v own numbers on some of the property I will have checked out in Ecuador and more on the possible Retreat/Gathering where, if you show up, we’ll get a chance to spend some time together.

Meanwhile if you just can’t wait, and you haven’t already, you can tune into my recent Interview and hear me now.

Should that not be enough, here’s some seriously cool stuff to help keep you amused until December:

One of the best things about our summer in South America was all the, mostly young, people we met on their own extended world journeys.  Wonderful adventures spanning months and sometimes years.  But not one single traveler had the United States on their itinerary.  Some, I think, are intimidated.  That’s too bad.  I’ve traveled across damn near every state and these Americans are for the most part a friendly, open and welcoming bunch.  But what really set me back were the people who said, “Well, there’s just not much to see in the USA.”  Now that left me stunned.  Not much to see???  Come along.  Let’s Fly over America together for a look.  It’s a little plane, so hang on!!

Pretty dramatic, eh?  And just between us, they left out some of the best parts!!

Here’s some Americans having “Call Me Maybe” music fun.  Wish I’d been there.

And here’s a guy sharing the love with his pet Cobra:

As it happens, I’m not afraid of snakes even if I’m not up for any Cobra kissing.  But this guy sets me back:


He’d be right at home with these folks:  This series of pictures will pucker ya right on up.  If not, they’re still cool to view.  Here’s one:

Let’s go around the world with a Brazilian beat.

Or we can run around the world with my pal Carlos.

Random Picture that Touched Me

 100 Abandoned Houses in Detroit

Think you’d like to own one?  Over 22,000 hit the auction block in October 2012.  Minimum bid:  $500.  Nope, no zeros missing.  Even then predictions are 10,000 will fail to sell.

These are not in Detroit, but still are haunting photos of houses in the process of returning to the wild.

Late November brings the Thanksgiving Holiday to the USA.  It is a bad time for turkeys all across the country.  But you can listen to one take a musical stand here:


Motivating French women to exercise:


Here are some blogs that have been keeping me entertained and informed:

 Outrageous Optimism

Can I Retire Yet?

The Mad Fientist

Street Smart Finance

Afford Anything

The Kechi One

Pie Town, USA – 1940

About 5 or 6 years ago, I was in Pie Town, New Mexico.  I had driven over from Phoenix, Arizona where I’d been attending a conference to visit my pal Wolfgang who had a ranch six miles out-of-town.  He flew in from Albuquerque putting his small plane down on the dirt strip he’d laid out on his land.  Since I had a couple of days alone at the place before he arrived, I drove over for lunch in the Pie Town Cafe one afternoon.  Pie Town is not much bigger today than in the photo above and a stranger in the local cafe still prompts curious stares.  Eventually the cheerful, inquisitive waitress pried out what brought me to town and who I was there to see.  Smiles all around and agreement my friend was their friend and a heck of a fellow to boot.  Click on the caption under the photo for more shots circa 1940.  Beginning about six down the shots are all Pie Town.

Meet me in Ecuador?

Posted: October 14, 2012 in Chautauqua, Travels

Later this month I’ll be returning to Ecuador for several weeks.  I decided to do this to amuse myself and, well, because being retired I can.

Once I decided to go my attention turned to what might be interesting to explore while I’m there.  Mostly I’ll be following my own advice  avoiding the sights, lingering in cafes and parks and chatting up the locals in my broken Spanish.  But I do have two plans.

The first relates to the title of this post.  About six weeks ago I came across this website:

Above the Clouds Retreats

There I met Cheryl, a woman who has followed the road less traveled, and who is now exploring ways to help others do the same.  Boy howdy, did she chose a cool place for it:  El Encanto.  (Beautiful sound track on this clip, BTW.  I recommend you click on it now and have it play in the background while you read.  I am listening to it as I write.)

About ten years ago she left the United States and bought a farm a couple of hours outside of Quito, close by the equator.  She now splits her time between Ecuador and Texas.  This is a person I wanted to meet.

Graciously, she responded to my email and our correspondence began.  Then I, well, sort of invited myself to visit and she, even more graciously, agreed.

Among other things we discussed the idea of adding a financial component to the Retreat.  After all if you’re going to pursue your dream, F-you Money helps.  Over coffee, which by the way she grows on the farm, we’ll discuss how this might work.

If you are a reader of the comments here on the blog, you’ll have noticed people regularly ask for help with their specific financial situations.  Although it is very labor intensive, this is one of the things I enjoy most.  But doing it in a comment or two seems limiting.  My thought is that for the Retreat I’d offer a group talk and Q&A session.  Then, at various times during the week, I’d make myself available to those participants who’d like to sit down for an hour or two and have a private conversation.  If this is something you’d be interested in, please let me know.

When I return, I’ll post a report.  Should Cheryl and I agree going forward makes sense you’ll all certainly hear about the dates and details here.  I’m excited and it would be great to meet you.  Especially in a cool place like Ecuador.

Here’s Cheryl.

She’s got one foot in the Northern Hemisphere and one in the Southern.  In this photo, literally.

After a few days with Cheryl, I’ll head down to Cuenca, currently my favorite city in the country.  It is also the place we’d most likely live were we to move there.  So I plan to spend a day or two looking at some property.  Mostly condos and single family houses.  However, Maribel, the realtor with whom I’ll be working made the mistake of asking, “Do you want to look at farms?”  Sure!  Why not?

From Cuenca I’ll head to the Pacific coast.  It’ll be my first visit.  Word is ocean front Ecuadorean property is a bargain unmatched.  So I’ll poke around the sand and villages there a bit, too.

As regular readers know, I believe in running the rent v own numbers before buying.  While money is not the only factor that enters into the home ownership decision, it is important to know what the relative costs will be.  Most times, here in the USA, renting wins the money evaluation.  But with the steep decline in housing prices, that has shifted in some markets.

From what I saw in Ecuador last year, the balance there may favor buying as well.  We’ll see.  I’ll pick a couple of examples and we’ll run the numbers on them in a future post.  See.  I’m not going there just for fun.  It’s the sacrifice I make for my readers!


The Podcast: You can hear me now.

Posted: October 5, 2012 in Life, Money

A few weeks back a guy calling himself The Mad Fientist showed up in the comments section here on jlcollinsnh.  He started by linking back to my post.  As if the name alone wasn’t enough, that got me poking around, and enjoying, his site.

One of the cool things he does is podcast conversations with other financial bloggers, starting with one of my favorites, Mr. Money Mustache.  So when he invited me to be his second interview ever, well what could I say but:


I hope you have as much fun listening to it as I did doing it.  Here’s the link:


Oh, and when your done you might want to check out his site, if only to learn what a Mad Fientist is.  For now all I can tell you is I’ve got my Halloween costume all planned out.