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Cost of Living-Granada, Nicaragua
The major difficulty in determining the cost of living somewhere is comparing apples to apples. To get by this I will simply show our costs of living here. What is the cost of living in the United States or Europe? Well, that depends on where you live, your idea of a required standard of living, how much you travel, how big your house is, how much you eat out and other factors. It is the same here. I hesitate showing our costs somewhat because some people will think we spend too much on some things and others will think we do not spend enough.
Having said all that, the average cost of living in Nicaragua is substantially cheaper than living in the states or Europe. One of the reasons you may be thinking of moving to Nicaragua is to reduce your costs yet improve your lifestyle. Review your needs especially after renting here for a while. You will find that there are some things you no longer need and there are some things you absolutely will not live without regardless of what your neighbors think. Finally, remember that these are our experiences and opinions. Also, remember that there are three prices starting at the highest: price for tourists, price for expatriates and the price for locals. Except at major stores, you can usually barter especially when you buy more than one.
Location, location, location
Like any country, where you live will greatly affect your costs assuming everything else is equal. Our experience has been that costs are highest where the greatest number of expatriates live, for obvious reasons. More accurately, the greater percentage of expatriates to the local population will raise your costs. One way of comparing the cost of living is to compare the cost of housing in those locations. If the same house is 20% higher in one location then the cost of living will probably be higher there also.
Starting with the highest cost of living, the list goes something like this:
- San Juan del Sur
- Everywhere else
Some would argue with the above list but San Juan del Sur is a good two hours from any sizable stores and that assumes you live in town. The costs in living in the developments along the Pacific Coast generally are also higher for housing and the other costs of living. Part of this is simply that they are further away from everything. Building materials must be transported there and major stores are further away.
Location within location is also important. Granada is the number one tourist location in Nicaragua and has a substantial number of expatriates. Within any city, the closer to the central park you are, the higher the cost of housing for purchase or rent. The central park exists in almost every town of substance here and is the heart of the city. Natives speak of pride in living close to the park. Living a mile outside Granada will substantially reduce your cost of housing yet accord you the conveniences of living near a major city though your cost of living will be about the same as those living in Granada.
You have many choices where to live. Are you the type to live by yourself on a farm or do you want the security of a development? Do you want to live within walking distance of good restaurants? How do you want to live? People forget that Nicaragua has not only the vast beaches and the colonial cities but also cool mountains and majestic valleys. Nicaragua has everything. For people buying a winter home or living here part-time, your selection criteria is completely different and the effect of the cost of living is much less since you are probably still earning a substantially higher income in the states or Europe.
The cost of food and housing will be some of your highest costs and they will depend greatly on how often you eat out but there are many other costs. We have a large, beautiful colonial home with a pool, employ a maid, a 2005 Jeep SUV and a motorcycle. Taxes are much lower here but they still exist and they probably will go up someday though they have dropped about 10% per year so far. You can find articles about people living on $500 in other countries but we live well and keep very active in the community. Eat local fruit, read books all day and never get sick if you want to live cheap.
Surprisingly, many of our costs are going down since they are priced in córdobas and the córdoba devalues against the dollar about 5-8% a year. When we arrived seven years ago the ratio was 17 córdobas to the dollar and now is 25.
Our monthly costs are shown below:
Maid – $117 (depends on number of hours, duties, responsibilities)
Our maid comes in three hours per day six days a week – $85 a month
Plus she gets one month vacation, one month extra pay in December, $32 in taxes and SS.
Labor cost is low here but the benefits and taxes will run around 40% additional to the pay
Gas (cooking) – $7
Electricity – $180-200 (and we do not use A/C))
Electricity is very expensive here.
Water – $8-9
Garbage Pickup – $1.00 a month and they pick up three times a week at the door
Telephone – $100 (two cellulars, unlimited minutes, no calls outside country)
There are two major phone companies here, one of your highest costs will be when you make calls to someone with the other phone company – high surcharges
Internet – $25 (cable internet with WIFI, good speed, competition is heating up)
Cable TV – $10 (fairly similar to cable in the states, many English channels)
Property Taxes – In Granada, $230 a year for our 4,500 SF home.
We know people paying more for a smaller home and less for a larger one.
Treat the property inspector and the alcadia (city offices) like kings – they are.
Home Maintenance – Cost of labor very low, materials higher but still low
Gasoline – over $5 per gallon, diesel is less
Good reason to have a motorcycle, scooter or bicycle.
Vehicles – 20-40% higher than prices in the states except Chinese which are lower.
Vehicle Maintenance – Part prices similar to states but labor much cheaper
Ex. Flat rear tire on motorcycle – They had to disassemble, fix tube, reassemble – cost $2
Food – $400-600 for 2 people (locals live on a lot less if you like rice and beans every day)
Entertainment – $100 (Depends on what this encompasses and your hobbies)
Homeowners’ insurance – Many people do not have this but rather inexpensive
Car, Motorcycle Insurance – $56 per year for SUV, $30 for motorcycle – basic required insurance
Whomever you hit or get hit by will be uninsured
General Taxes – Sales tax (IVA) is 15% but is often already in the cost.
Tips – Generally around 10%
USA Income Taxes – Only the USA still requires taxes on any income no matter where you live and any capital gains you make.
Medicine – Generally much, much less and usually do not need a prescription
Doctors – Office visit to English speaking doctor $15. Total cost for a recent colonoscopy was $280.
Dentist – A thorough cleaning $25, $200 for a crown, $400 for a bridge.
Beer, Liquor – Local beer wholesale $.60, at restaurant or bar $1
Good rum – very cheap but imported liquors are more expensive but everything still tends to be cheaper since taxes are generally lower. Wines do not have extensive variety here but a good bottle can be $5-6. Better wines are appearing.
Clothes, Shoes – Very inexpensive at the outlets but much higher at shopping malls.
Other things to consider:
Big decision you will have to make. Having a car, paying for gas and maintenance is a major expense if you are on a fixed income. We have a large garage but the majority of homes here have no garages so you have the monthly storage expense ($20-25) plus the worry of your vehicle being in someone else’s possession.
We use our SUV rarely which means less than 3000 miles per year but we like the convenience of traveling when we wish. We also have friends that just hire a driver when they need it or of course, you can always rent a car. Much cheaper than owning a vehicle. A third option is that some people here have a vehicle then hire a driver or a caretaker that also drives. This person then can also watch the vehicle while you running errands or whatever.
The bus system is extensive here and very inexpensive if you can handle crowded buses.
They are pirated but we can get first-run movies on DVD here six for $4.00. You may feel a little guilty about using pirated goods initially but then you remember Tom Cruise getting $20 million for six months work and you realize that is even more obscene. Ladies, he is not very tall, get over it.
In Granada, we have a old movie theatre that shows first-run movies for around a buck but most people go to Managua that has many movie theatres of the same quality as the USA but for $2.50. Like the states, the popcorn and the drinks cost as much as the movie tickets but here you can also get a beer and a sandwich.
Living in another culture is a form of entertainment. Relish it and enjoy it.
The USA requires you to file your taxes each year even if you live here. I believe only the USA and North Korea taxes foreign income on their citizens. You must report any income, any capital gains and notify the IRS of any foreign bank accounts. The fines are substantial for not doing so and you know that the USA is even going after Swiss and Panama offshore accounts.
The Nicaragua government knows most citizens and certainly, expatriates will not report interest income so if you have a bank savings account here, the bank usually automatically gives 10% of your interest income to the government.
Cost of Going Home
If you are the type of person needing to return to the states every few months then you should consider that cost and budget for it. As of this writing, the major carriers are cutting back on the number of flights and air fares are increasing especially due to taxes and security fees. If you live here and do not become a resident, then every 90 days (180 days with extension) you must leave the country or at least, cross the border. There is no three day requirement like Costa Rica.
Cost of Getting Your Money
Many people just have a local Nica bank account and have their pension or social security sent directly to their account here. Many of us keep a domestic account in the states where we can receive any money transfers, pension or social security. So this means you must periodically move the money here by transfer or use the ATMs. Obviously this means you should use a bank that does not charge much for international ATM or credit card usage. The credit cards of Nica banks are often not acceptable outside of Nicaragua.
Taxes In General
It would be rare for you to have to file taxes in Nicaragua unless you plan to start a business or work for a salary. Nicaragua does not expect people to pay their taxes so most of their taxes are immediately collected. For example, if you sell a property, there is a property transfer tax which is paid at the closing. If you have a savings account, the bank usually gives 10% of your interest to the government. If you hire a regular worker like a maid, gardener or caretaker then you will be paying fees to the government for the employee’s social security and medical.
Sales tax (IVA) is substantial at 15% but it is usually already included in the price of the item and many times, you do not pay it because the vendor is not reporting his income to the government. Be sure to check before ordering since 15% sales tax plus 10% tip adds substantially to your bill.
Property taxes are an art in Nicaragua. Do not argue over your taxes because you will lose. The alcadia (city or state offices) has the authority to tax you whatever they wish. Officially I believe it is .8 to 1% of the catastral value of your home. The catastral value can be anything they decide though almost always much less than the value paid. For example, we paid $189,000 for our house originally and it has a value of around $250,000 but the catastral amount is around $30,000.
If you are not able to hold a basic conversation in Spanish then you should consider Spanish lessons. You did move here to learn another culture and language is necessary to learn this culture even if only for basic conversation. Unfortunately, Nicaragua has one of the lowest percentages of people in the Latin world knowing any English. And when you leave the major cities there will be very few people knowing any English.
Spanish language lessons are one of the most expensive services you will pay for other than professionals like doctors, lawyers and architects. Typical costs are $5 to $10 an hour and many of the instructors expect more if there are two or more students at a time. You can get package deals if you sign up for many hours per week or for many weeks. It took a long time to find a Spanish instructor that would charge only $4 an hour to work with my wife and I and to come to our house twice a week.
You may not think $5 an hour is substantial but very few of these instructors are properly trained language instructors and in a country where teachers make $200 a month and policeman even less, it is very high and everyone offers it.
Take the time to find a good instructor that speaks clearly and understands the rules of grammar. Personally, I think the instructor should also be able to speak some English or the learning process will take longer. The best method is total immersion where you live with a family in their home. We learned more in two weeks of immersion than in six months of four hours per week.
The food is excellent here but the restaurants owned by the expatriates can be relatively expensive depending on your budget. Remember, one of the reasons we moved here is the low costs. A $5 cheeseburger may sound reasonable in the states but that is a lot of money here. Every major town has a market and the costs of the various foods there are very low but it takes time to go to the market every day.
Ladies come every day to our door selling fruits and vegetables. Their prices tend to be a little higher than the market but then you have the convenience. A young man brings us fresh seafood and an older gentleman brings us fresh bread. We have fast food outlets in the larger cities such as Subway, McDonalds, Burger King and Pizza Hut but the prices are about the same as in the states.
Living in a tourist town like Granada or San Juan del Sur expands the types of restaurants you have but the prices are more in line for the tourists. We do have our favorite Nica restaurants which are much cheaper and yet, very good. Some of our neighbors make various dishes to sell and they are very good values. Be sure to try out the fare of the street vendors, it is part of the culture.
Medicine here is much less expensive and the actual cost is less than our co-pay amount was back in the states. Medical costs are very cheap but for us, it is more expensive than the states and should be budgeted. Like most employed people, our health insurance cost was deducted from our paycheck automatically and being part of an HMO, all costs were covered so we never actually paid any medical expenses except for elective procedures.
Most expats here have no health insurance and pay as they go so you should budget for it. A fortunate few have great benefits so their insurance continues here. You can get a policy with the major hospital here but is actually a policy that provides significant discounts but is not really an insurance policy.
Owning your home will substantially reduce your costs of living. Unfortunately, generally the rentals in the major cities of Nicaragua are quite high compared to other Latin American countries assuming you want a nice home with a pool. I don’t know how people live without pools here. This is Nicaragua and the rental costs should be lower.
Shipping Things Here
It used to be much easier but now it is difficult and expensive to get almost anything shipped here. Custom taxes can often be more than 100% of the value and if the invoice is not included, they will assume a much higher price. Many of the people here have friends or relatives bring the items in their suitcases when they come to Nicaragua but someday the airport customs procedures will improve and this option will disappear.
The good news is that almost everything is available here and I usually tell people to just bring their suitcases and leave the rest of your stuff at home. Of course, if retiring here and becoming a resident, you can bring up to $20,000 of household goods tax free but you still have the shipping costs.
We live on about $1500 a month but that is because we own our home so we are saving $800-$1500 a month for that, assuming a nice home like ours. If you add up the list it comes to much less but there are other costs such as maintenance of house (we just updated two bathrooms), saving for trips home every couple years, trips within country, some medical and medicine costs, etc. Depending on how many meetings I have in Managua, gas can be $100-$150 a month.
We do have people living here on $600 a month but we could not live that way. You can find a Nica home to rent for $200 a month but it would not be adequate for us. You can buy a farm and grow much of what you eat, go without electricity and chase the pigs around for entertainment but it is not our style.
Hope this helps you get an idea of the cost of living here.