Why is The Cost of Living in Costa Rica So High? What Happened to “Living in Paradise”
Are you thinking of living and retiring in Costa Rica? First, you should do a lot of homework concerning the advantages and disadvantages and especially on how much money you need to live in Costa Rica with the same life style and standard of living you are accustomed to where you come from.
I will talk a little about my personal experiences living in COSTA RICA. I have been coming to Costa Rica annually since 1970 because I married a Costa Rican.. and lived here for 5 years straight from 1998-2003. Now in 2011- I see in the last 7-8 years the cost of living in Costa Rica has steadily escalated. In the last year 2010 to mid 2011 –the dollar lost 14% of its purchasing power! The weakening dollar: the exchange rate went from 580 colones for one dollar to 498 colones for one dollar.
Presently, the dollar seems to be staying around 498-500 colones for one dollar. If your income is in dollars-Fluctuations in exchange rates producing uncertainty is a major consideration.
So why is the cost of living here so high and just what do you mean by high? The are many factors: First-Costa Rica is a small country and imports a lot of items related to daily life, (although being agricultural it does grows a lot of the food consumed here.) The cost of these imported items is driven up partly because the government slaps an import tax on most imported items. Example are household appliances and automobiles. Also imported food items. (Anything that is imported into the country from outside it’s borders.)
ICE- Costa Rica’s electrical company is government run and is a monopoly so what does that tell you. Therefore the cost of electricity is extremely high (commercial is 25 cents per kilowatt hour and domestic is a little bit less than that. ) I pay for the B&B (commercial rate) which I manage around $110 per month and that is when I have NO GUESTS. I cook on a propane gas stove, wash dishes by hand, and I do not iron clothes. I very occasionally use the clothes dryer. Biggest expense is the hot water heater (I dont use the lesser expensive Tico showers which heats the water as it comes out of the water pipe directly into a gadget which heats only that water- This method is very ineffective and often times you are showering in cold or luke warm water) I have an older double wide kitchen refrigerator which uses a lot of electricity. I am very frugal with lights inside and outside the house, and use only cost efficient light bulbs. I have no air conditioning nor heating-which is not needed due to the climate which is around 72 F. year round. The elevation where I live is an almost perfect climate at 3,500 feet above sea level.
Telephones– the more you talk-the more you pay..this applies to home phone lines as well as cell phones. You can have high speed internet service connected to your home phone line-it’s a separate charge of $35 per month. If you dont talk much, then yes the home as well as the cell phones are cheap-however if you talk a lot you are charged per minute. My cell phone bill is around $18 per month and I talk VERY LITTLE. My home line -which I do talk a lot- is around $50 per month (then you have to add cost of internet service to this)
Water: Is relatively inexpensive because it is so plentiful in Costa Rica. I pay around $12 per month (when I have NO guests in the B&B.)
Domestic help: Is $3 per hour -however there are added cost to this. And to calculate the added costs you need to go to the Labor office in your home town and get a copy of ALL THE RULES related to domestic help. These rules are MANY and the cost of them add up to quite a large sum of money. Don’t hire domestic help without understanding and implementing these rules.
Cost of automobiles and maintaining them here in Costa Rica is VERY high. First if you want to import your automobile. you must pay a very high import tax. This tax is figured by the blue book value of your car and the import tax goes from 100% of the value on down (depending on the age of your automobile) Gas is around $5.50 per gallon. Mechanical work is expensive -similar to prices in the US. Tires and brake pads have to be changed more often due to the pot holes in the road and the stop and start type of driving that goes on here in CR. To insure your car costs about same as US. The car has to be inspected 1 time per year which costs $25 and in December you have to pay the tag—-and be prepared this cost is very high depending on what year and model your car is..new cars can be hundreds of dollars!
Cost of construction of a home is about same as in US per square foot. ( approx. $90-$100 per square foot-depending what kind of finishes you desire) Construction is very slow and be sure to construct in dry season. In rainy season workers loose a lot of working hours due to the rain–and you are required to pay for “some of these lost working hours”
Land is very expensive in CR– probably because it is a small country and just not that much land available to buy. An acre lot in the central valley will cost around $80-$90 a square meter and there are around 4,000 sq meters in an acre. Planned developments charge a lot more per square meter……Beach lots are much much higher in price.
Speculation is rampant on land prices so be sure not to over pay. Spend a lot of time investigating for yourself and do not take someone else word for the value of the property. North Americans usually pay a lot more than Ticos for the same property….so be careful.
Food costs are about same as in Atlanta, Ga (where I come from) However: Fruits and vegetables are cheaper in Costa Rica. But meat prices are higher.
Property taxes are low in Costa Rica
Labor is cheaper however it seems to take longer to get a job done here than in North America. The Labor office in your home town will provide a list of labor prices for different types of work and professions.
A good restaurant will cost you the same as where I come from in Atlanta, Ga. and if you are in a tourist area it will cost you more. However: you can eat at a “Costa Rica Soda” which is a small place, locally run, the food is simple and cheaper.
So why retire in Costa Rica? Frankly, given today’s cost of living here…I would say I can’t think of a REALLY GOOD REASON but that is my opinion only. In life there is a saying “different strokes for different folks” Of course there are the advantages of the tropical weather with a lot of sun year round- and the beautiful green of the plants, trees, and flowers. And North Americans seem to live in areas where other North American live so one can make new friends. The beaches are relatively close, however a stay at a lovely beach if pricey- after you factor in the cost of the gasoline to get there- takes 2-4 hours to drive to the nicer beaches from the central valley. The hotels vary in prices-depending on how much comfort and luxury you want to pay for.
Security ….I know you have read on many web sites about the serious problems with robberies in Costa Rica. Visitors often said to me, “Seems that there are bars on everything, homes and businesses. ” “Why is that?’ Well, my answer is: Because they must protect their homes and businesses from thieves. Sadly, this is a very serious problem in Costa Rica. Especially in the rural areas where there are few policemen. If you visit the major cities of San Jose and Alajuela, you will see a large number of policemen. However: when you go out to the outlying towns, you will see few policemen.
PRACTICAL ADVICE: To live here one must learn patience and tolerance because the culture here is not to hurry or set a deadline for anything. It is very helpful to speak some Spanish so you can learn something of the C Rican culture, which leads to tolerance and a much more enjoyable life.
And yes it is true. You will get charged more than a Tico for the same service OR for the same piece of land or for the same house. That is just the way things work here, and it’s better just to accept this and learn to live with it.
MORE PRACTICAL ADVICE– I highly recommend that you come to Costa Rica and rent for a least one year and check it all out for yourself. That will give you enough time to see if you can adjust to a different culture. And if the advantages for you outweigh the disadvantages. You will learn what the cost of living here is for your lifestyle. You can determine for yourself if you can afford to live here the way you would like to live.. and just of important if you can adjust to the differences in culture.
So I have been living in Costa Rica for quite awhile SO what bugs me the most- 1. the roads which many have pot holes and are poorly designed. Too many cars on the highways esp from Alajuela to San Jose. 2. the Costa Rican drivers esp the males who drive too fast, pass on curves, and are plain rude behind the wheel. 3. the price of gas here $5.66 per gallon- so you really have to think twice when you put your car on the road. 4. I like the Costa Rican people who are helpful and polite-but one must learn that their culture is different and I mean DIFFERENT. Examples: Relationships between men and women..the woman plays a much more submissive role in this Latin Culture. Another example-this culture is one of politeness to the extreme. To avoid a confrontation means not telling you what you want to hear. Or not exactly giving you a “straight answer” So one has to become an expert at “reading between the lines”. And to live a happy life you must learn to be “polite and smile” and wait awhile –without causing confrontation. The Ticos do not deal well with confrontation, usually they will “retreat”
WHAT DO I MISS: The conveniences I was accustomed to back home, the fact that things were organized and moved more or less smoothly. Here in CR things are less organized. Takes a lot longer to get even little things done. And seems you need a lawyer for everything and lawyers are very expensive here. A simple power of attorney can cost you up to $90 SO ask the attorney AHEAD of time how much xyz is going to cost you and you may need to negotiate the price.
So Ill bet after reading this you are going to say-well, Ill just come to Costa Rica on vacation-enjoy the sunshine and beautiful green rain forest and beaches and go back home where I things move smoothly and everyone speaks my language.
This article is written by Ann Cabezas who has lived and worked in Costa Rica off and on since 1998. First coming to CR in 1970, after marrying a Costa Rican. She has built three houses in Costa Rica. Ann has worked in the Costa Rica Travel Industry-designing personalized vacation itineraries for many years. You can contact her at firstname.lastname@example.org