Wealth International, Limited (trustprofessionals.com) : Where There’s W.I.L., There’s A Way

W.I.L. Offshore News Digest :: September 2009, Part 3

This Week’s Entries :

20TH ANNIVERSARY OF HURRICANE HUGO: SURVIVING HUGO (PART 1 of 2)

A Liveaboard Mariner’s tale of Hugo

When Hurrican Hugo made landfall just north of Charleston, South Carolina on September 22, 1989 it was the the strongest storm to strike the U.S. in the previous 20-year period, and was also the nation’s costliest in terms of monetary losses. Both the wind speed and damage records have since been exceeded.

Hugo – map of its track here – caused extensive damage to several eastern Caribbean islands before hitting the U.S., including Guadeloupe, Antigua, Monserrat, St. Kitts, Saba, the U.S. and British Virgin Islands. The storm altered the way insurance was assessed and paid on homes and boats, and caused governments to give more priority to disaster preparedness. This has helped mitigate the effect of more recent hurricanes as a result.

This article is part 1 of a yachtswoman’s riveting first person account of living through the storm on the British Virgin Islands. (Note: Months later we are still waiting for part 2.)

Sunday 10th September 12 GMT Lat 13.2  Lon 20.0  Pressure 1010  Wind 30 mph.

The weekend that Hurricane Hugo was born we watch nervously as Hurricane Gabrielle heads for us for a few worrying days, and then tracks north. A small tropical depression forms but way south and east. Cannot worry about it yet. Just check the weather once a day, then twice a day if it gets closer.

Monday 11th September 1800 GMT Lat 12.5  Lon 29.2  Pressure 1003  Wind 40 mph.

September is the height of hurricane season, and Safara, our 45 foot steel yacht, is safely back on her mooring in Maya Cove in the British Virgin Islands. We are back at work on Tortola. The tropical depression has been upgraded to a Tropical Storm called Hugo. Hugo sounds like a nice gentlemanly name, much too nice to bring any unecessary unpleasantness to our idyllic Caribbean islands!

Tuesday 12th September 1800 GMT Lat 12.6  Lon 36.7  Pressure 996  Wind 60 mph.

One of our children has gone back to school in the UK after a summer of sailing “down island,” the other one is doing a gap year and so back with us for a time. We had a slight scare from Hurricane Dean and holed up in Isles Des Saintes between Dominica and Guadeloupe in early August. Had a wonderful calm, cloudless couple of days snorkeling on the reef whilst Dean-watching. But Dean stayed East of us and ran out of steam in the middle of the Atlantic. That is where we like to see hurricanes blow themselves out!

Wednesday 13th September 1800 GMT Lat 12.8  Lon 43.5  Pressure 987  Wind 75 mph.

HURRICANE CATEGORY 1

The line between those who live and work on the waters of the Caribbean and those based on land is never more obvious than when bad weather is in the offing. You will not see landlubbers rushing home after work every evening to listen to the weather forecast and chart the position of every tropical storm in the Atlantic with furrowed brow and pounding heart. The island of Tortola lies at around 18.24 north and longitude 64.38 west. If the storm continues to travel more west than north then it will inevitably cross 64 west. But the question is will it be north of us, south of us, or the dreadful alternative of neither; in other words, right over the top of us?

Thursday 14th September 1800 GMT Lat 13.6  Lon 49.1  Pressure 970  Wind 105 mph.

HURRICANE CATEGORY 2

The forecast is that the atmosphere is favourable to Hugo growing into a monster. The storm of the century is forecast to pass south of us into the Caribbean and then turn north towards Puerto Rico or Hispaniola.

But what if it starts to make its northerly shift before then?

We know that tomorrow morning is D-Day, Decision-Day. Securing boats and property takes hours and hours of heavy manual labour. Judging how much preventative work to secure live and property against the unknowns of intensity and position of an oncoming cyclone, is a constantly changing anxiety. The difference between a Category 2 and a Category 5 is almost immeasurable. With the one everything can be saved if properly secured, with the other, very little can be expected to survive.

Friday 15th September 0000 GMT Lat 13.8  Lon 50.5  Pressure 962  Wind 115 mph.

HURRICANE CATEGORY 3

We sleep badly. It is a clear still night, hard to believe there is dreadful churning beast out there hurtling towards us with unimaginable ferocity. Something that can change our lives forever. We get up before dawn and listen to the 6 a.m. forecast. For the last 24 hours the system has been moving WNW, just what we did not want.

Friday 15th September 1200 GMT Lat 14.2  Lon 53.3  Pressure 940  Wind 145 mph.

HURRICANE CATEGORY 4

At work by 7.30. I am an administrator at small private plastic, general and reconstructive surgical clinic. It should be a normal clinic and outpatient day, with patients booked in all morning for post-op checks and consultations and small surgical removals of anything from warts to sutures. We are nervous and tense and rush patients through as fast as possible so that we can close up and start securing the hospital and its grounds. The expats who come in are full of worried energy and anxious. BVIslanders and down-islanders put their trust in a higher authority. “Dis island is blessed. Tortola don’t have no hurricanes. God will protect us,” they tell us. They will not be shutting a single shutter or bolting a single bolt. Are we mad? Do they know something we don’t? Its only later that we discover that God was not protecting anyone from Hugo.

Friday afternoon at last and we can secure the place. I clear my desk and my office which has full length and width glass windows facing southeast from where Hugo will be entering our island archipelago. Though the first big winds from the dangerous northern sector will arrive from the northeast. I cannot take a chance on my computer, prints, photocopier, telephone answering machine, etc. being obliterated by glass flying like bullets and rain traveling with the power of a train.

The owner and surgeon Robin Tattersall and I check throughout the buildings and have Jaigopaul the handyman put away anything that might roll or move. We decide to leave battening everything down in the Clinic until Saturday’s weather position makes it inevitable. There is still a chance that the hurricane will slide past south of us.

It happened, of course, that Hugo was not to be avoided and Robin and Jag (the handyman–Indian) spent all day Saturday securing the property. They threw all the plastic/metal garden furniture in the swimming pool and boarded up every window in the place. It is a long, tiring job for them. Robin spent the terrifying night of the hurricane alone in that empty old building full of echoing corridors and pillars while Hugo howled outside looking for vulnerable spaces to burst through.

Having gone so far as I thought was sensible at the clinic on Friday, I met husband Stewart and son Orion for a last shop at Riteways supermarket. People were buying the oddest things and there were no candles or matches or batteries to be had anywhere.

Some four hours earlier, our neighbour David calls me in a panic, “have you heard – what shall I do?” David is a close friend and neighbour liveaboard in Maya Cove. But currently in between women and so has nobody tonight at home to share the heightened anxiety!

I suggest he go straight home and take “Serai,” his 38 foot sloop, round to the safety of Paraquita Bay – he only draws 5’6” and he should be able to squeeze in. Paraquita is the BVI’s excellent hurricane hole, it is a large lagoon surrounded by mangroves and only a very tiny entrance. Unfortunately it has quite a shallow bar and at 6’6” we cannot get in on our yacht.

Irish Pete, another neighbour, I tell David will have already sailed to Paraquita with a new case of rum and beer on board. Oh yes, and his unwanted tenant, a large rat that had climbed on board just a few days earlier! His creative attempts to eject that rat are the stuff that legends are built on, specially Irish ones. As we look at Maya Cove on Friday evening, we see an unfamiliar geography to the anchorage. Many of our neighbors have disappeared into hiding places, others have swapped to bigger heavier moorings with more space around them to place anchors.

Irish Pete is gone but there is David’s boat Serai lying on his mooring still. So – he did not make it into Paraquita, I wonder why? John and Susie Tait had left yacht Gawaine on her mooring in the Cove, but of course they are not liveaboards. Gawaine is just a weekender dinghy really, whilst they actually live in a huge house on the hill overlooking the Cove.

Pat and Dorothy, elderly English liveaboards have moved their little yacht “Shamwari,” built from the very trees on their Rhodesian farm, into our tiny mangrove beds here in the Cove. This sheltered area is very small in the north part of the Cove up beyond the West Indies Yacht Charter docks and their boats. They have buried her bow deep in the shallow water where the mangroves grow, with many lines tied to the tree trunks.

Friday 15th September 1800 GMT Lat 14.6  Lon 54.6  Pressure 918  Wind 160 mph.

HURRICANE CATEGORY 5

That evening I invited David for dinner and we banned the “H” word! During the early afternoon Hurricane Hugo became a dangerous Category 5. It all became very lively when Steve and Helen arrived and stayed till past midnight. They were going to make their decision in the morning as to whether to take Scaup Duck (only draws 4’5”) into Paraquita at first light Saturday morning. I kept looking at the faces grouped around our cockpit and wondering with teeth clenching nervousness, whether it would ever be the same again.

Stewart and I barely sleep; we hold hands a lot in the night. At the first crack of light over Ginger Island we wake. Listen to the weather and the knot in my stomach pulls tighter.
We discuss the following options:
There was nowhere to go. Our lovely family home in which we had sailed across the Atlantic, Safara, would have to fight for her life right where she was and we have 24 hours left in which to prepare her.

We start work. Four anchors, laid north, northeast, southeast, south, each heavily weighted with an interesting selection of steel objects that we keep in our bilges. Each anchor is set out as far as possible across the bay and attached to rode (rope) so that no chain enters the boat. Chain snaps under sudden shock loads.

Steve and Helen leave the Cove for Paraquita Bay on little Scaup Duck. As they motor past us we wave bravely and wish each other luck with hearty smiles and banter. “Save some of those beers on board for the after-Hugo party!” I yell.

Saturday 16th September 1200 GMT Lat 15.4  Lon 58.4  Pressure 940  Wind 140 mph.

HURRICANE CATEGORY 4

Around midday a position fix for Hugo showed more northing and for a little while we dream that Hugo will go north of us and tomorrow we will all be taking up our anchors and laughing at our over-zealousness. But that little fantasy did not last through the next position fix on Saturday which put Hugo dead on target for the USVI.

Nobby, an ex naval engineer on a 38 foot ketch and Ian on Gypsy a 42 foot wooden yawl, the only two liveaboards left in the cove, put out 2 more anchors each. Susie Tait had called me on Friday morning and said that we must not remain on Safara during the storm. John Tait her husband, (runs the Moorings Charter company, with a fleet of 120 charter yachts to be secured) was a retired naval commander and had been through a few such storms before. He feels very strongly that no one should risk their lives by staying on their boat, and so we were “invited” to stay with them in their strongly built hillside home for the passing of Hugo.

We think about the Tait’s kind offer as we work. Stewart wants to stay with the boat, but we both know that once the wind rises to above 100 knots there is nothing he can do to help Safara. Rather than be tempted to climb out on dock to tend her lines and fend off boats that have broken their own lines, he would be better away from her.

Of course if the storm goes north or south of us the winds would be lesser and we can all stay with Safara. We defer the decision until another weather forecast. By late afternoon on Saturday we have 11 lines running through our fairleads and down to the bottom of the Cove, each one runs through plastic hose carefully positioned to prevent chafe.

We clear the decks, remove all the sails and stow them below decks. We even throw the spare toilet sitting on the stern deck waiting to be fitted, over the side where it will be safe from becoming a missile from battering winds. Easy to retrieve from the bottom only 20 feet under us after the storm passes. We setup the running back stays balancing the pull of the inner forestay, and bowse down the halyards as extra support to the mast.

Occasionally we look up at the bay road circling the Cove and see pick-up trucks, loaded with wooden boards, roaring smokily along to the East End. Much too little too late, I suspect. If Hugo speeds up we are not ready. I made an apple pie, something to do with all that nervous energy.

At this point the storm, encompassing winds of 130-140 knots, is beginning its destruction of Guadeloupe, and our fervent hope is that the high mountains there would slow it down and at least when it hit us, it would be with diminished ferocity. Eerie radio silence from Guadeloupe as though a half million people no longer existed.

The hurricane has slowed to 12 knots forward speed. The present course takes the 15 mile wide eye just south of St. Croix. The northeastern quadrant of a hurricane is the most dangerous sector. It would give us the highest winds plus the forward speed of 12 knots; the lower quadrants have less forward speed. We would be 38 miles away from the eye at its closest and must expect NE to SW winds of maximum gusts 140 knots. The winds in the Virgin Islands must expect to pick up before dawn on Sunday.

I cook – and call Susie Tait and tell her we will have dinner on Safara and then be up at her place around 10 tonight. We could not be sure that we could leave Safara in our little dinghy first thing on Sunday morning – if the winds reached 30 knots; hence the sudden decision to leave Saturday night. There is nothing more terrifying than not being able to get off your boat when the time has come.

Around 10 pm on Saturday night we left Safara and David left Serai. I took our passports and our boat papers, but nothing else. It was a token gesture. We all knew that even if Safara ended up on the road her strong steel hull would be only bruised. It was all the other weaker boats that we thought of. In the moonlight as stumbled into the dinghy we saw tears on David’s face.

China our Siamese cat, was very put out as we bundled her into a basket and puttered across the cove. It was a perfect moonlit night, the deserted yachts with their webs of lines leading in to the sea beneath them seemed expectant somehow. Yachts are built to sail, not sit at anchor for months an end. The men hauled the dinghies as high in the mangroves as possible; a 6 foot tidal surge in a place that only has a 1 foot tidal difference normally is a sobering thought. David goes up the hill to stay with other neighbours and we drove up to the Tait’s.

I noticed that the old navy salt Nobby who never leaves his boat in any weather – also left on Saturday evening and went to stay at Harry’s Place on the bayside, a hostelry of doubtful reputation but only at $10 a night. There was no one left in the Cove that night, the deserted homes of all our friends rocked infinitesimally on the calm water.

We walk into the Tait’s house like refugees, I holding a cat under one arm and a half eaten apple pie in the other. Stewart carried his tool box and Orion had a bag full of foods for Susie’s cupboards.

We are terribly bright and fun guests that night. John tells us exciting stories – of the days when he commanded the British Naval Squadron during the “Cod Wars” around Iceland. He was known by the Daily Telegraph as killer “Tait.” He yarns about days off the coast of Iceland where winds blew at 135 knots and ice grew on the decks like tropical vegetation, and of ramming Icelandic fishing boats.

We look at their roof and make silly jokes about it blowing off in a hurricane; we roll up a carpet or two that might be damaged by rain and then go to our respective beds. We could not sleep. I got up at dawn, around 5:30, as did everyone else.

Sunday 17th September 0000 GMT Lat 16.1  Lon 60.4  Pressure 941  Wind 140 mph.

HURRICANE CATEGORY 4

On Sunday morning there was no wind. The dawn was perfectly, glidingly tranquil. I could see Safara just below us and I could not remember a time when I had not had that knot in my stomach.

Since there is no sign of Hugo, Stewart decides to go back to Safara with Orion and they will take down the stanchions and do a few more tasks to secure her. I was nervous not having them with me. We are waiting now ... just waiting for the frightening unknown.

John left for the Moorings Marina in Roadtown about 6 miles away. The Moorings still had paying guests and as the General Manager his responsibilities were total. But, once the hurricane moves over us the government curfew will kick in and he needs to make sure that he gets back home before the roads are shut down.

The hurricane was expected Sunday evening. By the early hours of Monday morning it would all be over. The airport closes, no-one can leave the islands at all. Sea and airports are shutdown. It is strange not seeing the evening lights coming to the airport, most of the BVI planes had gone down to Curacao. Everyone rang me at the Tait’s house, friend after friend. It was like Christmas we wished each other good luck and felt a nervous exhilaration. We who are about to die Caesar, salute you.

Friday 15th September 1200 GMT Lat 14.2  Lon 53.3  Pressure 940  Wind 145 mph.

HURRICANE CATEGORY 4

What does one gossip to fellow seawives about in the teeth of an oncoming cyclone? Storm recipes? How the kids are? No we compare barometer readings as though our lives depend on them. The first harbinger of Hugo hit Tortola around 9.00 am. It was a furious squall and I watch Safara, and the two distant tiny figures working on her deck still.

Susie asked me to help her bring the dog in. Belle is an outdoor dog who never enters the house, we would have to drag her in. But first we have to de-tick her. We sit on the verandah teased by the first of the hurricane winds, picking, huge, fat bloody ticks out of Belle’s coat.

The phone rings. Its Stewart, “We’re off the boat,” he said. “I am at Gordon and Nancy’s house. Gordon has to go and board up the shop so I’m here boarding up the house with Nancy. I’ll see you in a little while.” Hugo traverses over Montserrat. Radio Antilles put out a frightening and feeble call and was never heard from again.

We hear in horror, and sick with fear the first hand story from a friend listening on ham radio to the professional radio operator still transmitting alone from the top of Saba “please if anyone can hear me, Montserrat is obliterated. We need help, please help us, please call someone.” Then Saba was gone. As though plucked by a dark hand from the surface of the sea.

The hurricane is slowing down. His forward speed is now only 9 knots. We hear that two British naval boats, a frigate and RFA Bramble Leaf, are following the hurricane in at a distance of 100 miles. Six hours after Montserrat was hit the British navy were there – someone had heard!!!

The first squall dies but the sky is changing. We see the towering hurricane bands striping our usual blue skies. Soon the wind comes hard and steady like an autumn gale. Susie thinks she will take Matthew, her 2-year old son, for a last play on the verandah. I sort her fridges out because soon the power will go, and we should put everything we do not actually need immediately in a fridge not-to-be-opened! We collected torches, candles and lamps together.

John had, but two lucky weeks previously, fitted very expensive alloy hurricane shutters to the front of his house and these made the inner house very warm. But gave a wonderful sense of security. Stewart and Orion return and as we stand on the verandah looking across towards the South East horizon in the rising wind, mouths dry with fear.

The barograph is dropping steadily and the wind is piping up to 50 knots. The sky grows dark in the early afternoon and we have to keep the lights on indoors to see. John is still at the Moorings. Safara is looking good, lying just sheltered from the north easterlies by the shoreline.

We think we will settle down and watch Crocodile Dundee on the VCR. We have our last showers, for when the power goes out there will be no more water, it will all be out of buckets lifted out of the cisterns below our feet. We just settle down in front of the TV – and the power goes out. The house seems to go quiet and outside the wind prowls and pokes like a wild beast not quite ready to attack. Building up hunger and rage first.

Hurricane Hugo keeps to its course just south of St Croix – perhaps at the last minute the high pressure below Florida would push the system further south and we will have a margin of 60 miles instead of 30 from the eye? On the dining room table was a chart of the area with two hourly plots marked in – we endlessly stop before it and discuss all possibilities.

Outside it gusts 60 knots and one of the hurricane shutters lifts and begins to bang. “I don’t like that,” said Stewart, “The wind is creating lift, hurricane shutters are built for pressure not for lift.”

Sunday 17th September 1200 GMT Lat 16.6  Lon 62.5  Pressure 949  Wind 145 mph.

HURRICANE CATEGORY 4

He goes outside and wedges it in place with a large shoring timber braced against the verandah balustrade. He searches for more wood to make bracing timbers for all of the windows. Susi calls John immediately at the Moorings and asks him to come home. He does, and the three men saw up pieces of timber for bracing doors. John decides not to fit them unless it becomes necessary. He tells us a story of commanding an aircraft carrier in a cyclone blowing 150 knots. The aircraft housing broke free, and went banging round the vast deck taking a few turrets with it before blowing over the sides.

We light candles and try to think about dinner. No one is very hungry. Susie has a spare Christmas pudding from a new recipe she has been trying out. Do we eat Xmas pudding? Do we? I make the rum butter extra rum! It was like Christmas. We eat sausage casserole by candlelight. With the last of the daylight and the help of full moon we peep out and take a lingering look at Safara. How proud and white she looked in a hurricane lit by moonlight.

Full moon – extra high tides. Maybe an 8 foot rise in the water we worry?

Then the first casualty strikes. To our horror we see Alec and Ginnie’s boat has broken her mooring lines and is lying across Don’s little Sea Urchin. She is lying to the one extra anchor that had been thrown out, and at the start of the winds this is all she has to prevent her becoming an agent of destruction and sinking three other of our friend’s boats in her path. It was an awful last sight of the pretty little Bay which was home to so many friends and neighbors, and which lives with us all through that night until the dawn on Monday morning brings the final outcome.

We listen to the VHF for news and contact with others in the darkness. We tune into St. Croix radio and Isle 95 until they are silenced by the oncoming storm in the early evening. Then we switch to St. Thomas which disappeared at around 11 p.m., and finally our local radio ZBVI which clings to the air throughout the night.

There is no rain. John says he has never known a cyclone with so little rain. But its still early ... there is plenty to come. Nevertheless here in the house 160 feet above sea level, water begins to creep in under the hurricane shutters and the glass doors on the inside. We collect towels and place them in front of the only door which faces northeast.

The wind rises to 80 - 90 knots and we try to go to bed around midnight. Every time I shut my eyes I see the boat. I block my ears with cotton wool and roll a pillow over my head, and the dull roaring which reaches brings with it pictures of our home, twisting and turning at the ends of her lines retreating in the face of an implacable enemy.

CONSIDERING RETIREMENT BUT SHORT ON CASH?

“We discovered an affordable virtual paradise when we made Puerto Vallarta, Mexico our permanent residence 10 years ago and are sharing its features and benefits with you,” says the author of this article. He provides a back-of-the-envelope calculation to back up his buy in recommendation. As long as real estate values in Puerto Vallarta rise at the forecast rate it all works pretty well.

The calculated out-of-pocket cash per month here for a $400,000 property financed with a $120,000 down payment is about $3000/month. Contingency planning for the event that real estate prices do not rise as hoped for one should be the first order of business if contemplating the suggested strategy.

Attention all baby boomers. Are you starting to think about retirement but your cash is tied up in 401(k)s, IRAs, pension programs, retirement funds, stock options, or your residence and you are not quite ready to liquidate any of these assets? Have you been watching retirement properties continue to escalate in price and are concerned that the cost of your retirement dreams might be beyond your reach when you are ready? Well, perhaps you will find the following information quite enlightening and hopefully it will alleviate some of your concerns.

We discovered an affordable virtual paradise when we made Puerto Vallarta, Mexico our permanent residence 10 years ago and are sharing its features and benefits with you. In 1997, prices for real estate, land, labor, and construction materials were about 1/3 of prices today in Puerto Vallarta, known otherwise as Vallarta or PV. 10 years ago, prices for food, clothing, household goods, etc. were quite reasonable in Vallarta but selection was poor. 10 years ago, virtually all financial transactions in PV were cash, including the purchase of house and land. Although the real estate prices were 1/2 to 1/3 of those of comparable amenities in the U.S. or Canada, in the absence of mortgages, one needed total financial resources in order to purchase a retirement property here. North American banks were reluctant to provide mortgages in Mexico and Mexican banks lacked the available capital.

During the past 10 years with the Mexican economy booming, the peso stable, and Vallarta exploding with growth, the situation has changed dramatically. Today, mortgage capital from a number of American mortgage firms is readily available in PV. Interest rates are generally 2% to 3% above the prevailing U.S. rates. Mortgage insurance is also now available as is title insurance. Because the economy is so stable, strong, and growing, the mortgage companies are offering financing up to 70% of the appraised value, thus opening the market to a flood of new baby boomers about to retire.

Now that North Americans can acquire their dream retirement condo or villa in Paradise prior to full retirement, let us consider some of the associated expenses. As a rule of thumb, $200/square foot would be an average price for a beautiful ocean or bay front condo and approximately $250/square foot for a villa facing the bay. Almost all properties have sweeping 180° views of Banderas Bay, the entire city of Vallarta, and the Sierra Madres and are comparable to the finest properties in the California seaside areas. As a typical example, a 2,000 square foot condo might cost $400,000 and require a little more than $120,000 initial deposit with the balance being mortgaged at 8% for 15 years. Such a fixed rate mortgage would require payments of approximately $30,000 annually. Trust fees are about $500 per year and property taxes are roughly 0.12% of the appraised value, or $500 per year. Condo association fees are usually about $4,000 per year bringing the total out-of-pocket expenses to approximately $35,000 per year. It must be remembered that the equivalent property in the States could easily be $1,000,000 with taxes alone of $20,000 per year! In order to reduce the $35,000 per year expense in Vallarta, many of the about-to-be-retired condo owners rent out their condos during the seven month “high season” of November through May. Rental income for a $400,000 condo should average at least $2,500 per month. Do the math and you will understand the relative ease in owning a property in Paradise prior to full retirement.

Now that you have a place to retire, let us consider the other living expenses and compare them to the equivalent in the States or Canada. All of the following information is rule of thumb and based on knowledge and experience derived from living full time in PV for 10 years, while owning property here for 23 years. Food purchased in supermarkets and meals in restaurants are of the same quality and price as in the U.S. Clothing, hardware, electronics, and everything else imported will cost about 50% more than in the U.S. Furniture costs are equivalent to those in the States. Fuel for your automobile and electricity for your residence will cost about the same as in the U.S. Car prices are roughly 20% higher in Vallarta so bring your own car! Auto insurance is about the same and although house and condo insurance is available, very few people seem to have it. Health insurance is the same, however healthcare, in any of the three new and modern high-tech hospitals in PV, is substantially less expensive. It would be safe to assume that health and dental care costs are 1/2 to 1/3 of the same medical services in the States. Fees associated with hobbies such as golf, tennis, fishing, etc. are about the same as in the States. Labor for house work, gardening, handyman, etc. is a third of such costs in the U.S. Skilled tradesmen such as electricians, plumbers, air-condition repairmen, etc. charge about the same rates as in the States. You can find self-proclaimed skilled tradesmen for 1/3 the price, but you will get what you pay for!

Next, let us assume that you are retiring and going to spend the “high season” in Paradise where it almost never rains, the sky is blue, and the average daily temperature is 73°F. You have purchased your million dollar condo for $400,000, drove your SUV loaded with clothing, personal belongings, and dog with it is proper immunizations to Vallarta, and you are ready to begin enjoying life. Your food, energy, furniture, insurance, hobby related expenses, property maintenance expenses, etc. will be about what you are accustomed to back home. Property taxes will be an insignificant fraction of what they would be in the States, medical and dental care will be 1/2 to 1/3, labor around your residence will be 1/2 to 1/3, and most all other service related expenses no more than 1/2 of those in the U.S. or Canada.

Finally, for the kicker! During the past 10 years, we have seen property values triple in Vallarta. The tourism boom is only beginning at this time with a 10 year building plan that borders on being incredible. The Mexican government in conjunction with global developers and a handful of Billionaires, yes with a capital B, are currently in the planning stages and just beginning construction of a mega-resort retirement destination zone near Vallarta. Prices in PV are sure to double in the next five years. The Mexican law assures all foreigners that they are considered “permanent residents” if they spend more than 50% of their time in Mexico for at least five years. That translates into “permanent resident” status if you live in your dream condo or villa during the “high season” for five years. As a “permanent resident,” you are exempt from Mexican capital gains tax upon the sale of your property in Vallarta. So, let us say that you decide to sell your dream condo after five years and return to the hectic pace back home. While the housing market is softening in Florida and California, the market continues strongly upward in Vallarta and in five years the value of your condo is estimated to be $800,000. Assuming that you financed your purchase and that you paid $120,000 initially and another $175,000 in mortgage payments and condo fees, without any rental income, you should have around $570,000 equity in your residence at the time of sale. That $275,000 profit should more than offset all expenses that could possibly be incurred even with the highest standard of living in Paradise. Using this hypothetical scenario, the $275,000 gain over five years equals about $55,000 per year. It is difficult to spend more than $3,000 per month living like a king in Paradise, therefore the seven month “high season” should not cost much more than $20,000 leaving $35,000 for travel and living expenses during the five summer months, or $7,000 per month. If you cannot make it on that, it might be time to go back to work! By the way, your monthly social security checks will be electronically deposited into your account regardless of where you live.

In summarizing, if you are thinking about retirement within five years and would like to enjoy your life to its fullest, you can probably buy that million dollar retirement dream residence in Vallarta today, even if you are short on cash!
About the author

Jim Scherrer has owned property in Puerto Vallarta, Mexico for 26 years and resided there for the past 12 years. The mission of his series of articles pertaining to Puerto Vallarta is to reveal the recent changes that have occurred there while dispelling the misconceptions about living conditions in Mexico. For the full series of articles regarding travel to and retirement in Vallarta as well as pertinent Puerto Vallarta links, please visit PVREBA.

THE COST OF LIVING IN LATIN AMERICA: THE GRINGO TAX

Go ahead and visit Latin America. Count your blessings that you are able to do so, but be sure to also count your fingers after you pay someone.

How to avoid paying the out-of-towner premium when visiting or living in Latin America? It starts with understanding that the tax exists. Once this is clear you can effect a strategy to counteract it. Herein are a few tips.

[Gringo / noun (pl. os) (informal, disapproving) used by Latin American countries to refer to a person from the USA]

Most of Latin America is full of travelers’ delights and people are generally honest, helpful and friendly but when money is involved everything changes. For anyone who has lived in or traveled to Latin America the term “Gringo Tax” will elicit a wry smile. For those of you who do not know what the Gringo tax is, it is the amount of money you pay for the same goods or services over and above what a local would pay for no other reason than because you are a Gringo.

It comes in many forms and is extracted in a myriad of ways. From inflated prices for construction work, a taxi driver that takes the long way, overpriced hotel rooms or being short changed in a petty transaction. It seems the Gringo tax is ubiquitous in Latin America. It is a time honored sport to try and take advantage of the fat, rich, stupid American customer.

Sometimes Gringo taxing is government sponsored and blatant. One state owned airline charges foreigners triple for domestic flights over what a local would pay. If you ask the airline staff why they do this you will get the eye roll and shoulder shrug. Your alternative is to take the bus which costs a lot less and is more reliable and comfortable.

Another popular method of price adjustment is when items are listed for sale in local newspapers. The price is rarely displayed. This affords the seller the opportunity to size up a potential buyer. The better you are dressed or exhibit some other sign of wealth the price goes up accordingly. Again, watch out Señor Gringo.

If you live in a small town where you could potentially be a steady customer it is all too common for local businesses and service providers to ask a foreigners to pay a higher price. This is puzzling to the outsider who has money to spend and other contacts to make recommendations to. The short term view, “make a few extra bucks today and don’t worry about tomorrow” is an alien concept to most business people from the U.S. who strive to attract repeat customers.

This begs the question why does it happen? Is it simply because they can get away with it if the opportunity presents itself or are there other more complex reasons?

Cultural differences or xenophobia may account for the main underlying reasons. You are perceived as rich and come from a land of opportunities and they are poor with little chance of bettering themselves. This gives way to the Robin Hood mentality.

It could conceivably be simply a sporting challenge if the person you are dealing with is not poor. What could be more entertaining than discussing the latest Gringo slaying with your buddies? This may be borne out of the perception that many foreigners disrespect the culture of their host country and therefore there is nothing wrong with getting them to part with a bit of extra cash.

An influx of foreigners in to a town often has the effect of pushing up prices especially in the real estate market thereby pricing locals out. It is not difficult to understand that this will inevitably cause resentment against the new comers.

Men do not like it when Latin women prefer foreign men because they have money, treat them better and could be a free ticket to the U.S. This is a blow to the macho Latin masculine mentality.

All things considered it is not really surprising that the Gringo Tax is levied but it does not mean we have to like it or pay it.

So, how do you avoid the gringo tax?

There are few rules of thumb that if you adhere to will reduce your Gringo Tax liabilities. The thing that puzzles me the most about the gringo taxing mentality is the lack of realization that it hurts their business and the country in the long term. They are effectively killing the goose that lays the golden egg. It is sad that the big picture is obscured by resentment and they fail to see that foreigners are bringing in fresh cash to economies that are starved for it. Generally foreigners do not leech off of the public dole, do not commit crimes and create jobs. I doubt there really is a quick way to stop this gringo taxing but a good start is to spread the word about it.

Just be aware of friendly strangers with a “deal.” Most instances of Gringo taxing are perpetrated on events that will happen in the future. Never pay for anything in advance. Make sure all goods are present and accounted for before payment. Pay for labor after it is done and you are satisfied with the results.

Every place has good and bad aspects about it. The Gringo tax is only one facet of Latin America and it should not deter you from traveling there or living there. This is just a heads up for people that may other wise not be as street savvy as they could be. So go ahead and visit Latin America, count your blessings that you are able to do so, but be sure to also count your fingers after you pay someone.

SHORT TAKES

In Venezuela Beauty Is a Matter of Pride and Scalpels!

Venezuela’s afterglow of winning yet another Miss Universe crown, its 6th, has not only illuminated national pride in its Latin beauties – but also its women’s widespread recourse to cosmetic surgery.

Surgical enhancement to the body has become such a norm in the South American nation that it has emerged as a top destination for “scalpel tourism” by foreigners looking for a lift or new contours at a cheaper price.

“There are patients who come from Colombia, the United States, Ecuador, the Caribbean islands. ... They have surgery and then spend a few days on vacation,” explained Rosi Oyon, head of a French subsidiary selling silicone breast implants.

The passing of the Miss Universe crown from one Venezuelan to another, from 2008 winner Dayana Mendoza to Stefania Fernandez a week ago, could spur an uptick in a sector already booming, several participants in the industry said.

It was Venezuela’s 6th Miss Universe crown in the 59-year history of the pageant, and the first time the same nation has claimed the title twice in a row.

The win puts Venezuela just one spot behind the United States in terms of overall Miss Universe victories – although with only 26 million people it has less than 1/10 of America’s 300 million population.

Denials their beauty is anything but natural is par for the course in the beauty pageant world, but for plastic surgeons there was no doubt that Fernandez had a little help. “I didn’t operate on her, but I am sure that she has had work. They all have,”said Daniel Slobodianik, a plastic surgeon who has helped several Venezuelan celebrities better fill out a bikini.

Vanessa Brito, a 27-year-old Caracas resident who added breast implants fitted five years ago, explained that surgery was common for women from all walks of life. “I think there is a social pressure in Venezuela, a beauty ideal that can be seen in contests like the one for Miss Universe. And seeing that, everyone wants to look the same,” she said.

Laura Gonzalez, a 19-year-old student, agreed. Over the past four years she has had a nose job and breast enlargement.

“This goes beyond the Miss Universe contest. Venezuelan women love to look good. We love to get our hair done, to dress well. A woman needs to feel good about herself, and it is something that has really influenced me,” she said.

Arturo Rojas, the head of another breast implant supplier in Venezuela, said: “Venezuelan woman are among the vainest in the world. Beauty is considered a basic necessity.” Girls barely in their teens sometimes receive surgery as a gift from their parents, as in the case of Yudnara, a 13-year-old who made a pre-op trip to a doctor’s office accompanied by her mother.

“I think women have the right to get these kinds of operations. We are all beautiful, but sometimes we want to be even more beautiful. Not just on the inside, on the outside too,” she said. Even the risk of infection, which can lead to a mastectomy in the case of silicone breast implants, does little to dissuade adolescents – though that has generated a sideline industry for malpractice lawyers.

“They don’t heal quickly, because such young girls, at 15, 16 or 17 years-old, are not ready for this kind of surgery,” said one lawyer, Emilia de Leon.

Breast surgery is by far the most popular procedure in Venezuela, with an estimated 30,000 procedures carried out each year, according to specialists. “Mammary prostheses are the backbone of Venezuela’s beauty market,” Oyon said.

In that section of the market, French-made silicon sacs – considered more reliable and smoother – dominate over rival U.S., Chinese and Brazilian products, accounting for around 80% of the enhanced busts created. For non-Venezuelans visiting to improve their neckline, the difference in cost can be significant. In Caracas, breast enlargement goes for around $2,500, compared to several thousand more in other countries.