You’ve got to know when to hold ’em, know when to fold ’em,
Know when to walk away, know when to run.
You never count your money when you’re sittin’ at the table.
There’ll be time enough for countin’ when the dealin’s done.

                              – Written by Don Schiltz, sung by Kenny Rogers

The last four months have been a rollercoaster of emotions. I’ve been second-guessing our decision to buy a house in Mexico, constantly asking myself whether our funds would be safer invested in foreign real estate or kept close to home given the current economic climate in the United States.

“SAFER” in Mexico or the US? Geesh…who would have ever thought that would even be a question 5 years ago!

But today as we packed for our trip to Mexico, I was reminded of a phrase I often tell clients: “Action relieves anxiety”. With every item I packed, my excitement and confidence grew.

Last month we sold our house in Texas to buy a modest home in Mexico. Between a nightmare tenant, and the rising cost of property taxes and insurance, it felt more like a liability than an investment to keep the Texas property. We cashed out, and bought one half of a duplex in an ideal location: the San Antonio neighborhood in 
Lake Chapala.

This area, located at 5000’ in the Colonial Highlands along Mexico’s largest lake, is home to the largest expat community in the world. This means there are a lot of gringos around, and it’s a soft place to land if you don’t speak Spanish (which I am learning).

Beginning in the 1950s, a substantial colony of retirees, including many from the United States and Canada, began to settle in the area along the lake shore. Because of the pleasant climate and attractive scenery, it is considered the best place to retire in Mexico. And recently, more people under the age of 60 are moving to the area, including digital nomads and young families.

Did I mention the weather? This was one of the most compelling reasons for us to want to spend winters there. Lake Chapala has a spring-like climate 9 months of the year. The average temperature is about 76F, or 24C. Evenings are cool due to the elevation, which makes for a nice sleep without the need for air conditioning. This vibrant area continues to draw people from all over the world, including Europeans, Canadians and Americans, along with wealthy Mexicans from nearby Guadalajara who are buying vacation and retirement homes there. As a result, rent and housing prices are going up with some homes in the high six figures. I feel hopeful that our choice is a solid one.

Still, the truth about our financial decision won’t reveal itself for a few years, especially given that they have a new president (who I am optimistic about) and the slow pace of real estate transactions. If we need to sell – well, it’s not exactly a liquid investment. Selling a home can take one to two years in many parts of Latin America because it’s predominantly a cash market—mortgages aren’t as common as in the US and Canada so it’s harder to find buyers who can pay for a home with cash. On the bright side, this means the real estate market in Mexico is somewhat insulated from crashes. In fact, about 69% of homes are owned outright in Mexico and 87% of owned homes are debt-free. People do not live on credit in Mexico – it is a cash-based society – and there’s something to be said about a society where people aren’t leveraged to the hilt. Maybe it’s part of the reason why people are much more chill in Mexico.

Given the lack of national debt, and the bustling economy, I’m optimistic about Mexico’s economic prospects. It’s now the world’s 12th largest economy by GDP, with foreign investments increasing and a rapidly growing middle class. These well-to-do Mexicans enjoy cafe culture, rooftop cocktails, and nice vacations at the beach. They have disposable income but live within their means, and they are often debt free. By 2050, experts predict Mexico could become the fifth-largest economy in the world, driven by the manufacturing and energy sectors.

Unfortunately, I can’t say I feel the same confidence in the future of the United States. I feel Americans are in for some difficult times in the years ahead. Here’s something I read today:

“The government itself forecasts the national debt to grow beyond $55 trillion over the next decade. Social Security will run out of money in 9 years. The US dollar is on the road to losing its global reserve status soon.” 
 James Hickman

And if inflation seems bad now, experts predict that it’s going to get a lot worse. As a result, the middle class is shrinking and the American dream of home ownership is fading.

The US government is like a family living off of credit cards it can’t pay off, and the interest and debt load is compounding each month. The only reason it hasn’t hit its spending limit is because it can keep printing more money – but that just creates more inflation and a lack of confidence in the US dollar as the global reserve currency.

The military is also in trouble:

“Last year, the US military missed its recruitment goal by 41,000 troops, which is a staggering, record-high figure. The active-duty US military is now at its smallest size since 1940. As a result, mission readiness is down. Fitness standards are being abandoned. Recruiting bonuses have skyrocketed. Some politicians have even suggested offering citizenship to illegal immigrants in exchange for serving in the US military.” 
– James Hickman

One wonders where this is all headed…

Now Canada, where I was born, faces its own challenges. Skyrocketing housing costs and rising living expenses have made life there increasingly difficult. The health care system is failing people, and the political climate has drastically changed from the Canada I remember. It seems less and less likely that we’ll retire there, making Mexico an increasingly appealing Plan B.

However, Mexico isn’t without its issues, as we all know (and the US media reminds us). From water quality concerns to public safety in border towns and cartel violence in certain states, it’s clear that no place is perfect. But the positives—such as the lower cost of living, high-quality food, and excellent health care—make it a strong alternative. It’s also a place of traditional values and a ‘live and let live’ attitude, which resonates with us. As for crime – since I am constantly asked about this – I am twice as likely to be murdered in the United States than in Mexico. To my knowledge, no one has done a deep analysis on this to the extent I have. (I’m a bit of a data nerd if you can’t tell.)

Choosing Mexico as a potential Plan B has faced some criticism for ourselves and others we know. Some will even say that a “true patriot” will stay and fight for the American “way of life”. I am not sure what “fighting’ looks like. And who do we fight? Afterall, how does one fight rampant drug addiction, homelessness, reckless fiscal policies, powerful lobby groups, and overspending by the government? Because regardless of who is in power, I am 90% certain that we’ve reached the point of no return and something big and ugly will have to happen before things can turn around. I am not sure I want to be around for that.

Our forebears didn’t “stay and fight” for the old ways; they left their homeland for new opportunities in the Americas – and we admire the sacrifices they made and the courage they had to start a new life in a new country.

Today, we have advantages our parents and grandparents didn’t. We’re not starting with just the clothes on our backs and a single suitcase. Many of us have the ability to move freely, work remotely, and establish homes in new lands with greater ease. The world might be tightening up on borders and visas, but opportunities for obtaining second passports or residencies still exist for those who are prepared.

If you have the means, it’s wise to explore these options. Establishing a Plan B—in places like Mexico, which offers vibrant communities and a lower cost of living—could very well become your Plan A. I encourage you to “dig that well before you need it.” While I hope for a return to better times in the US and Canada, having options provides not just safety but also peace of mind.

If you have questions about Lake Chapala or getting residency in Mexico, feel free to comment below. I’m happy to point you in the right direction. And if you enjoyed this blog, please let me know! I’m stepping outside my comfort zone in sharing this with you.

24-hour Update: The responses to this article have been surprising. Here are some of the comments I’ve received:

“We are also looking for alternatives to the US and are going to Ajijic (edit: a town in Lake Chapala) to scout it out.”

“Agree with what you’re saying.  Can’t believe our country has come to this.  I feel it will get a lot worse before seeing any type of hope for a better outcome.”

“I absolutely loved this email. It is refreshing to have someone say what I have been thinking about the US. I do believe the US is in big trouble and there is no more American dream.”

From someone who has already left the US to live in Panama: “We have good friends and neighbors who are leaving our little enclave here in Panama to move to Lake Chapala area.”

“I really like Ray Dalio’s writings on the situation. He is seeing it as you are. He sent this out today.” Pick A Side And Fight For It, Keep Your Head Down, Or Flee
Ray Dalio | Jun 25, 2024

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