I usually spend most of the US winter here in Argentina, something I have done for the last six years. During this time, I have seen local prices skyrocket, the peso become overvalued, and what used to be “cheap” by US standards, become barely affordable. I’ll give you some examples: maintenance in my apartment, from Ps 600 to Ps1400 in five years. Mate prices just doubled, from Ps 14, to Ps 28. I used to pay Ps 14/hour for my housecleaner, now I don’t pay Ps 25. Of course I’m not really complaining too much, because the value of my apartment, in dollars, has tripled at the same time, and the lousy little car I bought three years ago has lost little, if any of its value.
My Argentine friends and relatives complain a lot about rising price but seem to be living la vida loca, almost careless or carefree about their money. People treat money like dirty paper, which is actually what pesos look like here, peso bills are so thin that they break apart in your hands!
Well, I polled some locals about dealing with inflation and they gave me a few pointers in case it ever hits the US.
1) As soon as you get the cash, spend it. Why keep cash in your pocket when tomorrow it will be worth much less? Parties and outings are usually planned for the day after payday. Young people especially, really live day to day.
2) Try to if buy necessities in advance: school supplies, food, clothing, furniture and electronics. It will all be more expensive tomorrow, and if worse comes to worse, you can sell the stuff to a friend at a premium.
3) Make use of the “cuotas”, monthly payments on everything, interest free. At the supermarket checkout, every time I pay with a credit card, they ask me: cuantas cuotas? how many payments? I have seen people check out with a $20 tab, and ask for three or four cuotas. Why not? The longer you postpone payment, the cheaper it becomes.
4) If you have ANY extra pesos, buy dollars and hide them under your mattress or in a safe deposit box, if you can find one.
5) When you save up enough dollars, buy brick. ( See: http://www.wallstreetoasis.com/blog/go-long-on-br…)
6) If you don’t have enough to buy brick, buy a car, or any other hard currency denominated goods.
7) If you can avoid taxes, do so. Even if they catch you, even if they charge you a penalty, it will cost you less in the future.
8) Don’t EVER pay any bills on time or early, silly!
9) Many bills don’t need to be paid in the present, so don’t: for example, people pay very little attention to registration fees for motor vehicles, or traffic tickets. When they sell the car, a US dollar transaction, they go to the Motor Vehicle Department and pay up, in local currency of course. With fees and fines, it is still worth it, they tell me.
10) If you can borrow a few bucks from a friend, a relative or a bank, make sure you borrow pesos, and take your time paying it back. In the meantime, save dollars.
Pay attention, take heed, it may be coming to a theater near you...
Don't hide anything of value in a safety deposit box in Argentina. As a result, I'm not sure I want to own property ('brick') in a country that has such bad monetary policies. This is not a healthy way to foster a growing economy. It converts a society, as you said, into spendthrifts and saps investment and future growth.
Am I the only here seeing this as a marketing fishing hack post. I maybe wrong on this. Dude are for real? Dont tempt me to pack and head to Argentina to become a loanshark...lol
Whats incredible about Argentina is the discrepancy between the "official" inflation rate and the "unofficial" inflation rate. That is scary. Last I saw official was around 10% and unofficial running three times that. By what your saying it seems it is even higher than that for daily purchases to fluctuate that much.
Brazil is not a whole lot different. I was there recently and a local was complaining that to buy a new top-of-the-line Range Rover is over US$300K. In the U.S. it would be maybe $85K. I went to a shopping mall and was astounded as the prices. Flat screen TVs were 2-3x as expensive as U.S. It's a huge problem and due primarily to taxes and import duties. Ironically the laws that are supposed to help the average person in reality make them suffer.
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