Regular readers will know that I’m one of the world’s great ponderers. But, I have to admit, it wasn’t always that way. When working in the UK (boy does that seem an eternity ago) I used to ponder but back then I described it as thinking. I was paid to think, and think quickly, not ponder, you understand.
But now ? Well now I ponder. And I ponder a lot. I ponder about the weather. Will it be sunny? Will it rain? Will our water tank be full soon? Will Arsenal win the next game? You give me a subject and I’m sure I will able to ponder about it. But the subject I’ve spent a lot of time recently pondering about is the sterling v US Dollar exchange rate. It’s fair to say that I’ve had money on my mind.
Why? Quite simple really. My pensions and the majority of our easily convertible assets are in sterling and sterling has taken a real pummelling recently and particularly so since Brexit.
Before we moved here I did all of our budget calculations on the basis of US$ 1.50 to £1 exchange rate. The rate was better than that but my years of managing budgets for companies that I worked for had taught me (well actually it was the Finance Directors that browbeat it in to me) to always be prudent. I then did the same calculations – for the cost of building our house and living expenses during and after the completion of the build – but this time using outliers . I even went so far as calculating a 1:1 exchange rate. I never, ever, expected the rate to drop so low but I wanted to be sure that if it did we could still ‘cut the mustard’. And we could.
Since moving here -and especially during the build process- I’ve studiously watched sterling’s movement in the currency market and bought sizeable ‘lumps’ of US dollars when I thought the rate on offer was good. During the early stages of our house construction (the period when the staged payments to our building contractor were among the highest) I managed to secure exchange rates in the low to high US$ 1.70s. Sometimes ‘beating’ my budgeted rate by over 15/16 %.Good times.
But now? Well now the exchange rate has swung viciously the other way and you’re lucky if you can get much better than US$ 1.25. A negative movement from my budget rate of 16.66%. Swings and roundabouts right! But we got the positive swing on the rate during the heavier cost of the build as opposed to the much, much lower costs of covering everyday living expenses. So no complaints from me. These things happen. And if I complained it wouldn’t change a thing. So why waste the effort!
This US dollar exchange rate monitoring is not something that becomes ‘a way of life’ only for people like me from Britain. It will (obviously) be the case for anyone whose ‘funding ‘ isn’t already in US or Belize dollars.
So my message to anyone thinking of moving here who find themselves in similar circumstances is to spend a little time calculating how a range of US dollar exchange rates will affect your ability to live in Belize without negatively impacting upon your standard of living.
There are ways of taking out the risk/uncertainty of what rate you will get from month to month. For example if you have the necessary funding you can make sizeable (maybe enough to cover your living costs for a year) by exchanging currency if the rate moves in your favour. Another way is to enter into a forward currency contract. Neither option significantly increases the exchange rate but you do have the certainty. You know exactly how many US dollars you have to spend.
Now if you’re wondering why I’m putting this ‘out there’ (wherever ‘out there’ might be) it’s just to let you know what some of my ponder moments concern themselves with. I don’t just sit there out on the veranda – the western, lagoon facing one that is- drinking coffee – instant, black and unsweetened- and dream about Arsenal once again winning the Premier League or winning the Champions League for the first time. Oh no. Now you know that I do occasionally ponder about far less serious stuff than that!
The headline for today’s ‘Business Section’ edition is based on the single released by Sam Smith in 2013 which reached number one on the UK Singles Chart.