Wednesday, October 08, 2008

You’re Welcome: The cost of living (Part 1/2)

Today, I received this e-mail from a future Geojite (or is that Geojean?):
American in Korea,
I am set to come to Korea in January to teach English in Geoje.  I found your blog by performing a Google search and I wanted to ask you a question.
Can you give me an idea of the cost of living in Geoje?
I'm sure that you are busy, but if you find time, it would be great if you could help me out.
Thank you for your time.
Well, CW that’s a good question.  And of course you’re welcome before you even thank me.  I want to answer your question in two parts.  Today, I want to look a a general snapshot of Korean money compared to US money.
I don’t know your situation but if you are paying off any loans or debt or have the goal of saving up dollars—or any other currency for that manner—Korea is going to be mighty expensive.
I previous wrote about the sinking Korean won a few weeks ago.  Then, I took the hit and exchanged my money and sent it to America.  I’m glad I did then, because its gotten much worse.  The won is now at a 7 1/2 year low against the US dollar!  The only time its been worse in recent history is when it was forced into an IMF loan in 1998.
Here’s today’s chart from Google Finance:
krw 10-08-08
Its down about 33% the past year, and down about 10% the past three weeks.  I re-did my end of term budget to plan in my final payments from Korea (last paycheck, severance pay, and pension disbursement) and was shocked at the results.  I lost $600 compared to what I would have received if September had been my last month!  That’s what a 10% drop in a currency means for ex-pats sending money back overseas.
Teachers with prior experience or a teacher’s degree usually get a 2.2 million won a month contract.  When I first came, this was worth about $2,400 a month.  Add in the benefits—health, the severance pay at the end, and the paid housing and the deal was good.  Now the same 2.2 million won month contract is worth about $1,600 a month!  That’s $800 less than the beginning of term!  Because of the sinking won, many teachers have taken a de facto pay cut of $800 a month!

Korean Won US Dollars
October 2007 2.2 million $2,400
October 2008 2.2 million $1,600

Those wanted to save money or send money home are at a serious disadvantage.  However, if you are looking to travel around Asia during breaks, around Korea on the weekend, and be immersed in a foreign culture, Korea would still be a great choice.  It just might be a good idea to keep the money you earn here until the won goes up a bit before sending any of it home.
Also, while the weak won hurts the exchange rate, it hasn’t caused a huge inflation.  I’m speaking as a consumer here not an economist.  So your won aren’t as worthy overseas, but here in Korea, they are just right.  Tomorrow, I’ll talk more about.
You’re welcome.

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