Category Archives: Economics

The Challenges of Living in Poverty in Mexico

After my Herbal Material Medica and Permacultural courses were finished, I signed up to audit the MIT sponsored online course entitled The Challenges of Global Poverty.  The text for the course was entitled Poor Economics by Abhijit V. Banerjee and Esther Duflo who were also the instructors.  While I’m not by any means an economist or statistician, I knew enough about statistics to know when something was statistically significant or not but not enough to figure out the more complicated equations.  I managed to slide by with a 75 final grade.

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I did learn quite a bit about living in poverty and as a consequence, I was able to look at my life here in rural Mexico with new eyes.  Most of the samples in the class were from rural India, but it was amazing how similar the culture of poverty is throughout the world.

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Here are some of the things I learned and how that information relates to my life here in Mexico:

Many poor are unable to obtain traditional credit or open bank accounts. As a consequence, complicated processes are invented to set aside money needed for future expenses. One method of saving is known as a tanda in this part of Mexico.  A tanda is a group of people that contribute a set amount of money each week or pay check or whatever the time frame has been determined.  Each member is assigned a number.  One member receives all the money each pay period. (See A room of her own–furnishings) It allows the participants to ensure that the money needed for a particular item is available when that expenditure is due.

Personas que deben (People who owe money)

Mentioned in class was the institution of money lenders.  In India, repayment is enforced through public shame and the possibility of sending a eunuch to show his genitals to the delinquent borrower (a form of intimidation).  While Mexico is not known for its eunuchs, shame is a big motivator here as well.  Often lists of people who owe money are posted outside establishments for the entire community to see. 

Many villages in India have a sort of informal lending between families which allows those in need to receive money or assistance with the understanding that it will be paid back in the future. In Mexico, the madrina/padrino (godparents) tradition is a version of this informal lending.  When a family is planning a major event like a baptism, wedding, graduation, quinceanera, etc.,  a variety of extended family or community members are asked to take on the role of godparent.  The so honored are financially responsible for a particular aspect of the event, napkins, shoes, seating rental, mass, etc. This is done with the understanding that at some time in the future, such expense will be repaid by the recipient family in the form of another madrina/padrino setup. (See Chambelan at the church, Chambelan at the party, Secondary Graduation)

Mexico, like India, has a high number of micro businesses.  Often these businesses are run by women.  These are self-limiting businesses.  Time spent on the business is often scheduled around other obligations such as child care or meal preparation.  A larger investment in the business is not feasible because the business is limited by its product or demand.  So each day, the business owner earns just enough to get by, never more. (See Failing at your own Business)

The course mentioned the excellent health care in Mexico.  Perhaps it is excellent in comparison to India, however from personal experience, the health care in Mexico, while affordable, is not magnificent.  (See All Around the Health Care Bush, Mexico’s Seguro Popular) Health care impacts the poor the most since a major illness and/or death of a family member often eliminates any savings the family may have accumulated.  (See Mass and Burial Mexican Style)There is also a tendency to request injections or pills from doctors so doctors prescribe them whether they are needed or not.  Again, very similar to Mexican customs.

I found it interesting that India has a version of curanderos as well.  Since actual medical professionals are beyond the limited means of the poor, sick family members are often brought for prayers and herbal treatments. (See La Curandera).  

The poor find it difficult to save money for several reasons.  One reason is that women, who tend to try to save more often, frequently find their money being appropriated, whether with permission or not, by male family members.  Men are more likely to spend the money on impulse buys and non-essential goods, like alcohol and tobacco.  No comment from the peanut gallery on this startling scientific find on gender bias and spending habits.  

Because of this appropriation of funds and the difficulty of self-denial, cash is often converted into physical goods. Gold jewelry is a common investment that is easily liquidated when the need arises.  Here in Mexico, the US dollar, considered more stable than the pesos, is another way people save.  When the dollar is low, people buy it from the casas de cambio (money exchange places) and then try to time the resale to a period when the peso is low.  Of course, jewelry and cash can be stolen as well. Sometimes the investment is in livestock, although this sort of purchase carries the additional risks of illness or death. And still the very determined can make off with goats lifted over a 6-foot wall. (See Good Fences make Good Neighbors–unless your neighbors steal them,  Where oh where have they gone?)  

The poor sometimes choose to invest in building material instead.  La Yacata is a silent testimony to the hopes and dreams of the poor.  Half-finished homes, foundations poured, rooms open to the sky, just waiting for another small windfall of cash.  (See Building a dream, constructing a life)

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With all these negatives to saving, many poor would rather spend the money while it’s available instead of trying to save towards some future goal.  This is a predominant cultural norm in this area of Mexico and it’s hard to argue against it.  Every month there seems to be a festival or other event where you can spend money. (See Mexican Holidays)  Every business and home have a TV to while away the slow hours.  Homes with no indoor plumbing have 2 or 3 cell phones per family.  The idea is life is hard, might as well enjoy what there is to be had.

Neither the course nor the text provided any real solutions to overcoming poverty.  In fact, there was sort of a general shrugging of shoulders and dismissal–well, we’ll always have the poor.  It was interesting to learn that once an individual or family falls to a certain income level, they are trapped in poverty and it takes an incredible amount of effort (and good luck) to rise to an income level where real progress can be made. For the most part, the poor just don’t have the social contacts, knowledge or investment opportunities to pull themselves up by their bootstraps into wealth.

One of the biggest factors in global poverty was found to be institutional corruption.  In this, there was less hopelessness expressed by the authors.  Small things, such as adding a picture to voting ballots, changed the outcomes and thus the structure.  However, I’m not so sure how much change really can be brought about.  Institutional corruption is pervasive.  It not only encompasses the political arena, but also health care, the environment, and education. (See Mexican educational reform and political wrangling, Politicking, Local Elections)  Those that are affected most are the poor.  Their water is polluted because of corruption.  Their children are not well-educated because of corruption.  Their health suffers and they are unable to receive proper medical attention because of corruption.

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In fact, one study highlighted in the course demonstrated that the type of colonization an area was subjected to affected the living conditions of the people hundreds of years later.  Mexico was unfortunately conquered by the Spaniards who were bound and determined to extract every last bit of wealth from its soil.  The subsequent governing body set up by the Spaniards was established with plunder, not social good, in mind. Thus it remains down to this day. (See Women in Mexican History–La Malinche)

Unfortunately, it isn’t possible to cover all 12 weeks of the course in one blog post. These are the points that stood out to me having first-hand experience in my poverty stricken life here in Mexico.  All in all, it was just a tad depressing. Not to be deterred,  I’ve signed up for a new course–The Science of Happiness. It certainly promises to be a lighter topic!

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A room of her own–furnishings

We set up with just a desk for my son, a desk for me, a card table and 4 chairs. Little by little, I brought stuff from La Yacata in order to make it more functional. I had a wooden TV table that now supports my printer and the internet box, the main reason for renting this place, after all.

Before

Before

There were a few shelves that originally were in my son’s Spidey room. A little yellow paint and they work nicely in the kitchen. I scrubbed the hideous green paint off the wooden insert in the kitchen and my son stained it.  What an improvement! I had a two burner electric hot plate that works for our occasional cooking. I bought a tea kettle and 4 dishes, and 4 enamel tin cups. I was going for utility rather than luxury. I brought a few pans from the other house, a container of sugar and tea and the kitchen was set up.

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The washer, of course, was the central kitchen item. Even after owning it for several months now, I still caress its lid when I go by. I’m very pleased with my purchase.

Before

Before

The English teacher across the street said she was getting rid of her daughter’s twin bed. In exchange for a bus ticket to DF, it was mine. I had to wait about a month though since she wanted to replace the bed with a double bed and didn’t have the money to buy both the base and the mattress at the same time. Eventually, the day arrived and we went to take possession. After a bit of Tetris, the bed left her itty bitty house, crossed the street and entered my itty bitty house. It’s lovely, really.  Now I can nap if I so desire.

Classroom

Classroom

Nap area

Nap area

I also wanted to get a twin bed for my son’s room. We had enough boards at the house for my husband to make the base. After weeks of prodding, he finally did. A few more weeks of prodding, it was delivered.

So now I was in the mind to buy a mattress and maybe some living room furniture. I started my search at the new Fabricas de Francia. Ok, I admit, that probably wasn’t the best place to find a good deal. I had already discovered washers there were 30,000 pesos. But I was window shopping right? Well, after checking the price tags on a few pieces, it was time to hightail it down the escalator. I also vetoed Famsa after the looooong delay in receiving my washer. Coppel had some mattress for under $2,000 pesos and free delivery, but I still didn’t want to pay that much. The sofas and stuff weren’t really nice either.

Before

Before

So I decided to wait for the Maraton–which is an annual furniture sale in the convention center just outside of town. There were all sort of, umm, interesting models. Not really my cup of tea, but hey, maybe somebody else wants a crib that matches their dining room set. Mattresses were anywhere from $2,000 to $3,000 pesos. The genuine leather living room sets were very nice, but SOOOO out of my budget. Fortunately, they had a scratch and dent tent outside. There was a nice blue loveseat, but just a little too expensive for me.

Before

Before

Then, I found them. Two little brown vinyl chairs. Perfect. They were good quality and I could afford both of them. I paid cash, which caused some eyebrow-raising, and they wrapped them up to go. I spent the afternoon moving them about my itty bitty living room, delighted with my purchase.

chairs

The mother of two of my students had sold me a bronzey mirror for my son’s room awhile back. (See Ladykiller’s room remodel) She said she had a second one that she also wanted to sell, but at the time I didn’t really need it. Now, though, I said I would like to buy it. She surprised me my last class before Christmas vacation by telling me she was giving me the mirror. Score!

Curtains were another issue. The two front windows had those slatted Venetian blinds, but it was still possible to peak in. After pricing vinyl window paper, I decided to just use the plastic contact paper I had bought to forar (cover) my son’s books at the beginning of the school year. It added a bit of privacy to both front windows and the back door. The two remaining windows were larger than typical, so I had to make some curtains. I bought a set of sheets for that purpose, kept the bottom fitted sheet to use as a sheet and cut up the top flat sheet. It was cheaper than buying fabric.

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I ordered some bedding from Zulily which actually arrived before the beds. I ordered matching bedding so that it all could be washed together in the washer. Practical huh?

After an exhaustive search, I finally found a twin size mattress for just over $1000 pesos at La Bodega. A little bribery in the form of “I’ll buy you a bag of cement if you will take me to pick up the mattress with the truck” to my husband and the mattress was mine.  Well, my son’s.

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I had in mind a little table to set between my two living room chairs. I found an unvarnished one that would do in el mercado (market) however they wanted $250 pesos for it. Too much, in my opinion. But wait, my son is still taking carpentry classes as his school and his current project was a small coffee table. There we have it!

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I also wanted a tree stand. Draping our coats on the chairs and dropping our helmets on the floor got old real fast. And as the house is itty bitty, well, there’s no room for that sort of disorder. It didn’t take much effort and only 250 pesos to get that necessity. A carpenter shop on Pipila had just what I wanted.

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But I wasn’t finished yet. In August I joined the school teacher tanda. A tanda is a Mexican money saving scheme. One person is in charge and receives the money. Each participant is given a payout number. Since we get paid bi-weekly at the school, our tanda was also bi-weekly with a contribution amount of $500 pesos each time. I choose the last number because in my mind I didn’t see the sense in continuing to make payments when I wouldn’t be receiving anything more. Sort of like paying for the cake when it’s already been eaten. The thing is, you have to be sure of the people involved. I’ve heard tell that sometimes the organizer refuses to pay. Or participants don’t give their contribution so others end up short. So it’s a risky business, to say the least.

Anyway, my number came up at the end of February. I received 3,500 pesos after 4 months of waiting. I don’t know that I’ll participate in any more tandas. Seems like I could save the money myself just as well. My plan was to get a loveseat for the living room, or maybe a small kitchen table and chairs. But the universe had other plans.

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A room of her own–Paying the Bills

About half way through the month, an envelope with my name on it was slid under the door. I probably was a bit more excited than the situation warranted because it was the first Telmex bill. I hadn’t even had the service a month yet, and it was already due. The next step was trying to figure out how to pay it.

I tried paying it online, but the system didn’t like my payroll credit card. So then I thought I’d try and go to the Telmex office to pay it there. There is only one Telmex office and it is smack dab in the middle of the mercado (marketplace). I went after school and could NOT find a place to park my moto. Two for two in failed attempts. But, the third time is the charm, right? I went to Soriana with the intent to pay the bill at the register. Only, I paid for my groceries and forgot to pay for the bill, so I had to go back through the line again. There is a 5 peso fee associated with paying at the store, but it was done.

Then rent was due again. I didn’t want to make the trek to Yuriria every month, so I called and asked the owner to give me a bank account number where I could deposit the rent. She gave me an account to HSBC, so I decided to swing by after my afternoon private classes. I struck out. The bank closes at 5:00. I had to try a second time right after school the next day, but it was easy peasy. It was certainly better than a long drive.

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The water bill also came with its outstanding balance of 600 pesos. The owner said that her brother-in-law took care of that (he works at the water company) and I wouldn’t owe anything until January. I expected a pretty high bill with all the washing I’ve been doing, but I guess it just comes with the territory.  And sure enough, the first bimonthly bill was $426 pesos.  A whopper!  Of course, I did wash EVERYTHING in the house, so I’m hoping that the next bill is less. However, looking at the breakdown, there’s a charge for each of the following:  agua, alcantarillado, tratamiento de aguas residencial, rezagos agua, rezagos alcantarillado y tratamiento, recargos, credito por redondeo, cargo por redondeo, IVA alcantarillado y tratamiento (water, sewage, sewage treatment for residence, water charge, sewage charge, surcharges, rounded up credit and charge, taxes on sewage and treatment).  My actual use was lower than the August and October usage, but the charge was exactly the same for the August bill.  Hmm.  

There were fewer options to pay this bill, so off to the water office I went.  Fortunately, I knew where it was and had until the 24th of the month to pay it.  Office hours were from 8 to 2 Monday through Friday.  Not exactly convenient for a working stiff, but  hey, them’s the breaks.  The trick is to get there around 8 before most Mexicans are up and about to avoid long lines.   I could use my bank card for only a 2% commission fee added on, but I opted for cash.  

I asked the girl behind the window what those rezagos charges were.  She said two past bills hadn’t been paid.  As I did not live there during that time, I am not responsible for those costs.  Guess who will be getting $200 pesos less in next month’s rent payment?

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The electric bill was my favorite bill of all!  During the 2 months, I had rented, I had used less than 50kWh which made me eligible for an 85% government assistance credit.  The production cost of the electricity I used was $373.14.  The government support was $333.49.  That meant I needed to pay a whopping $50 pesos.  Of course, there are rumors of this subsidy being revoked in 2017, so I won’t count on all my electric bills being so low, but hey, every little bit counts.  (See Tras gasolinazo, CFE sube tarifas de luz  and Electricity costs up, will continue to rise)

By this time I was an old pro.  Off to La Bodega I went, my little green bill in hand.  When I handed the bill over, the check out man asked me twice if $50 was the total I was paying.  I assured him it was, twice.  So he processed the payment.

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By this time, the Telmex bill was due again.  This time I headed to the office to pay and found a specially designed ATM outside ready to accept my payment.  Bill paying was done in no time.  I heard a rumor that there was one of these handy dandy payment machines for the electricity bill too.  I’ll definitely check it out next month!

In the meantime, the refrenda for my moto came due.  Conveniently enough, I could pay this bill at the Isseg Farmacia instead of heading to the department of motor vehicles and taking a number.  So that’s what I did. Two minutes and 119 pesos later, I was done.

Finished.  I feel so empowered!  I can pay bills in Mexico all on my own!  Yeah me!

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Book Review–Launch Your Dream by Dale Partridge

launch your dream

So how do you get from just dreaming about what you want from life to actually doing something about it?  Launch Your Dream by Dale Partridge gives you 30 days of activities specifically geared to help you set up your own business and develop a sustainable lifestyle in the process.  This step by step approach will assist you in having it all, including meaningful work, a balanced family life, and adequate income to maintain each aspect.

I have to admit, I highlighted huge sections of the book. There were so many points I wanted to incorporate into my life, that I had to reread the book a second time, paying special attention to the text I had marked.  What stood out for me was the systematic debunking of certain “follow your dream” myths.  The top 10 incorrect beliefs are as follows:

Myth #1

Working for someone else is more stable than being self-employed.

Myth #2

Anyone can work for themselves.

Myth #3

It’s a simple matter of discovering what you are passionate about and doing it.

Myth #4

Self-employment is the gateway to wealth.

Myth #5

Failure should be avoided at all costs.

Myth #6

The number one reason people don’t start their own business is a lack of funds.

Myth #7

Only the young and hip are successful entrepreneurs.

Myth #8

Working for yourself means no more free time.

Myth #9

To be successful, one must be ruthless.

Myth #10

If you build it, they will come.

Once I was convinced that I, too, could become a successful entrepreneur, it was time to break it down into segments.  The bottom line, which totally amazed me, was when looking at your proposed business, or at your current life, you are not the hero, but the guide.  With the self-absorption prevalent in modern society, it takes a bit of a mental stretch to wrap your mind around this concept.  Your purpose in creating a business, any business, is to provide assistance to others so that your customers can triumph.  Your role, whether you provide a physical product or not, is that of service. Starting with this foundation, the sky’s the limit.

Although I’m in the midst of a transition year (See A Room of Her Own), I don’t have a specific business I’d like to open right now.  That’s not to say I haven’t done so in the past (See Failing at your own Business) or will do so again in the future.  Ninety percent of this book, however, could be applied to the growth I would like to see with this blog.  Not necessarily as a source of income (See Failing at your own business–blogging) but as a fountain of knowledge for others.  You may have noticed I have branched out a bit with my topics recently.  Well, expect some more branching to follow.

“Your ultimate goal as an entrepreneur is not to have a successful start-up; your ultimate goal is to live a successful life.  Your goal is to have it all.”–Dave Partridge

five-stars five

See reviews here. Get your copy of this book here. Dave Partridge also runs a business start-up workshop on which this book was based.

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Disclosure of Material Connection: I received this book free from the publisher through the BookLook Bloggers book review bloggers program. I was not required to write a positive review. The opinions I have expressed are my own. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255  “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

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