Pinching pennies will earn you a reality check

How does the looming world recession affect a China expat? The good news is that China is one of the best places on earth to survive a recession.

Living costs are cheap and there are plenty of opportunities to pinch your pennies.

I have been saving more than 4,000 yuan ($553) a month by cutting back on the 300-yuan ($42) nightly dinners, nightclub adventures, multiple taxi fares and compulsive buying.

I curbed my expenditure by living more like a local. My saving strategy began about a year ago when I decided to buy an apartment in China.

After the recent stock market wobbles, I'm glad I developed the saving habit.

How well do you remember the crash of 1987 and the following lean years?

On October 19, 1987, Wall Street plunged 22 percent, the largest one-day drop in history, and many will remember the impact it had on lifestyles.

Back then, I was a cadet journalist and was asked to approach Australia's richest man, Robert Holmes A Court, for his personal response. His companies had lost $1 billion of their value overnight. As he toured a steel mill, donning a hard-hat, and wearing a $3,000 Italian suit, Holmes A Court walked past the media pack. "How does it feel to lose $1 billion?" I shouted. He smiled at me and walked away.

I got a reaction and was able to write: "Australia's richest man today smiled at his $1 billion loss." My editor was happy, but most working people in 1987 were not. Everybody was scared of losing their jobs, just like they are today.

The key part about the 1987 recession was that if you had a job, life was still OK. I was a 20-year-old, and relatively ignorant about the real impact because I had a nice envelope of cash coming in each week.

People who really suffered in 1987 were those living beyond their means in the lead-up to Black Monday. These were guys who were making $4,000 a month and spending $5,000. It was the 1980s, and "greed was good".

Over the following months, these high rollers, who had lost jobs, were selling their Porsches and BMWs dirt-cheap.

Most of us expats have jobs and will not be forced to sell our top-end cars because most of us don't have them. We don't also pay insurance, registration and running costs that go with the four-wheel deal. Compared with our friends back home, our car-less lifestyles can mean a $150 a week saving straight away.

Food expenditure is another way to save. I started cooking at home and my 100 yuan ($14) stretches a long way at the market. I'm hosting low-cost dinner parties and it's high-end fun.

We might get lucky, and there may not be a recession, but the recent market crashes have made me think of my good American friend's whopping credit card bill. It's out of control and he's not alone.

Living on credit is one of the reasons why the world is in all this financial mess. A modest China expat lifestyle can get anybody's finances back on track.

(China Daily 01/28/2008 page10)