2013 Musings from Togliatti, Russia: Cost of Living, Money and Finances

Note: Values are in £ Sterling. There are 100 pence (p) in £1. Those who think in Dollars must multiply by 1.5 to get a Dollar figure. Thus, £100 is $150, 30p is 45c, etc. You get the idea…

My wife is fond of telling me “people” earn £200 a month in Russia. I don’t know why she says this, as I never met anyone I supposed was on £200 a month for a long, long time. I since pointed out that she hasn’t lived there full time since 2005 and things may have changed. I also point out that she burns over £1000 in a month there without too much difficulty – and that’s without shopping for girl stuff. And I burn more when there. So where are all these £200 a month people? They are not the ones I see sitting in restaurants paying £120 bills, with Audi four wheel drives outside. I don’t even see destitute pensioners begging near churches like I still see in EU Estonia.

Lets take a look at the cost of living: Utilities are very cheap in Russia. The oil and gas is there, not imported, and many buildings still run communal heating systems. Which cuts costs for heat and hot water. My wife’s old flat costs something like £20-£30 a month for landline telephone, gas, hot water, electricity and service charges. In the UK you would likely pay ten times that.

There is no Poll Tax, Rates or Community Charge there. (I don’t know if the US has that or what it might be called there, but in the UK that is a local municipal charge that is maybe £150 a month per house. Its what pays for garbage collection, police, fire department, local services and maintaining parks and public areas, etc.) They don’t have that. Probably why they are not too hot on maintaining public spaces.

Petrol (gas to Americans) is something like 30p a litre. I’ll take the trouble to convert that to a Dollar US gallon price: $1.72 per US Gallon. By comparison, in the UK we pay about $8 a US gallon (£1.40 a litre).

Taxis are between £2 and £4 across town. You might pay £4 for a 20-30 minute journey. A bus the same distance might be 40p. In the UK you can pretty much multiply that by ten.

Internet is either by 3G dongle or broadband via landline. Either way, £10-£20 a month covers it. Every man and his dog has an iphone, a tablet, a laptop or something that connects to the net. All the internet cafes closed down locally. Free wifi is growing. Every company has internet. Every girl has a net connection one way or another – make no mistake. The “no phone” or “no internet connection” or “internet cafe” charges are long gone.

We have mortgages and home loans. Many Russians don’t. Many live in Soviet time flats they got free from the state. Many also have other flats inherited from family they either rent out or have sold to use as down payments on newer mortgaged homes with a good LTV ratio. No 95% mortgages there. If you have a mortgage, you probably put half down. There are no inheritance taxes or capital gains taxes to speak of. Or if they exist, they are easily circumvented. Asking about them only elicits laughter, anyway.

Credit uptake is growing. Mortgages and car finance are available; and people are starting to use it. Interest rates are not competitive by our standards. I saw some side-of-the-road billboard advertisements for “Payday Loans”. Which Brits will know as sites like wonga.com that loan poor people money at thousands of percent per annum short term until they get their salary. These people are the parasites of the UK financial industry and the government here has just regulated them heavily. In Russia its new, and people are sucked in. Credit cards are also available, but debit cards are more popular. This is still a mostly cash based society, even though credit has arrived.

People who tell you stories about US Dollar transactions are twenty years out of date. All that is fading away; as it was ten years ago too. My FIL gave us $300 he got bugged into accepting in some deal from a guy last year because he knows we use Dollars as we visit the US. He didn’t want to change it locally lest he got nailed on exchange rates. He couldn’t use them anywhere else because people seldom use them any more. The Rouble is more stable in recent years than the Dollar, and if one is forced to use a foreign currency, the Euro makes more sense as Europe borders Russia. ATM’s don’t offer them any more. To use the US Dollar in this part of Russia now would be like an American choosing to use the Australian Dollar by choice in Seattle. I mean, why would he? What reason would there be to do so? It would simply make no sense. The US Dollar is finished here.

Restaurants: I don’t go to Russia to “feel the struggle” any more. I want western standards. In Russia that means upper end. That means a restaurant bill will rush you anything between £80-£120 for two with drinks. That is English money. Choose carefully and the food will be OK, it will arrive at random times and service will be questionable. But they are still learning – its the best you will get. Really, you don’t go to Russia for the food. Its a big effort and top dollar to create anything remotely edible. In Togliatti, its Park Hotel or Vostochny Express or nowhere.

Shopping: Don’t bother. Anything you actually want to buy is imported from some place you can buy it cheaper. Nobody has stock of anything in all sizes anyway. And the credit card machine is always “broken” – so you pay cash. Unless its something manufactured locally (and I cant think of much that is, apart from Olymp mens shirts that are quite good), it wont be cheap. Everything is imported from EU Europe and carries a greedy Russian price hike. Really, nothing that is “consumer goods” is cheap in Russia. The only exception might be fur coats and some girls boots. But generally, don’t go shopping in Russia.

The Grocery store: As you do, I insisted on going to the grocery store alone. I like to try out my bad Russian language and prove how I can exist for at least thirty minutes alone without having to call my wife.  :chuckle:  I buy two carrier bags of basics, which is orange juice, proper toilet paper, maybe a bottle of wine and a few bits. It costs over 1000 Roubles. Which is £20-£25. I am sure what I bought is cheaper in England……

OK, I don’t have a great perspective on what groceries cost in England because I don’t personally do it often, but I know vaguely what my wife spends each month in Tesco’s, and its less than £20 a day. She tells me its because English supermarkets have 3 for 1 offers, buy one get one free, and we get discount vouchers, “Whoops” and all kinds of stuff that isn’t in Russia yet. She is all over what supermarket does what deal and buys wisely.

Like any bloke, I just bail in, buy what I want that moment, and a packet of Smarties, and pay what it costs at the till. But Russia had some serious food inflation. Food there is now English money.

The long and short of it is I am taking 6000 Roubles (£120) a day from the ATM (local bank limit), and while we are eating in some restaurants, we are not living a lavish lifestyle. We are just taking some taxis and doing what we need to do. And at 6000 Roubles a day my wife still has to open her purse and settle a bill sometimes.

Russia is not a cheap place any more.

People have said for a long time that to replicate a western lifestyle in Russia costs more than at home. And it does.

When you subtract the stuff that is laughably cheap, what remains is way overpriced. But its true that if you just go about your day, have lunch somewhere, take a few taxis, have dinner somewhere, buy a few provisions from a grocery store, maybe take a boat trip or do something each day, you will be surprised how the money just drains from your wallet.

In Russia, if you look at locals, many of them are tooling around in BMW, Audi and other imported cars. Those cars cost almost twice in Russia than they do at home. And we know few will be on finance. That means the bloke in the BMW jeep likely coughed up close to £50k for that car. Well, he isn’t on £200 a month is he? Local oligarch perhaps? Five years ago you saw the odd one and you may think so. Now go to a decent restaurant or the yacht club and these cars are lined up outside.

We took a boat trip for a couple of hours down the Volga. Tickets were maybe £5 each. The guy ahead of us brought three pals, a big pizza and crate of beer so he and his buddies could chill out. So tickets £20, pizza and beer maybe another £15. So this average bloke spent £35 for a two hour chill with his pals. So he isn’t on £200 a month either.

I would recommend any visitor budgets for £100 a day, excluding accommodation. And have a back up card in case he runs out.

Anyone who can live in Russia on £200 a month rides the bus, shops in the cheap market and eats only home cooked cabbage and potatoes. Whilst many do live like that, what I guess we can call the middle class is growing quickly and noticeably. People are buying the new houses as they are built, people are buying new cars, both local ones and imported ones. People are dining out more. People are remonting their dachas. People are holidaying abroad. People are spending money, so that money is coming from somewhere.

The only explanation is that the economy is starting to work as it should. Government is spending money on improving infrastructure. That money eventually filters down the food chain to the baker, the butcher and the candlestick maker.

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