The Pacific coast state of Nayarit, Mexico

One of the hot new words for 2008 was frugalista—someone who lives frugally but still manages to be fashionable and healthy. Expat Cuyler Salyer and his wife Alicia have been frugalistas since before the term was invented. In their home in Tepic, in the Pacific coast state of Nayarit, they eat gourmet meals, have cable television and Internet, keep a maid, travel around Mexico, and enjoy hobbies like gardening, surfing (Cuyler surfs weekly), and trekking. And their monthly budget? Just over $1,700 for the two of them.

Cuyler, a native Californian, first went to Mexico to surf in his teens. He met Alicia, who’s from Tepic (her grandfather was the first mayor), during his college years. Cuyler’s work—he’s a telecommunications engineer—kept them moving over the years, but they maintained close contact with Mexico.

In 2002, Cuyler was caught in a massive layoff of IT employees, which proved to be a blessing in disguise. Having time and money, he and Alicia went to Tepic, where they converted a family property into a parking lot for a small strip mall. Today the parking lot provides an income stream.

After a brief return to the U.S., Cuyler and Alicia—who “always yearned to return to Mexico,” Cuyler says—settled in Tepic for good in 2007. They renovated and combined two small houses that Alicia had inherited, creating a four-bedroom, 2,200-square-foot house with a back garden. Today it’s their home. And while it means they pay no rent, housing costs in Tepic are reasonable.

Thanks to having family who are Mexican locals, Cuyler has learned a lot about living as they do—and the more you live like a local, he contends, the lower your costs will be. On housing in Tepic, for instance, he says: “If you want to live in the suburbs like an American, you’ll pay more. And you’ll have to drive everyplace.”

Instead, you can rent a two-bedroom furnished apartment in town for about $175 to $355 a month. For $485 a month, you can rent a house like theirs, with several bedrooms and a garden. In addition, living in town cuts down on travel costs. He and Alicia live 3.5 blocks from the main town square. There’s a hospital a block and a half away, and restaurants nearby.

“Usually I don’t need to go more than two blocks from the house for entertainment and services,” Cuyler says. In fact, they’ll often go a week or more without using their car. They love the convenience—and the walking is good for their health.

Here’s a sample of Cuyler and Alicia’s monthly budget:

Rent: Nothing for Cuyler and Alicia, but $350 would comfortably cover it in Tepic.

Property tax: $1.75 (half that if you have an INAPAM card)

Water bill: $15 (again, 50% off with an INAPAM card)

Electricity: $43

Telephone: $38; plan includes 60 minutes’ worth of calls to the U.S.

House maintenance: $35

Cable TV (with 64 channels and high-speed Internet): $48.50

Miscellaneous home supplies (e.g., cleaning products): $14

Propane bottled gas (for cooking and water heater): $23

Maid (who comes twice a week): $75

Food at grocery stores: $176

Meals out: $70

Travel: $143 (for longer trips, they often travel by bus—and get 50% off the fare with their INAPAM cards)

Mexican auto insurance: $21

Gas for car: $40

Medical: $20

Medicines: $28 for miscellaneous (they have saved $78 a month over the last year by using IMSS medicines)

Mad money (beer, taxis, etc.): $143

There are other expenses not included here, so their monthly budget works out to be just over $1,700 for the two of them.

Tepic has a year-round temperate climate, so they have neither heating nor air-conditioning costs. It’s not why they picked Tepic, but it’s a nice side benefit that saves on costs.

Cuyler and Alicia enjoy entertaining at home, and prefer it to eating out—though they do both. Obviously, eating in is less expensive. In addition, their first stop for grocery shopping is always the IMSS supermarket, where prices are 15% to 20% below those in conventional supermarkets. IMSS—Instituto Mexicano del Seguro Social, or Mexican Social Security Institute—is Mexico’s national health care plan. According to Cuyler, IMSS also runs a chain of supermarkets, including the one they frequent in Tepic. After the IMSS supermarket, Cuyler and Alicia go to Soriana, a major Mexican grocery chain, or to the wholesale vegetable market in town.

“Are you shocked?” Cuyler asks me gleefully, after he’s detailed their budget…shocked at how little their comfortable life costs them?

I might have been at one time, but no more. I’ve seen how far my money goes in Mexico. Without obsessing over a budget, simply living a comfortable life, you can get to the end of the month and be surprised at how little you’ve spent.

If that’s being a frugalista, it’s a pretty great way to live.

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Huge savings with your Mexican retirement card

If you’re 60 years old or older, get your senior citizens’ retirement card. Expats with an FM-3 residence visa qualify for this, getting you discounts on everything from bus and airplane fares to medicines to theater tickets. The card is issued by a government agency called INAPAM. Benefits vary by Mexican state, but “Nayarit is a pretty socialized state,” says Cuyler. Thanks to his INAPAM card, he also gets 50% off his annual property taxes and water bill in Nayarit.