Recommend somewhere Cheap with Fast Reliable Internet!
1) How much does it cost where you live?
2) How reliable is your internet, and is it fairly fast?
Bonus question: Do you have 3G or internet available through your phone? When my electricity and internet goes down due to power failure, it's incredibly useful to still have laptop on batteries that can connect with a cell phone.
Where I'm living now just outside of Merida is great (but HOT now). I pay $165 USD/month for a private studio casita which includes everything but drinking water and a pool. It's a bit out of town though - takes about 10-15 minutes to walk to the village/bus and then about 20 minutes to get into Merida proper. But if you don't want to be that far out, you can easily get a place closer for less than $300 USD/month.
The other area of Mexico I usually live in is San Cristobal and it's much cooler (in all meanings of the word) and, IMO, nicer and cheaper than Merida. Rents are similar to Merida for nice places but you can get cheaper. Food, entertainment, etc. is cheaper and better.
Re internet, everywhere in Mexico has internet. In the Yucatan, most parks have free wifi. Every apartment I've rented has has internet - some faster than others. In most places if you want faster you can get it for yourself or talk to them about upgrading and you pay the difference. Don't know about internet on your cell because I don't want to be that connected and I've never had the power/net go out on me here (in 2 years). But I do know it's available as my husband has a blackberry that he can use to access the net.
Another bennie of Mexico if you're from the US is that you're in the same time zones and flights are frequent and relatively cheap. If you're not from the US that won't really matter.
I work online and it's been VERY easy to do down here. I can live very comfortably on less than $600 USD/month and could live on $400 without stressing too hard.
The idea that I could negotiate for faster internet with the landlord is such a great tip. I'll definitely remember that.
A good friend of mine just got back from a year living in Rome, where she had little/no internet access. Mainly because she was living in the country illegally and thus had limited choice of living situations - she found a landlord who didn't care whether she was legally there, but the consequence was that said landlord also wasn't really invested in supplying all the latest conveniences.
The same friend spent two weeks in Sicily and described it as basically a third world country.
I combined a trip to northern Italy with a visit to said friend and found that free wifi was thin on the ground. A few hostels where we stayed had it, and I think in Verona we got a signal on our iPhones in one of the main squares. Most internet cafes didn't have wifi at all, even in Milan.
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