I have read the first two answerers and quite frankly, I have nothing to add that would be any different their answers.

Best of luck.
References :

Read Rolly’s excellent article on moving to Mexico.
http://rollybrook.com/how_to_move_to_mexico.htm

Define "cheap" and laid back area. Rent is higher near the beaches than it is inland, and lower in areas with fewer gringos, but you need a lot more Spanish. For instance, folks near Lake Chapala or SME (pricier) are pretty clever about understanding bad Spanish. Further out you go, the less likely you are to find English speakers or people who can understand you unless you are fluent.

For example, in villages near Lake Chapala but further from the Gringo enclaves of Chapala and Ajijic, the rents are pretty reasonable. You can find a simple one-bedroom furnished (you DON"T want unfurnished - usually means no appliances, sometimes no fixtures) as you go toward the south side of the lake for around $200 a month. It may not have high speed Internet available, but will usually have phone service.

Many areas have CraigsList and sometimes you can find good rentals. The best rentals are word of mouth or notes on bulletin boards.
References :
retired in Mexico

and Puerto Vallarta:
http://pv.en.craigslist.com.mx/

Mexico is a great place to retire, but it’s a difficult place if you have to work to support yourself. You have to job skills good enough that the employer will write the visa letter stating that he could find no Mexican with the right skills for this job. Some people get jobs selling time shares in resorts like Puerto Vallarta, but it’s hard because they nay only get one sale for every ten pitches.

A better idea is to work hard in the US and save and invest your money. Then take vacations to Mexico every year to see what area you like best. Then when you retire, you can take your Social Security and IRA money to your favorite spot.
References :
http://www.mexicoguru.com/asktheguru.php