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Personal Finance

Geoarbitrage: Making Big Money While Living in a Low-Cost Area

November 6, 2019

In the old days, people used to dream of moving away from their small hometowns and into the big city to make big money. One drawback is that the big city also has bigger expenses. That was the only recipe for a high income back then.

Well not anymore. Today, people are achieving that dream of a high income while still living in a low-cost environment.

This is called Geoarbitrage.

What is Geoarbitrage and is it Real?

Geoarbitrage is a combination of geo, meaning earth, and arbitrage, which in the world of finance means “the practice of taking advantage of a price difference between two or more markets.”

Put simply, geoarbitrage means earning a high income from one part of the world, then using that income in another place where the same money can stretch further.

It’s a simple concept but there are several methods that have been gaining traction on the internet.

International Geoarbitrage

People around the world are now more connected than ever and with computers penetrating nearly all U.S. jobs, there are some taking advantage of this and working in high paying jobs while living in a low-cost part of the world.

International geoarbitrage is basically living in a low-cost country while working in a remote job for a company based in a higher income country.

While not all jobs can take advantage of international arbitrage, there’s certainly a huge number of jobs available.

A lot of freelance-based job market sites have been popping up like Fiverr, Upwork, and Freelancer. You can also find full-time careers working remotely.

Remote work salaries

Let’s see some of the most common remote jobs available.

  • Client Services Director – $104,724
  • Developer – $79,985
  • Accountant – $55,202
  • Writer – $52,343
  • Teacher – $45,483
  • Online Tutor – $26,019
  • Virtual Assistant – $22,000

Some of these might not look like a lot if you live in the U.S. but remember, we’re living in a different country. Source: Glassdoor.com

Let’s take a few cities from this list of geoarbitrage cities and compare the average annual salary that you can get if you work there locally. We’ll use the lowest and the highest of the remote job salaries listed above: Virtual Assistant ($22,000) and Client Services Director ($104,724).

So as you can see, if you live in Split, Croatia, you can live 2.3-11.2 times more luxurious than the average local. If you live in Chiang Mai, it goes even further at 3.4-16.2 times! Source: numbeo.com

And these are just the figures from the most common remote jobs. Your expertise might even be among the highest-paid remote jobs available.

Domestic Geoarbitrage

If moving to a different country isn’t for you and you like going to the office, then you could consider just moving one state or even just a few miles away.

Domestic geoarbitrage means staying in the same country but taking advantage of price differences between states, cities, or even just different parts of town.

In every city, there’s an expensive part of town. In San Francisco for example, you could be saving more than a thousand dollars per month if you move from an expensive place like Soma or South Beach and move just a few miles south.

Now if you’re lucky enough to work near the state line and we start jumping between states, that contrast is even more obvious.

The relative value of $100 can vary greatly from one state to another.

Source: taxfoundation.org

If you work in California, for example, and you live in Arizona, That would be like having a 20% increase in net pay.


Another thing to consider is state tax laws. Each state has different state income, effective income, sales, property, and gas taxes and some states are more tax-friendly than others. Some states have 0% for some of these taxes.

 

Source: Kiplinger.com

So it’s well worth looking at all these tax advantages and cost of living differences between states.

Part-time Geoarbitrage

In some situations, working in one place and living in another just isn’t an option. Some jobs require you to basically work and live in the same place, like working on an oil rig, working on a fishing boat, or as a soldier deployed overseas.

In these cases, geoarbitrage is still possible, if only part-time.

For example, you can decide to work 6 months of the year, and then spend the other half holidaying in Vietnam drinking out of coconuts or doing some volunteer travel and helping out in another part of the world. 

Part-time geoarbitrage is a great option even if your job doesn’t require you to work where you live.

In this type of lifestyle, you actually take frequent mini-retirements rather than saving it all up for the end. Which actually makes sense since in doing so, you can spend the best part of your life in the best health of your life.

And if you invest in properties in multiple regions of the world, then you’re all set! You can live in them for part of the year and rent them out as holiday homes when you’re not there.

Learning from Others

If geoarbitrage seems appealing to you or if you’re curious to find out if it’s possible for you then you’re in luck. There’s a ton of resources you can find online about geoarbitrage: from blogs to books to youtube channels.

You can’t learn this stuff from your co-worker that’s spent 20 years working in the same cubicle, so seek out people who’ve already done it.

Learn from others living the life you want to have so you can spend more time on the things important to you.

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