Geoarbitrage: The Only Guide You’ll Need On Geographic Arbitrage
Expenses can vary a lot depending on where you live: This is a truth basically everyone is aware of. However, many are not aware of how it is possible to take advantage of this truth to improve their finances.
By using geoarbitrage, you can save money by living somewhere else without the need to leave your current job. With remote working becoming more popular every day ever since the COVID-19 pandemic started, doing this is easier than ever.
While geoarbitrage might sound like a complex financial strategy, it is pretty easy to do. In this guide, we will tell you all about how you can use it to gain financial freedom—all while having great experiences in the process. Let’s get started!
What Is Geoarbitrage?
Geoarbitrage is the practice of taking advantage of the difference in prices between various locations. As we all know, housing is the biggest expense for nearly everyone. According to Business Insider, Americans pay 37% of their monthly income on housing.
If we could just reduce that a bit, it would be incredible. You could save a lot of money in the long run. To live cheaply you need to spend less, so why not start with housing? This is the premise of geoarbitrage!
Let’s say you get paid $100,000 for your software engineering job and can work anywhere in the world. As long as you have an internet connection, everything should be alright. So, why live in San Francisco when a studio apartment of 400 square feet will cost you $2,500?
There are far better options like living in a 4,000 square feet house in South Dakota for the same price. However, if you don’t want to live there, you can find beautiful properties around the world for less than $1,000 a month. Airbnb will do all the work for you.
If you can do your job anywhere, it doesn’t make sense to pay exuberant rental costs when you could live somewhere else for cheaper. This is exactly what geoarbitrage aims to solve. By doing it, you might achieve true wealth and retire early, even if it is not a permanent move.
This is not a new strategy as, in fact, tons of people have been taking advantage of it for years. Have you ever heard about digital nomads? This is a form of geoarbitrage. Living anywhere in the world while working remotely is now easier than ever!
How Can You Determine Cost Of Living In Cities?
When choosing where to live, you should always consider the financial aspect of it. After all, moving to Dubai wouldn’t make sense if you are looking to spend less. Fortunately, there are a lot of tools available to determine the cost associated with living in a specific city. Let’s take a look at some of them.
You can determine the cost of living in other cities using online calculators. Our team tried many of these and found the two best calculators. The first one we are going to share is BestPlaces.net
Right off the bat, we are going to say that there is one major con here. They have a paid service that gets you many more data points. These include the cost of exact groceries like milk, apples, broccoli, and many other categories.
For $9.99 a month, it actually might be worth it for one month or two. Especially if you are thinking about making a huge life change by moving cities. Numbers, in that case, mean everything.
However, the free features certainly get the job done. They will give you an expected wage change, comparison highlights, and a head-to-head breakdown by category. This is based on the cost of living index.
But how does this index work? 100 for each category would be the U.S average. A cost of living index of 130 means that the city you are looking for will cost you 30% more than the average. If it’s below 100, it will be cheaper. This should be as clear as water!
Finally, seeing the net increase or decrease expected by category is not the only thing you can do. You can also see how each city stacks up compared to the U.S average.
The next online calculator we would like to recommend is the Cost of Living Calculator | Salary.com. Salary.com is more concerned with making you understand how the cost of living and salary might change for your position.
The first thing you’ll want to do is enter your job title. There are lots of auto-suggested titles here. Then, complete your current salary, current city, and desired city. Now once submitted, it is going to let you know the cost of living change.
Also, you’ll know the average job salary change. In that way, you can understand if you will have more disposable income at the end of the day. This can be pretty cool.
After doing some calculations with this tool, we noticed something you need to know. For example, going to Seattle from San Francisco implies a cost of living increase of 37%.
But, a wage increase on average of 14%.
Let’s see what happens with a $100,000 salary in Seattle. That change means that at the end of the year, you’ll have $22,822 less in disposable income. Yes, this is how exuberant costs of living affect your money in general.
If you want to know everything about how to manage a $100,000 salary correctly, please visit our article on this topic!
Jobs That Admit Geoarbitrage
These are professions that you can start doing with a degree right now. You can also take a course online for two to three months and start working. These roles have pretty good salaries and are easily accessible. Don’t miss the chance to take advantage of them!
The starting salary for this position goes around $50,000 and $60,000. This is a solid job to have, and it leads to a long-term career that has good growth potential. As a project coordinator, you will take care of the projects that your company receives from its clients.
This includes things like making budgets for projects, maintaining them, and also maintaining stable relationships between the client and company. To land one of these jobs, you should develop some experience beforehand.
There is a certification you can get from the project management institute. This is called the CAPM certification. It consists of 23 hours of training plus an online exam. The certification costs $700. However, it is well worth it for the career you could gain from it.
Honestly, if you have a prosperous career in this role, you could be making six figures a year.
Graphic Designer / Video Editor
The entry-level salary for these positions is around $35,000 to $50,000. It can vary quite a bit. What graphic designers do is design any visuals that companies might need. These include logos, product packaging, infographics, and social media images.
Video editors work with content creator teams to turn raw camera footage into great-looking videos. You don’t need a degree or previous experience to get the job. However, what you’ll need is a good portfolio and expertise working with Adobe’s software.
These include Adobe Photoshop for graphic designers and Adobe Premiere Pro for video editors. These programs are really easy to learn through Youtube videos and practice.
There are also so many good courses on Udemy for $10 or less. Seems like a good deal.
Overall, these two jobs are an excellent option if you have a creative and delicate eye. You can forge a whole career out of them. These jobs give you the potential to make a high amount of income as you gain more experience.
In the age of social media, knowing how to build websites and programs is a really important skill. You can learn everything you need just from online classes and with hours of practice.
Demand for web developers is estimated to grow by 13% in the next 10 years.
You could work at normal tech and marketing companies if you want to. A lot of them don’t require you to have a degree. All they care about are your coding skills. An entry-level job would start you at a salary of around $74,000.
The real money, though, is in starting your own business. If you become skilled in web development, you can build websites for other businesses that are going to pay you $1000’s.
The position will usually pay hourly and the average rate is $16 per hour. The responsibilities of a virtual assistant will vary considerably. In general, you are going to handle the easy day-to-day tasks of a business.
The pros of becoming a virtual assistant are that the job is usually very flexible with working around your schedule. Another pro is that you don’t need any experience. However, there are some cons.
As we said before, the job is paid on an hourly basis. This means that your employer usually won’t offer health insurance, a retirement plan, and other benefits. It is also not the type of career that can make you more money in the long run.
Where Can You Go With Geoarbitrage?
With geoarbitrage, you can go anywhere in the world. You just need equipment to work (computer, wifi, cellphone, etc.). However, we will do a quick review of which are the cheapest states in the U.S. This is better if you don’t want to leave the country!
Indiana is becoming more and more popular due to the pandemic. They have more than enough small towns with good internet and a low-cost of living. This draws remote workers like you that seek to make the most of their income.
If you want to relax and don’t mind a little cold, the Hoosier state might be a good option. The cost living index in Indiana is 90.4. This means that it’s 10% lower than the average U.S state. The grocery cost index is 92.3, and the housing index goes around 76.5.
That makes Indiana a great option for people who want to make the most of geoarbitrage.
Kansas is a state that was built on farming, and these days they are big in meatpacking and manufacturing. They have a lot of open lands and not many people outside their major cities.
That’s why housing tends to be on the cheaper side.
Kansas has also started to see where the U.S is going with the pandemic. For this reason, they are putting some effort into getting faster internet. These infrastructure improvements also match with the Kansas objective of tracking remote workers.
The cost living index here is 87.9, while the grocery cost index is 92.8. As for housing, the index stays at 71.8. It’s kind of cheap to live in Kansas.
Despite its poverty levels, Mississippi is like a dream for remote workers and retirees looking to save some money. Stay out of Jackson, and you should be alright. Jackson, Mississippi is not a good place to live. The rest of the state, with all these little small towns, is pretty nice.
The cost living index in Mississippi is 84.8, and the grocery cost index is 93.1. You’ll be surprised to read this, but the housing index cost is 66.7. That makes Mississippi the best option for you for making the most of geoarbitrage.
Grab A Van (Alternative)
In this case, you don’t go anywhere, but you rather buy a van and customize it. If you do this you don’t actually need to pay rent for a location. You just have to pay for the van and everything associated with that.
This is a great option because you could live anywhere you want to for cheap. It is also good for traveling around the world, discovering new places and beautiful views.
Is Geoarbitrage For You?
To answer this question to yourself, try to think about these things:
- How much do you pay for rent now?
- What do you do every day?
- Who do you see?
- Do you enjoy yourself on the weekends?
- Do you have people you love there?
- Is your salary enough for the lifestyle you want?
You should definitely consider all of these things before trying geoarbitrage. If you think you can leave all that behind, then geographical arbitrage might be right for you. If you get excited about meeting new people and seeing new places, then yes, it is for you.
However, remember that if you go to places like Bali or Mexico, many people you’ll meet there are tourists and vacationers. You probably won’t see these same people you made friends with last month.
Unless you find others doing a similar thing like you, they’ll disappear. They have to go back to their work or where they live. It will be an ever-revolving door of people that you meet and befriend and then are gone. You’ll have to wait for the next group to come in.
If that sounds interesting to you, consider doing geoarbitrage. You can live a lot cheaper and maybe even on a beach. You won’t regret it!
Conclusion on Geographic Arbitrage
We’ve just told you everything you need to know about geoarbitrage, a perk that many don’t know about. If you want to achieve financial independence, then it is a perfect advantage you can apply to your life.
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