This is the magic of geoarbitrage
Feeling stuck in debt? Wondering if moving might solve your money woes? Today, we discuss geoarbitrage, a strategy many use to pay off debt, become financially independent and retire early.
For those who live in a place with a high cost of living, it can be a struggle to save and pay off debt. Geoarbitrage your dollars to go further so you can meet all your financial goals faster.
So, what’s geoarbitrage? Geoarbitrage means to move locations for a lower cost of living to better your financial situation.
There are two main types of people interested in geoarbitrage: those who want to reach financial independence and those in retirement who want their money to last longer.
Interested in learning more about geoarbitrage and how it might help better your financial situation? Hear Ali & Alison of AllOptionsConsidered.com share how they’ve used geoarbitrage to fund their early retirement, then keep reading to learn all about how those in the LGBTQ can take advantage of this way of living.
Geoarbitrage with Ali & Alison on Queer Money®:We thought, through all of our research and all of the budget work that we were doing, that we could blend staying in different countries around the world—and stay in or under budget. - Alison Walker of AllOptionsConsdered.comClick To Tweet
Affordable places for LGBTQ folks to geoarbitrage in the US
For those in the LGBTQ community, moving locations can come with apprehension and worry about where to move. Finding an LGTBQ-friendly city can be difficult and adds extra requirements when finding a place to move that fits your ideal.
If you’re just getting started with geoarbitrage, the steps to get from where you are to actually move can be overwhelming. To help make your decision on where to move easier, check out 25 affordable gay cities you’re forgetting.
Types of geoarbitrage
We already talked about the two groups of people who typically use geoarbitrage to hack their location and financial situation. Now let’s talk about the two main types of geoarbitrage: domestic and international.
Domestic versus international geoarbitrage
Domestic geoarbitrage is for those who plan to stay in the same country they currently live in. If you’re in the United States, you may move from one state to another, but stay in the same country.
As those of us who live in this country know, the cost of living from state to state (and even city to city) can vary widely. According to a 2019 study by Statista on the 10 most populous cities in the country, a homeowner living in San Jose, CA would need an income of almost $198,000 while the same homeowner in San Antonio, TX would only need about $72,000 for the same lifestyle.
The other type of geoarbitrage is international geoarbitrage. Instead of staying in the same country you currently reside in, you would move to another country to get the benefits of location hacking. Like domestic geoarbitrage, the costs of living vary greatly for international travel.
You could live like a king (or queen) for less than $1,500 monthly in some locations in some locations, such as Malaysia, Thailand and parts of Italy, according to U.S. News & World Report in 2019. However, there are other locations that could be even more expensive than your current situation, so you’ll have to pick wisely. Because the world is a vast place, finding a geoarbitrage location could be more difficult when going international vs staying domestic.
Geoarbitrage to retire sooner/FIRE
The majority of younger people focused on geoarbitrage are part of the FIRE community, or those seeking Financial Independence so they can Retire Early. Retiring early may feel like just a dream, but by hacking your location through geoarbitrage, it can help you realize your goal much quicker than you may realize.
If you live in a city with a higher cost of living, geoarbitrage can help you meet that goal much faster than staying put. Unsure how to do it? No problem. To help you plan your exit strategy, see Your Sure FIRE 5-Step Early Retirement Plan.
How to use geoarbitrage to fund early (even late) retirement
1. Learn what geoarbitrage or early retirement look like for you
The first step is to get crystal clear on what geoarbitrage or early retirement look like for you. Do you want an active retirement full of adventure or a casual, relaxing retirement? Do you want to stay in the U.S.? Live abroad? Or, slow-travel around the globe?
Once you know your definitions of geoarbitrage and retirement, you can price it and plan it. Click here to learn more.
2. Prepare to earn more (even in retirement)
There are several ‘passive’ ways to earn money whether you’re retired or simply geoliberated. There’s small business income – yes, your own small business – real estate income and investment income.
See why we told Experian that knowing your true income is so important:
3. Invest more (because you should never stop investing)
Yes, you want to invest for income as we said above, but you should also and always invest for growth, too. This is true no matter how old you are.
4. Save more aggressively
Even though it’s harder to save more money in our low-interest-rate environment, saving more money is still an important strategy and there are few tricks to do so.
5. Borrow less money for more geoarbitrage flexibility
Debt, especially credit card debt, simply anchors your future earnings (savings and investments) to your past.
Avoid debt as much as possible, and pay off debt as fast as possible. Click here to learn about a faster way of becoming debt free.
Geoarbitrage for late-stage retirement planning
You may be close to or even at retirement age and wondering if geoarbitrage can help you. Depending on your financial situation and living circumstances, it absolutely can!
Even if you are close to retirement age and working on late-stage retirement planning, geoarbitrage can be a great strategy to help you get there. By lowering your cost of living, you can save and invest more, pay down debt quicker and create a nice nest egg – even if you’re starting later than you wanted.
You may be doing this alone or want a community of like-minded individuals to live near. There are gay retirement communities popping up all over the country, with more being added each year. Just like domestic and international geoarbitrage, the cost of living in a gay retirement community can differ based on location, amenities and individual needs.
No matter what stage in life you’re in, if you’re considering geoarbitrage, you need a strategy to start with. Let’s talk more about what that strategy can look like.
See The One Thing we learned about reaching goals:
How to create your geoarbitrage strategy
When deciding to hack your location, you’ll need to do a good bit of research first. By creating a geoarbitrage strategy, you’ll be well equipped to decide what location works best for your situation.
There are lots of things to consider about the potential location you want to move to. Here are some of the most important things to consider when creating a geoarbitrage strategy.
What to compare in a geoarbitrage strategy?
Each person’s wishes and goals will be different when determining their geoarbitrage location. By comparing some of these top things to consider, you’ll be well on your way to finding the location that’s right for you.
6. Picking the right housing to geoarbitrage
First thing’s first – what type of house would you like to live in? Do you even want a house, or would you rather have an apartment or shared living space?
Here are some other questions to ask yourself when it comes to housing:
- Do you want a yard space?
- How many bedrooms and bathrooms do you want/need?
- Will you be working from home and need a dedicated office space?
- Do you want an urban location, or would you rather live in the suburbs? Or would you rather have open countryside in a rural space all around you?
- If you have school-aged children, what are the schools and crime like in the area you’re considering?
Answering these questions and any others that are important to you will help you narrow down a location for your housing situation. There are also other factors to consider in your geoarbitrage plan.
7. Understanding your taxes in geoarbitrage
Another important thing to consider is taxes. There are different taxes in each state and country: property, state and local income and sales tax are the main ones.
If you’re still planning to work once you move, income taxes may be more important than someone near or already retired. Some states have income taxes while others don’t, and some even have local income taxes on top of state income taxes.
I live in Maryland, and if you live in the city of Annapolis or Highland Beach in my county, you’ll pay additional local income taxes on top of state income tax.
Another consideration is property taxes. These rates can vary and some states charge property taxes on vehicles while others don’t. If you plan to rent, property taxes may not come into play, unless you’re in a state with vehicle property tax, like Pennsylvania. According to World Population Review as of 2020, the states with the lowest property taxes in the U.S. are Alabama, Hawaii and Louisiana.
Sales tax is another lesser tax to consider. Generally, states with lower property tax rates have a higher sales tax. Unless you are a heavy consumer, sales tax may not mean as much to you, but it’s still a good thing to know when comparing locations for your geoarbitrage strategy.
8. Having healthcare in geoarbitrage
Ah, healthcare. Something that many of us love to hate in this country. One of the factors that people, especially those at or near retirement, use to base their geoarbitrage location on, is healthcare. This is why many people choose to go international vs staying domestic when seeking a geoarbitrage location.
The cost of healthcare in the United States is more expensive than almost any country. We also have the highest instances of obesity and disease compared to 36 other high-income countries across the world, according to The Commonwealth Fund in 2020.
If healthcare is one of the reasons you’re planning to move, then consider an international move. This can not only help you FIRE, it can also make your retirement number lower and funds last much longer than staying somewhere domestically.
According to International Living earlier this year, the five best countries for expat healthcare are:
- Costa Rica
The Debt Free Guys hacked their FIRE journey by spending some time in Spain. We dive into their reasons why a little bit later in this article.Being able to show up for people is more rewarding than anything else, worth more than brunches or vacations. - Alison of All Options ConsideredClick To Tweet
9. Knowing transportation geoarbitrage cities
Another factor to consider as you create your geoarbitrage strategy is your transportation needs. Are you planning to take a car with you? If you prefer to walk, take the bus, or taxi around, then you’ll want a location that supports public transportation.
If you like to travel by plane, another consideration might be proximity to the airport. For international travel, you may want to be within a certain distance away from an international airport.
All things to think about when narrowing down your search for the perfect geoarbitrage location.
10. Job availability in geoarbitrage for you and your partner
If you or your partner still plan to work in your new location, job availability may be another factor that needs to be considered. If you (or they) are in a specialized field, that might help narrow down your search for a new location.
Geoarbitrage can be tricky when one or both partners still need to work, but that’s why you’re creating this strategy now. Figuring out all the moving parts and what works for you or doesn’t will help you get that perfect location that’s right for you.
Depending on the type of work you do, working remotely may be an option. If you’re an asset to your company and they don’t want to lose you, they may allow you to work from home. With no end in sight for the COVID-19 pandemic, more companies are letting employees work remotely. Some companies, in fact, have held off renewing leases for office buildings.
If you’re in a high cost of living, this can be an excellent way to get to your FIRE/retirement number faster.
11. Working remotely while you geoarbitrage
As a freelancer, it’s a lot easier to pick a location when job availability isn’t a factor. We can work anywhere we have a laptop and internet connection, so the job market doesn’t make as much of an impact on our search.
Still, we need to ensure we move to a location that has cell towers to pick up an internet connection. Living in the middle of nowhere may sound great, but if there’s spotty reception and you have to drive an hour to get to civilization for a Wi-Fi connection, it might defeat the purpose of location hacking.
12. Other costs of living while you leverage geoarbitrage
There are still some other factors to consider when creating your geoarbitrage strategy. Food is an inevitable cost that must be included in your budget and location consideration. Moving to a city may give you more access to food than living in a rural location. Of course, the cost of groceries will vary as well, so will need to be a factor in your location.
Do you prefer to dine out? What types of food do you like and what price points are you looking for? Answering these questions can help you determine where you want to move based on how you like to eat and what your food/dining out budget is.
Clothing and household items should also be considered. The cost of goods will be different as well as the availability of some items. If you prefer certain brands, have allergies, or a specific style you want to continue, research to be sure these things are offered in your potential new location.
Another thing you may want to consider is the happiness level of each location. You definitely don’t want to put in all the effort of packing up your life to move, just to find out you’ll be miserable! Check out Forbes list of 20 happiest and 20 unhappiest cities in America.
Now, let’s look at some of the best big and little cities for geoarbitrage.
Best big cities for geoarbitrage
Here are some of the best big cities in the country for geoarbitrage. We’re considering a big city to include a population of over 1,000,000 people.
1. Portland, Oregon
With a population of over 2.3 million, Portland is one of the best big cities to move to. Those who want to be outside and live a life of leisure surrounded by nature would love living in Portland.
They have a wonderful food scene and robust public transportation system. The city is great for walkers and bikers and about 20% of its population is 60 or older, according to U.S. News & World Report. Advocate listed Portland as the 20th gayest city in the US in 2014 and Business Insider ranked it the 6th best city for LGBTQ singles
You can expect to pay about $1,100 for rent or up to $1,800 for a mortgage if moving to Portland.
2. Pittsburgh, Pennsylvania
Pittsburgh has a similar population density to Portland, with a 26% saturation of elderly over 60. Those over 65 can enjoy free public transport and they have a great healthcare system too.
Pittsburgh’s metro area is estimated to have an LGBTQ density of about 3%. If true, this puts it in the top 50 US metro areas.
Costs of rent and mortgage, also according to U.S. News & World Report, are much lower in Pittsburgh, at about $800 and $1,300, respectively. For those who love attending sporting events, Pittsburgh is a great place to experience live events in all sports categories.
3. Tampa, Florida
Tampa has almost 3 million people, with bustling city activity just down the road from sandy beaches. The cost of living here isn’t much more than Pittsburgh, but cruisers will love this easy location to get them to Europe or parts of the Caribbean.
If you want to live on the Gulf Coast with easy access to the urban lifestyle and beach on a budget, consider Tampa. Plus, in 2017, Advocate named Tampa the 19th gayest city in the US, Business Insider ranked it the 3rd gayest city for queer singles.
4. Dallas-Fort Worth, Texas
Dallas may have a population of over 7 million people, but it’s still a great opportunity if you like big city living on a reasonable budget.
Jobs abound in the DFW, so if you or your partner still need to work, this may be the place to consider. There is no income tax here, but you might want to watch out for property taxes if you plan to purchase a home.
In 2016, Dallas and Fort Worth both earned a perfect 100 on the Human Rights Campaign’s Municipal Equality Index. In 2018, the Dallas-Fort Worth metro boasted the largest gay population of any city in Texas.
According to the U.S. News & World Report, the median housing cost for seniors is just $165,000. Depending on where you’re moving from, your money could go much further in the DFW.
Best little cities for geoarbitrage
Big city living may not be for you. Perhaps living in a smaller city might be more your style? Here are some of the best little cities that might fit your ideal geoarbitrage location.
1. Asheville, North Carolina
Asheville has a population just under 450,000 with a low cost of living to go with it. Expect to pay around $850 for rent or about $1,200 if you plan to own.
Those who love to explore the mountains and get in tune with nature will love this town. It scored high on the happiness map and comprises almost 30% of people aged 60 or older, per U.S. News & World Report.
Craft brewers and gastro-creationists are flocking to this town, so if you are adventurous with food and drink, this city should be on your list. Advocate ranked Ashville as the 12th gayest town in the US.
2. Fort Wayne, Indiana
Moving to Ft. Wayne may be the ticket if you’re after all four seasons and a low cost of living. Expect to pay about $700 to rent and just $1,000 to own in this little city of about 430,000.
According to the City of Ft. Wayne, Fort Wayne’s the second-largest city in the state. It also has thousands of acres of space dedicated to parks and recreation for people of all ages.
3. Lakeland, Florida
If you want Florida living without the big city, Lakeland might be your answer. With 38 different lakes in the city, you can get affordable waterfront property with a median home price of $146,500.
With a population of roughly 650,000, Lakeland is perfect for those who want water without being near the ocean. Expect to pay about $900 for rent and about $1,200 for a mortgage if you move here.
4. Port St. Lucie, Florida
If you’re looking for affordability on the Atlantic coast, Port St. Lucie might be your geoarbitrage location. A little over 30% of their population, according to U.S. News & World Report, is retirees over 60, and a low cost of living has this little city high on the happiness scale.
Rents are a little higher here but doable for oceanfront living. Expect to pay about $1,100 to rent and $1,400 for a mortgage here. Less than an hour to gay-friendly Palm Beach, Port St. Lucie prides itself as a small, gay-friendly community.
Now that you’ve got a few locations picked out, it’s time to test the cities to see where you might land.
3 Ways to test geoarbitrage cities and save money
Proceeding with a geoarbitrage requires a strategy and a plan. If you’re undecided on where to go or plan to move to an unfamiliar place, consider some of these ways to test possible geoarbitrage cities. You’ll be able to try before you buy (or rent) while saving money.
Travel rewards credit cards
If you aren’t already doing so, maximizing credit cards with travel rewards can help you save money to help with the big move. There are many ways to do this and some require more discipline than others, like putting all your expenses on the card but paying it in full so you don’t pay interest.
Some cards also come with annual fees, so you’ll need to figure out which card will work best for you. Once you do, put your traveling and other expenses on your travel rewards credit card to start racking up points to use later.
Travel hacking using credit card rewards is like swimming in the deep end. If you need help paying off your credit card debt, here’s the number one solution for becoming debt free . . . faster.
See our favorite travel rewards credit cards here:
- Earn 125,000 Hilton Honors Bonus Points after using the card to make $2,000 in eligible purchases within the first 3 months ($667/mo)
- Can squeeze 3 nights out of 125k points at some hotels
- Earn a Weekend Night Reward from Hilton Honors after making $15,000 on purchases (1 reward per calendar year,) (Average $1,250/mo)
- Earn 12X Hilton Honors Bonus Points for each dollar of eligible purchases on the card with Hilton Portfolio hotels or resorts
- Earn 6X Hilton Honors Bonus Points on every dollar of eligible purchases when using the card at U.S. restaurants, U.S. supermarkets, and U.S. gas stations (Most hotel free nights need about 45,000 points or about $7,500 per year/ $625 per month)
- Earn 3X Hilton Honors Bonus Points for all other eligible purchases
- Hilton Honors allows points to be pooled! You can pool your Points with up to 10 other members. No fees attached. (Allowed us to each get the card and get 6 nights free between hotels in Ireland)
- $95 annual fee
- Earn 60,000 bonus miles (enough for international travel) after spending $3,000 on purchases in the first 3 months ($1k per month)
- $95 annual fee waived for the first year
- 25% back on United inflight purchases
- Check your first bag for free when a flight is purchased on the card (up to $140 savings on round-trip flights)
- Earn 2 miles per $1 spent on purchases from United and at restaurants (including eligible delivery services including GrubHub, Caviar, Seamless and DoorDash) and on hotel stays
- Earn 1 mile per $1 spent on other purchases
- Bonus: MileagePlus, United’s frequent flyer program, allows one free stopover per round-trip award ticket. (not allowed by American or Delta)
- How we flew from Denver to London, to Barcelona and back to Denver for only 50k miles
- Earn 40,000 points after spending $1,000 on purchases in the first 3 months ($334 per month)
- Rewards are dollar value based on flights and points, there isn’t a 1-to-1 correlation, each reward needs to be found using Southwest flight booking tools
- 6,000-anniversary bonus points on card opening anniversary
- 2 points per $1 spent on Southwest® and Rapid Rewards® airline, hotel and car rental partner purchases
- 1 point per $1 spent on all other purchases
- No foreign transaction fees
- No blackout dates or seat restrictions
- Annual fee: $99 (not waived the first year)
13. Use Airbnb for geoarbitrage testing
Another strategy to save money would be to use Airbnb in place of hotels or motels. This way, you can live more like a local would in the area you plan to move to. You can spend a few days, weeks or months to decide if you can see yourself actually living there.
You can get $35 off your first Airbnb stay if you sign up today using this link here.
If you own the home you live in now, you could also consider renting your place out on Airbnb while you move to your new location. This could be another stream of income for you to help fund your retirement.
Get everything you need to know about building your own Airbnb Empire here.
14. Join local Facebook groups for online geoarbitrage research
You can also get great information about different areas on local Facebook groups. Once you’ve narrowed down the area you want to move to, check out what groups are available online. You can join groups in different areas, to really get an understanding of the location and its offerings:
- General interest groups
- Hobby groups
- Groups centered around the city or county you’re moving to
- Networking groups
Read through what’s already been posted about the area and ask questions of the members.
You can learn a lot about an area (and the residents) by posting in groups. You may find out things that help you make a decision. You could also avoid a potentially costly mistake if you decide to move and then realize you regret your decision.
15. Adequately prepare for your geoarbitrage move
You’ve done all the work to create your geoarbitrage strategy. Now, it’s time for the show to begin, and that starts with picking up your life and moving.
Depending on if you’re doing all the packing and moving yourself, the cost can be a few hundred dollars to a few thousand. The final piece to this geoarbitrage puzzle is nailing down your moving process. Here are some things to consider:
1. Earn more with cashback rewards
You can also use cashback rewards to fund your geoarbitrage research. You’ll need a credit card from the start to the end of your move. It’ll make life easier and offer some protection. Examples include booking your Airbnb and flights to scope each city to hiring a moving company and buying packing materials.
These are our current favorite cashback rewards cards:
- A $200 Bonus after spending $500 on purchases in your first 3 months from account open date
- Get 5% cash back on grocery store purchases (not including Target® or Walmart® purchases), up to $12,000 a year
- Get unlimited 1.5% cash back on all other purchases
- An industry leading 0% introductory APR on purchases for 15 months from account opening date
- No annual fee
- This card uses points vs. dollars for rewards, although 100 points can be converted into $1 cashback or other rewards such as merchandise, gift cards, travel and more
- Get 25,000 bonus points after spending $1,000 in eligible purchases in the first 90 days of account open date, a $250 cashback value
- Get 4X points on takeout, food delivery and dining
- Get 2X points at grocery stores, grocery delivery, gas stations and on streaming services
- 1X point per $1 on all other eligible purchases
- $15 credit for an annual streaming service purchases like Netflix or Spotify
- Low Introductory APR on purchases and balance transfers
- No annual fee
2. Make the move
U-Haul has a great reputation with movers. We’ve used them several times from providing packing materials to renting hauling trucks.
Fortunately, you can also hire U-Haul’s movers to move your stuff.
If you’d rather do some of the work to save money but not drive your own truck, hook yourself up with U-Pack. U-Pack will deliver a crate to put all your goods in. Then, you have three business days to load your crate before U-Pack returns to pick up your crate and move it to your new home.
Upon arrival, you unpack everything yourself, and you save yourself a ton of money compared to hiring movers.
Either way, remember to use the credit card you sign up for in step 1 to book your reservation.
3. Get homeowners/renters insurance
Get a free quote from PolicyGenius by clicking this link here. Policygenius customers save on average up to $1,127 a year by shopping for homeowner’s insurance in one place. Best of all, Pg will re-shop your homeowner’s insurance every year to make sure you always have the best rate.
For more helpful moving tips, see the Debt Free Guys moving checklist. This checklist will help you budget and plan for your move.
Before you know it, you’ll be saying goodbye to your current home and saying hello to your new space!
Our geoliberated life in Spain
Geoarbitrage is near and dear to the Debt Free Guys. After all, they used geoarbitrage to live 3 months in Spain.
If you haven’t already listened to these episodes of Queer Money®, check them out now. They discuss all the details on:
- What lead them to choose geoarbitrage
- Why Spain was their chosen location
- What they did while they were there
- How their geoarbitrage strategy worked for them
How we could afford to live in Spain for 3 months (Part 1):We realized that if we structured things correctly, we could literally live and work from anywhere in the world. - John Schneider of Debt Free GuysClick To Tweet
How we could afford to live in Spain for 3 months (Part 2):When we stay in a place that has a lower cost of living, we’re taking advantage of something called geoarbitrage. We’re actually lowering our living expenses compared to what we are making, which gives you an advantage.- David Auten of Debt Free GuysClick To Tweet
Get more tools to help you geoarbitrage:
- 10 Steps to Super Simple Investing
- 29 Ways to Find Extra Money
- Here’s How to Pay Off Credit Card Debt Fast!
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Mandy Sleight is a professional freelance writer who also provides editing and proofreading services to a broad range of clients. Due to her tremendous experience, her work has been featured in Kiplinger, Market Watch, Money Geek, and other major publications. If you want to contact Mandy, you can find her on Facebook or LinkedIn, or by reaching out on her website contact page.