This is the magic of geoarbitrage

Feeling stuck in debt? Wondering if moving might solve your money worries? Let’s discuss geoarbitrage, a strategy many use to pay off debt, become financially independent and retire early.

What’s geoarbitrage?

For those living in a place with a high cost of living, saving and paying off debt can be a struggle. Geoarbitrage your dollars to go further so you can meet all your financial goals faster.

So, what’s geoarbitrage? Geographic arbitrage 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 taking advantage of it might help better your financial situation? Keep reading to learn how to take advantage of this way of living.

During episode 160 of Queer Money®, Ali and Alison of AllOptionsConsidered discussed using geoarbitrage to fund their early retirement. “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,” said Alison Walker

Types of geoarbitrage

We already talked about the two groups of people who typically use geoarbitrage to hack their physical location and financial situation. Now let’s talk about the two main types of geoarbitrage: domestic and international.

Domestic 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 remain in the same region.

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 2022 study by Statista on housing costs in the 10 most populous cities in the country, a homeowner living in San Jose, CA, would need an income of almost $231,000, while the same homeowner in San Antonio, TX, would only need about $76,000 for the same lifestyle.

International geoarbitrage

The other type is international geographic arbitrage. 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 significantly for international travel.

You could live like a king (or queen) for less than $1,500 in monthly expenses in some locations in some locations, such as Malaysia, Thailand, and parts of Italy, according to U.S. News & World Report in 2022. However, other places could be even more expensive than your current situation, so you’ll have to pick wisely. Because the world is vast, finding a geoarbitrage location could be more difficult when going international versus staying domestic.

Geoarbitrage to retire sooner/FIRE

The majority of younger people focused on geoarbitrage are part of the FIRE community or are seeking financial independence so they can retire early. Retiring early may feel like just a dream, but hacking your location and realizing cost savings through geoarbitrage 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.

How to use geoarbitrage to fund early (even late) retirement

The first five tips are about how to use geographic arbitrage to fund your retirement.

1. Learn what geoarbitrage or early retirement look like for you

The first step is to clarify what geoarbitrage or early retirement looks 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 and plan it

2. Prepare to earn more (even in retirement)

There are several passive ways to earn money, whether you’re retired or geoliberated. There’s small business income – yes, your own a small business – real estate income, investment income, and retirement income. Having location-independent income gives you the financial freedom to widen your search.

3. Invest more (because you should never stop investing)

Yes, as we said above, you want to invest for income, but you should also constantly invest for growth. This is true no matter how old you are.

4. Save more aggressively

Even though it’s harder to save more money with today’s inflation rates, it 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, anchors your future earnings (savings and investments) to your past.

Avoid debt as much as possible, and pay off debt as fast as possible.

Geoarbitrage for late-stage retirement planning

You may be close to or even at retirement age and wondering if geoarbitrage can help you achieve financial independence. Depending on your financial situation and living circumstances, it absolutely can!

Even if you’re 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.

No matter what stage in life you’re in, if you’re considering geoarbitrage, you need a strategy. Let’s talk more about what that strategy can look like.

How to create your geoarbitrage strategy

When deciding to hack your location, you must do some research first. By creating a geoarbitrage strategy, you’ll be well-equipped to determine the best location for your situation.

There are many things to consider when considering 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?

People’s wishes and goals will differ when determining their best geoarbitrage destinations and location. By comparing some of these top things to consider, you’ll be well on your way to finding the right area for you.

6. Picking the proper housing to geoarbitrage

First, what type of house would you like to live in? Do you even want a home, 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?
• 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 vital 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 critical 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 critical 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.

For example, if you live in some regions of Maryland, like Annapolis or Highland Beach, 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. Property taxes may not come into play if you plan to rent unless you’re in a state with vehicle property tax, like Pennsylvania. According to World Population Review, as of 2023, 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 good 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, base their geoarbitrage location on is healthcare and the costs of health insurance. This is why many people choose to go international vs. stay domestic when seeking a new location.

Healthcare in the United States is more expensive than in 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 2022.

If healthcare is one of the reasons you’re planning to move, consider an international move. This can not only help you FIRE, but it can also lower your retirement number and allow funds to last much longer than staying somewhere domestically. In a nutshell, by living abroad, you might realize lower costs.

According to International Living in 2023, the six best countries for expat healthcare are:

1. Portugal
2. Costa Rica
3. Spain
4. France (tie)
5. Panama (tie)
6. Colombia

We hacked our FIRE journey by spending some time in Spain. We dive into our reasons for this later in this article.

9. Knowing transportation options in your chosen location

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, you’ll want a location supporting public transportation.

Another consideration might be the proximity to the airport if you like to travel by plane. You may want to be within a certain distance from an international airport for international travel.

All things to think about when narrowing down your search for the perfect geoarbitrage location.

10. Job availability 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 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 right for you.

Depending on your work type, remote work 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. Even though the COVID-19 pandemic has ended, many companies still let employees work remotely. Some companies have held off renewing leases for office buildings.

If you’re in a high cost of living, this can be an excellent way to reach your FIRE/retirement number faster.

11. Working remotely while you geoarbitrage

As a freelancer, picking a location is much easier 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 must ensure we move to a location with 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 living expenses 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 also vary, so food costs must be a factor in your area.

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 eat and your food/dining-out budget.

Clothing and household items should also be considered. The cost of goods will be different, as will 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 and quality of life in each location. You don’t want to put in all the effort of packing up your life to move to find out you’ll be miserable! Check out the 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 over 1,000,000 people.

1. Portland, Oregon

With a population of over 2.4 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 an incredible food scene and a robust public transportation system. The city is excellent for walkers and bikers, and about 20% of its population is 60 or older, according to U.S. News & World Report.

If you are moving to Portland, you can expect to pay about $1,345 for rent. The median home price, however, is just over $600,000.

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 have a great healthcare system.

According to U.S. News & World Report, rent costs are much lower in Pittsburgh, at about $850. The median home price is about $223,000. 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 just over 3 million people, with bustling city activity just down the road from sandy beaches. The cost of living here isn’t much more than in 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.

4. Dallas-Fort Worth, Texas

Dallas may have over 7 million people, but it’s still a great opportunity if you like big city living on a reasonable monthly 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 watch out for property taxes if you plan to purchase a home.

According to the U.S. News & World Report, the median housing cost for seniors is $395,000. Your money could go much further in the DFW, depending on where you’re moving from.

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 towns that might fit your ideal geoarbitrage location.

1. Asheville, North Carolina

Asheville has a population of just over 450,000, with a low cost of living to go with it. Expect to pay around $953 for rent. The median home price is $278,750.

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.

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 $788 to rent in this little city of about 409,000. The median home price is just over $155,000.

According to the City of Ft. Wayne, Fort Wayne is 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

Lakeland might be your answer if you want Florida to live without the big city. With 38 different lakes in the city, you can get affordable waterfront property with a median home price of $304,274.

With a population of roughly 706,000, Lakeland is perfect for those who want water without being near the ocean. If you move here, expect to pay about $1014 for rent.

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 retired over 60, and the low cost of living in this little city is high on the happiness scale.

Rents are a little higher here but doable for oceanfront living. Expect to pay about $1,200 to rent. The median home price is just over $230,000.

Now that you’ve picked a few locations, 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 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; 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 must determine 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.

13. Use Airbnb for geoarbitrage testing

Another saving strategy would be to use Airbnb instead 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 deciding if you can see yourself living there.

If you own your home now, you could also consider renting your place out on Airbnb while you move to your new location. This could be another income stream for you to help fund your retirement.

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 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. It’s time for the show to begin, starting with picking up your life and moving.

Depending on if you’re 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, hiring a moving company, and buying packing materials.

2. Make the move

U-Haul has an excellent 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 work to save money but not drive your 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 it up and move it to your new home.

Upon arrival, you unpack everything and save much more money than 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

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 ensure you always have the best rate.

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, we used geoarbitrage to live 3 months in Spain.

What led us to choose geoarbitrage

Because we didn’t have a house and the associated housing costs, we could live in Spain for 12 weeks and spend less than we would in most American cities. By having a lower living cost related to what we were making, we were living the geographic arbitrage dream.

“When we stay in a place with a lower cost of living, we’re taking advantage of something called geoarbitrage. We’re lowing our living expenses compared to what we are making, which gives you an advantage,” said David Auten-Schneider

Why Spain was our chosen location

We chose Spain because of its lower living expenses than other European countries. By selecting the seaside town of Sitges and living there during the off-season, we could get the rental for about 25% of the cost if we had gone during the tourist season.

What we did while we were there

By following some of the tips we list above, we were able to save money while living abroad. We rented an Airbnb because we could stay there cheaper than in a hotel. We negotiated a deeply discounted rate directly with the host but booked through Airbnb for their fraud protection.

We saved money on food by using the kitchen in our Airbnb. We could eat for about $75 per week using a meal plan and shopping list.

We could save on the cost of renting a car by using Spain’s public transportation system. We explored the country’s southern tip while avoiding high-cost touristy areas to make our dollars last longer.

How this strategy worked for us

We could successfully live in Spain for 12 weeks cheaper than in a comparable U.S. city, saving us more money.

Get more tools to help you geoarbitrage:

• How Can I Make $1000 Fast? 30+ Proven Ways
• 10 Steps to Super Simple Investing
• How to Pay Off Credit Card Debt