Grand Rounds: Geoarbitrage
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Welcome to this session of grand rounds, a collection of posts I have discovered in the blogosphere and have found of interest and hope you do too.
This offering of Grand Rounds looks at articles from around the web that deal with geoarbitrage and its benefits.
Home is indeed where the heart is.
But where that home is can determine if it is where you leave your bank account too.
I have written previously on the effect geographic arbitrage can have on your finances in, “Arbitrage Your Way To Success.”
High Cost Of Living (HCOL) areas can quickly deplete your household of dollar bills with higher property prices as well as taxes on said property when compared to LCOL states.
See how your state fares in WalletHub’s “2019’s Property Taxes by State.”
Housing, food, and transportation typically comprise the biggest three expenditures for a household.
Thus any way to lower these costs can go a long way towards accelerating your path to financial freedom.
Enter geographic arbitrage.
Dave, from Accidental FIRE gives you a wonderful graphical representation of how much these costs can vary state to state.
Find out if your current locale is helping or impeding your path to wealth in, “The Cost Of The Big Three Expenses By State.”
Just because you grew up and worked in the United States does not mean you are bound to spend your retirement life here.
As many ex pats have found, you can often increase your lifestyle level by taking advantage of geographic arbitrage on a global level.
There are many countries where the cost of living puts LCOL areas in the US to shame.
Taking advantage of currency exchange on top of cheaper housing and food costs can truly stretch your US dollar and allow you to live a level of lifestyle that would not be possible if you are domestic bound.
Curious as to where some of these locales might be?
Forbes helps you out in, “Quit Your Job And Live Abroad In 2019: 10 Places So Cheap You May Not Need To Work.”
You may indeed decide that geoarbitrage is for you because you want to jump start your path to Financial Independence.
So it is just as simple as moving to a state with no income tax?
Not so fast.
There are a lot of factors besides a state income tax that can drive up the cost of living (i.e. they get you one way or the other).
So before you start filling up the moving van you should look at the incredibly comprehensive analysis BeThree does in her article, “States Without Income Tax: Is There A Benefit To Moving?”
Do you really want to put your geographic arbitrage on hyperdrive?
Many ex-pats do just that, choosing to live abroad and take advantage of incredibly low cost of living areas.
When I went to Bali for my 45th birthday (best trip ever) I witnessed firsthand how far my dollar went.
Incredibly luxurious meals cost less than a trip to McDonalds and some of the most incredible handcrafted goods could be had for a song.
I could not help but think what my current finances would provide in terms of lifestyle if I chose to move there.
Apparently I am not the only one.
Mr. Free@33 gives a real-life example of being an ex-pat living in Thailand in, “Is Geographic Arbitrage The Answer To Your Early Retirement Dreams?”
Hope you enjoyed the reading material.
Have a great rest of the week.
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