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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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Thanks for the highlight Doc!
No problem Dave. I always enjoy your work
I’d love to slow travel around the world for a few years. We’ll have to wait for our son to go to college, though. Also, we probably can’t travel full time due to families. Our parents are getting older and they’ll need more help soon. 🙁
I look forward to day of slow travel (or any real travel now for that matter). Truly can’t appreciate foreign locales with the typical 1 week off I get when I take off from work (really 5 days of vacation if you lose the 2 days to travel).
Stay safe my friend in the meantime.
Just wondering… in the age of COVID, does health care options influence your decision to geoabitrage outside the US? In a positive or negative sense? As a general topic of discussion and since you’re a medical professional, the FIRE community does not address health care costs and long term care. Lots of info on side hustles and index funds, but maybe while you’re young you don’t spend a lot of time thinking about health insurance? Just trying to kick off a positive conversation about FIRE topics that make me say, “but what about…”. Thanks for being faithful with the posting… Read more »
Hey Kevin, great question. Healthcare probably weighs the most on my mind when I do decide to pull the trigger and retire early. It is such an unknown because the environment is changing constantly. I know there are healthcare ministry options etc that some people use to bridge the gap between early retirement and medicare coverage. I’m not sure exactly what will work for me. It is probably a reason I may even delay the inevitable by ramping down my practice to even more part time just to maintain employee health insurance. I know of people who have written about… Read more »