What is geoarbitrage?

In brief, geoarbitrage is the practice of living somewhere cheaper in order to accelerate your journey to financial independence. It can be done in the accumulation phase, for example by living in employer provided housing or in a low tax country while earning, or in the decumulation phase, moving somewhere that allows for a lower cost of living.

In terms of my personal experience, I’ve never practiced geoarbitrage specifically for financial reasons, but I have certainly seen the impact that living in different places can have on spending and saving. I lived in Taiwan for 5 years in my 20’s. During this time, I earned about $24,000 USD per year, and I saved about half. At the same time, I lived quite well, traveling around South East Asia, eating out every lunch and dinner at restaurants, and so forth. I didn’t pick Taiwan for economic reasons, but it is kind of in the sweet spot as far as earning potential vs. cost of living.

Later, I lived in China for a year. I was working in a smallish city in central China, and my salary was quite low. I earned about $5500 USD per year. Still, because my employer provided housing and some food, I managed to save about $3000 USD, and that’s with taking two month-long biking and camping trips. Again, my goal in China was not primarily to earn money, but clearly the cost of living there can be dramatically lower. At the same time, I returned to China a few years later for a business trip while working for a US university. I was put up in hotels costing $200 USD per night. It was a side of China I hadn’t even known existed. It really drove home to me that, even within a particular country, there can be a tremendous range of both costs and earning potential.

And then, in 2020, we moved from the US to Canada. Again, this wasn’t a financial decision, but it still had financial impacts. Our taxes went up, but our house was a bit cheaper. I was able to take my job with me, so my salary didn’t change, but when my wife found work in Canada her salary was slightly lower. However, as we transition to part-time work or full retirement, we won’t need to worry about paying for health insurance, which can be quite expensive in the US.

In the future, I think it’s possible that we might live overseas again. I suspect we’ll wait until our daughter is in college (which will be a while) but considering both my wife and I have backgrounds as English language teachers, it wouldn’t surprise me if we spent some of our early retirement living in different countries. I don’t anticipate these decisions to be primarily financially motivated, but it’s good to know that if something unexpected happens and our savings are dramatically reduced, there are plenty of nice places around the world where we would still be able to meet the costs of living. Some places I’m personally particularly interested in are Bhutan, Thailand, Chile and Croatia.

What experience do you have with geoarbitrage? What are some of your favorite places to live?

How do you save money? (the small stuff)

This is always kind of a tricky question for me to answer. Personally, I am frugal by nature (or nurture) so saving money comes pretty easily. That isn’t a helpful answer, though. The real question is what changes can someone make in their life to save more money? Here, I certainly have some suggestions.

Fundamentally, though, the big thing is mindset — you’ll never stick with it if it feels like deprivation. There are a few antidotes to this. For one thing, I’m always aware of the larger goal (i.e. financial independence) that I am saving towards. For another, I’m also very much aware that many of the “conveniences” that we spend our money on actually lower my quality of life. To put it another way, I find there is usually some synergy around saving money. For example, the more frugal choices are also often better for my health and / or better for the environment.

Take today, for example. I had the day off. We had our usual breakfast (oatmeal with peanut butter and fruit) and I noticed the drawer in the kitchen cabinet was tilted. I pulled it out and found that both rear brackets had broken so the rails were loose. I am not particularly handy, but this seemed pretty straightforward, so after taking my daughter to the bus stop, I took the bracket off and prepared to head to the hardware store.

(Already, there are a couple of little choices there — oatmeal with peanut butter and fruit is cheap, healthy, convenient and reasonably good for the environment. Deciding to fix the cabinet both saves money and gives me a chance to learn something new. Finally, having my daughter take the bus to school is both more frugal and better for the environmental. Plus, we get to share a daily walk to the bus stop, and conversation once we get there.)

As I was getting ready to leave, I remembered that the spring loaded tub plug upstairs was also not working. I brought it downstairs so I could take it with me as well to try to buy a replacement, but my wife suggested trying to lube it first. Again, I’m no DIY expert, but I know that WD-40 can be a good cleaner for these types of things, so I sprayed that in first, then I used a lube I had previously bought for my garage door, and it worked perfectly, so I just re-installed it into the tub.

(Obvious one — deciding to try cleaning and lubing this both saves money and prevented the current plug from ending up in the landfill.)

I brought a small backpack with me, and put in a bag of almonds and a reusable water bottle. I walked to the hardware store in about 15 minutes and found what I needed in about 2 minutes. A set of two shelf brackets cost $5 CAD. I also bought a vase and a rose bowl at the thrift store for a total of $4 CAD — we have a ton of flowers at our house, and our primary vase had recently blown over on the deck. And then I started walking home, and I got a call regarding a credit card application. I’d applied for a new card the day before, mostly in order to get free roadside assistance. I answered their questions on my way home, and then I installed the new brackets in about 15 minutes.

(OK, there are a lot of examples in this paragraph. First of all, I brought almonds and water with me so I’d be less tempted to buy a snack or a drink that would be more expensive, less healthy, and worse for the environment. Similarly, deciding to walk rather than drive was both better for my health and better for the environment. If I were in a hurry, I would have biked. And, of course, this choice was informed by the much earlier (and bigger) choice to buy a house where we could walk into town. Again, repairing the brackets ended up being much cheaper than hiring someone, plus I got to learn something and experience the satisfaction of taking care of something myself. And buying the vases secondhand was both cheaper and better for the environment. Finally, we’re using a no annual fee credit card to get free roadside assistance. I’ll do a future post about how we approach credit card rewards.)

Hopefully, by this description of a very ordinary day, you get a sense of the type of mindset behind the many small choices we make each day that enable us to save 30-40% of our income. I hope you can also see that, for us, being frugal does not mean deprivation. We take care of the things we need to take care of, and buy the things we need, we just try to do so in a way that doesn’t cost very much money. And by doing this, we find that we are often also adding benefits in terms of making healthier choices and / or choices that are better for the environment. Plus, we get to learn new things and experience the satisfaction of taking care of things ourselves. And, just to be clear, we absolutely hire professionals for bigger projects. At the same time, each experience of doing something ourselves raises the bar for “bigger” a little bit higher.

Finally, I want to emphasize the point that being on the path to early financial independence doesn’t necessarily look dramatically different. From the outside, there’s nothing particularly unusual about any of the choices I made in that day. To our neighbors, I think we appear more or less similar to everyone else. The accumulation of these choices, though, is what enables us to have the savings rate we do, which is one of the key elements of our journey to financial independence.

What about you? What are some of the little things that you do regularly to help save money?