Geo-Arbitrage

Geo-Arbitrage

Okay, you’ve got money coming in and you don’t have to sit in a cubicle for it, what’s next? Well, being a nomad isn’t just about making money through a remote job, it’s also about saving money and traveling at the same time. Let’s now invest in a GEO-Arbitrage plan. Geo-Arbitrage originates from the FIRE community (Financial Independence, Retire Early). Sit down and take account of all of your expenses. This may include, but is not limited to: rent, housing, food, insurance, transportation, entertainment and hobbies. Once you have a rough total of what you spend monthly and yearly, then pull out of map and see how these expenses compare to different location in the U.S. or even abroad in other countries. You may find that you can cut your cost of living in half or more by simply moving a couple of miles from one city to another or by moving to another country entirely. Your income won’t be going up, but your savings will.

How can GEO-Arbitrage help you? What is your motivation and what are your goals. Living in a more affordable residence, whether in the U.S. or abroad, means less money being spent on everyday necessities like rent and groceries. That’s money that can now be redirected to student loans, if you have gone to college, or a retirement savings.

Whatever your goal is, you need to calculate your Geographic Arbitrage Gap. This is your Current Cost of living in your current residence minus your new cost of living in the location which you plan to move, multiplied by the amount of time you plan on staying there.

Simplified formula: (Current Cost of Live – New Cost of Living) x Duration of Time

So, if your currently live in Mississippi and just consider the average rent of $900 per month which equals $10,800 per year and compare that to the average rent for an apartment Vietnam of $295 per month which equates to $6000 per year.

($900/mon – $295/mon) x 12 mon = $7,260

Moving from Mississippi to Vietnam, you would save on rent an average of $7,260 per year on rent. But, now, let’s include other expenses. Instead of just looking at rent, lets compare average total living costs of Vietnam to Mississippi (something to keep in mind, while Vietnam is a country and Mississippi is a state, this is still a valid comparison as the states operate as their own little countries. The United States is more like a coalition of countries.) According to LivingCost.org, the total cost of living for a single person in Mississippi, which includes utilities and rent, food, transportation, and salary after taxes, equals $1896.00 per month. The total cost of living for single person in Vietnam, keeping in mind all of the previous expenses mentioned for Mississippi, equals $614.00 per month.

What happens when we apply our formula?

(Current Cost of Live – New Cost of Living) x Duration of Time

Let’s plug in our numbers.

Current Cost of Living while living in Mississippi is $1896.00 per month.

New Cost of Living after moving to Vietnam is $614.00 per month.

The Duration of Time will be one year.

So: ($1896.00 – $614.00) x 12 months = $15, 384.00

Your average Geographic Arbitrage Gap and savings would come out to be $15, 384.00. Whatever your goals are for choosing the nomadic lifestyle, I’m sure everyone could use an extra $15,000 in savings for their bank account. This all of course depends on where you actually plan on moving and the budget you have determined for yourself, but this example gives you an idea of what is possible.

This is just the tip of the iceberg when it comes to GEO-Arbitrage. Thanks to the long history and work of nomads everywhere, so many strategies and methods have been created to save money. I used the cost of rent in my initial GEO Arbitrage Gap calculation, but what if you could cut rent from your bills entirely?

One way of doing that is to start pet and house sitting. In an interview done by The Nomadic Network channel with house sitter professional and community manager for the organization Trusted House Sitters, Angela Laws explains the main benefits and cons of pet and house sitting and how to get started. One of the main benefits, she points out, is that you save money on your accommodations as you are living in somebody else’s house while they are away, but additionally you save money in regards to internet, laundry, cooking, and electricity. The important thing to keep in mind, however, is that you are there to do a job. This can be a spectacular opportunity for exploration and globe-trotting, but you need to respect your duties in regards to your client’s house and their pets. Additionally, if you are planning to move to another country in Europe or Asia, this allows you to initially visit with low cost and more flexibility in getting to know the culture, people, and surrounding area which you wouldn’t have with a more traditional accommodation such as a hotel. If this seems like a golden opportunity then websites Angela Laws recommends visiting are:

TrustedHousesitters.com

Facebook Groups

Nomador

Housecarers

Mind My House