Geographic Arbitrage- How I Save $20000+ A Year Living Abroad

Doubling your savings by jumping on a plane sounds like a get rich quick scheme. It’s not. Learn how geoarbitrage can increase your discretionary income by +50%

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Published On: October 12, 2020

Latest Update: May 2, 2024

About the author

Hi, I'm Marco Sison. I worked in finance for Fortune 50 companies before retiring early at 41 years old. I have been an expat for over 10 years, living in over 50 countries to show you the best ways to save, invest, and live in amazing countries outside the USA. I am a trusted resource on personal finance and overseas retirement for US News & World Reports, HuffPost, MSN Money, USA Today, ABC Network, Yahoo Finance, Association of MBAs, the iTunes documentary Seeking FIRE, and the Amazon Best-Seller- Abroad: Expats That Thrive.

My net worth starting in 2020 was ~$1,000,038.

My net worth when I retired in 2015 was ~$600,000.

My net worth increased 67%. Not bad, right? What if I told you that I didn't earn a dime of that money? How did I do it? More importantly, how can you increase your net worth by 67%? The answer is geoarbitrage.

The Meaning of Geographic Arbitrage

Geographic Arbitrage (geoarbitrage, geo arbitrage, or geo-arbitrage are interchangeable) means moving to a place where the cost of living is lower than your current home. If you know me or have been reading my blog, you know that I consider international geoarbitrage the strongest benefit of the Nomadic FIRE lifestyle. By living abroad, my monthly expenses are 50% or less than living in the US. With globalization, technology, and remote work on the rise, it's now easier than ever to live and work in another country.

The idea behind geoarbitrage is simple: have a steady income in a strong currency (US dollar, British Pound, or Euro), then spend money in a cheaper country (SpainVietnamMexico, etc.). Regardless of whether your money comes from rental income, retirement income, or remote work, the key is keeping the higher income but living in a country, where your dollar goes further.

The concept of living in low cost countries isn't new but gained momentum this past decade, after best-selling author Tim Ferriss coined the term in his book, "The 4 Hour Work Week: Escape the 9-5, Live Anywhere, and Join the New Rich."

"Earn dollars. Live on pesos."

Low cost of living (LCOL) countries offers you so much more value for your money. Instead of dealing with ridiculously high rent and food costs in cities like New York or San Francisco, you could spend a fraction of that for a beautiful villa on an SE Asian beach in Bali or a European capital like Sofia.

In 2019, my monthly spending in Austria, Colombia, Cyprus, and Bulgaria was 70% less than if I lived in the US. The low cost of living didn't equal a low standard of living either. My living expenses involve an active social life, a centrally located apartment, frequent meals out, and weekly maid service.

Living Overseas in Cartagena Colombia to watch beautiful sunsets by the Old Fort

Enjoying sunsets by the ocean in the colonial town of Cartagena, Colombia

What is Arbitrage?

Geographic Arbitrage. The term sounds technical, but it's straightforward. Let's start with what is arbitrage?

"In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets"

People use arbitrage all the time in real life. Have you ever drove past your usual grocery store and went to a cheaper supermarket because you found the same steaks cost less? That's arbitrage. 

What Is Geoarbitrage?

Arbitrage is taking advantage of different prices in different markets. Geoarbitrage uses geography as a way to get more value for the same dollar. Steaks cost less in a cheaper supermarket, right? Well, an apartment in the suburbs costs less in an apartment in a trendy neighborhood in the city.

Domestic Geoarbitrage

Domestic cost savings moving in the United States can be substantial. The map above shows how moving from California to any states in the South can save you 30% to 45% in living expenses.

I talk a lot about living overseas. But taking advantage of arbitrage opportunities doesn't require jumping on an airplane or even moving states. You can save money changing neighborhoods in the same city. 

As a real-world example, I lived in the suburbs about 15 miles outside of Portland's city center. I spent less on rent, reduced my commute time (lowering my transportation costs), and paid ~1.5% less in local income taxes, by living 15 miles outside the city.

International Geoarbitrage

This is where things get spicy. While more complicated than moving to another state, moving to another country has tremendous financial potential.

I may have saved $2000 to $3000 per year domestically moving from an urban area to the suburbs. But I save $20,000 to $30,000 per year moving from the United States to another country.

Whether we are looking across the country or across the world, being frugal isn't a new concept. We look at ways to increase our savings and discretionary income all the time. Geoarbitrage supercharges the idea. If moving from the city to the suburbs can reduce taxes, you can figure out that moving from New York to Alabama can slash your housing costs. Now, look at the extra savings of moving from Portland to Medellin ($3,057 vs. $740 = $2,317 saved per month). Now we are talking about reinventing your financial future entirely.

Cost of Living Calculators from The Earth Awaits

 INSIDER TIP : Consider the average social security income in the US is $1,500 per month. Living in the US on social security alone is a poverty-level life, but $1,500 covers the cost of modest lifestyle for a family of two in Medellin. 

Can Geographic Arbitrage Reduce My Cost of Living?

Geoarbitrage takes advantage of the fact your dollars can go farther in a place with lower costs. Let's look at average expenses to live in a Medium Cost of Living (MCOL) city like Portland, Oregon.

Economic Policy Institute Monthly Estimated Expenses

One Adult and No Children - Portland/Hillsboro Oregon Metro Area.















Monthly Total


Annual Total


Source: Economic Policy Institute- Cost of Living Calculator measures the income needed for a modest yet adequate standard of living.

The Best Geoarbitrage Strategy Reduces Housing Expense

Housing is the largest expense for most Americans. 1/3 of the average budget is to put a roof over our heads. With multiple variables like state income tax vs. property tax or small town vs. big city affecting how much we pay for real estate, housing is an excellent candidate for geoarbitrage opportunities. Let's look here first.



That is $962 per month for a studio apartment. Let's round that up to $1,000 per month for housing costs to make the calculations easier.

Here is an semi-furnished new apartment in a centrally located part of Portland for $975 + $100 for utilities.

According to most Cost of Living Indexes, Portland is a MCOL city. What type of studio do you think $1,000 gets you in an expensive city like New York or San Francisco? I'll stop you from Googling because it's doesn't exist. What about the cheapest location? The cheapest rent in the US goes to College Station, Texas, where $600 gets you an average unfurnished studio. 

Cheapest Cities For Rent (per square foot)

Studio Apartment Rent


College Station









North Dakota






5 (tie)

Sun Prairie



5 (tie)

Oklahoma City



Source:  The Cheapest Cities per Square Foot for Renters

The cost difference between $1000 vs. $600 in rent is a DOMESTIC geoarbitrage opportunity. Staying in the US, but moving from Oregon to Texas and your largest expense goes from $1,000 to $600.

The extreme version of saving on housing expenses leverages INTERNATIONAL Geoarbitrage. Let's look at some real-world examples:

Medellin, Colombia- Here is a huge $700 one bedroom with large balcony, solid oak kitchen, and leather furniture.

Bali, Indonesia- My $450 villa with daily maid service, a 15-minute walk from the beach.

Antalya, Turkey- My $500 one-bedroom city center Airbnb, also only a 15-minute walk to the beach.

These are personal examples. Just so you don't think I'm lucky are finding apartment deals, here is data on the average prices for 1- bedroom apartments in cities I have lived in last year. You have the potential to SAVE $6000 or more a year on just rent.

I'm using housing costs as an example of geoarbitrage opportunities, but location drives higher costs for food, transportation, health care, state income taxes, etc. Living in a cheaper country will reduce costs and increase discretionary income.

Living overseas last year, I reduced my monthly budget, increased my discretionary income, and saved over $21,000 ($1,754 per month) on just transportation, taxes, and health insurance.



Average American

Marco Living Abroad










Total Saved



Monthly Cost Savings = $1,754

If your location is flexible, moving around the country, or even better, moving around the world can significantly shift your financial outlook. Cheaper countries can increase discretionary income by 50%, putting more money back in your pocket, or even better, freeing up more money for you to invest.

 INSIDER TIP : Taxes are very location-dependent and can be tricky to compare. For instance, are states with no sales taxes cheaper than states with no income taxes? Look at all variables (state tax, income tax, property tax, etc.) in your new location to compare taxes properly.

States with No Sales Tax (as of 2019):

  • Alaska
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

States with No State Income Tax (as of 2020):

  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

How to Use Geographic Arbitrage For Financial Independence? 

The Triple Benefit of Geographic Arbitrage- The Math Behind the Magic

Substantially Increasing Your Savings

As we've seen above, geoarbitrage is a game-changer when it comes to increasing your savings rate. You can clip coupons all day, give up your lattes, bike to work, and cut out all your happy hours with friends and you will not cut your living expenses more than moving abroad.

Let's look at some real numbers. Say hello to John and Beth. They are an average two-person family earning an average salary, living in an average cost city in the US. Combined, they take home $56,000 per year after taxes. 

Neither John nor Beth are big spenders. They live an average lifestyle in a one bedroom apartment in the city center. They cook most their meals at home, take public transportation, and go to an occasional nice restaurant.

Since John and Beth are not big spenders, they saved more of their income than the average American. Currently, they spend $46,000 a year and save $10,000 per year. Saving 18% of their net income vs. the average US personal savings rate of 7.5%. Not bad John and Beth. 

John and Beth, both 35 years old, decide they have a goal to save $1,000,000 for retirement. They like the sound of being millionaires. Assuming John and Beth keep their money in cash (no investments) at the end of 25 years of work, they would have $250,000 in retirement savings. They would be 25% of the way to their goal.  

John and Beth decide they want to accelerate their retirement savings with a geoarbitrage strategy.

Let's go back to our Geoarbitrage Calculators from The Earth Awaits. We adjust the numbers for a two person household, because John and Beth will be moving abroad together.. 

John and Beth both have university degrees and find location independent jobs that pay the same salary. If they maintain their salary, keep the same average lifestyle, and save the rest, their geoarbitrage plan can increase their investment portfolio from $250,000 to between $750,000 and $1,100,000 over 25 years. 

View Chart Assumptions



Cost of Living Index


Portland, Oregon











Supercharge Your Investment Strategy

Cutting your expenses is just the first step. To amplify the benefit, invest the savings. Living overseas in LCOL countries gives you more money to invest. When you save and invest money, your money makes more money; then the money that your money made, makes even more money. This insane growth is compound interest. 

Albert Einstein

"Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn't, pays it."

More money invested supercharges compound interest. Compound interest increases your net worth, and allows you to hit our financial goals faster. Let's look at the numbers in action. Check out the massive effect of geoarbitrage on saving and investing over 25 years. 

Now things are getting spicy. See how much bigger the red bars are outside the United States? Geoarbitrage paired with compound interest drives the difference in the numbers.

Saving and Investing in the US over 25 Years = $675,000 - NOT BAD.

Saving and Investing in Colombia over 25 Years = $2,950,000 - EVEN BETTER!

$2,950,000 - $675,000 = OVER $2.2 Million dollars MORE saved living abroad.

Substantially Reduces Your Final Financial Target

Geographic arbitrage has the additional benefit of reducing the amount of money you need to hit your financial goals.

Let's revisit John and Beth. Using the 4% rule, let's estimate how much they need to retire in different countries. If John and Beth stayed in the US, saved and invested their money, they could reach their retirement target of $1,000,000 in 30years. If they started saving at 35 years old, they couldn't retire until 65. 
















However, if they moved to Portugal as part of a geoarbitrage strategy, Portugal's lower cost of living would cut their financial target in half to $630,000. John and Beth could then retire in 13 years (vs 30 years in the US). Now they can retire early at 48 years old. 

Want an even bigger shocker? With the major savings of living in Colombia, John and Beth would only need $300,000 to retire. $300,000 would only take them 6 years of saving and investing. In Colombia, enjoying early retirement at 41 years old becomes possible.    

See the effect of the geoarbitrage's Triple Benefit in the graph. Outside the US, you need less money and less time making early retirement a reasonable possibility.

View Chart Assumptions






Cost of Living Index


Portland, Oregon











G A M E – C H A N G E R. You can hit financial targets 20 to 25 years earlier, by living outside the United States. Geographic arbitrage dramatically shifts the math on financial independence and rewrites your financial future. 

How to Supercharge Geographic Arbitrage With Other Financial Tools?

The Triple Benefit makes Geoarbitrage is the most powerful, yet underrated financial strategy to reach FIRE. The math above shows how you can leverage geoarbitrage and accelerate your financial goals by jumping on a plane.

Here is another free tip. You can compound the effects of geoarbitrage with other financial tools and strategies to hit your FIRE targets faster.

  • Downsizing – smaller house equals reduced maintenance, property taxes, and utilities. Lifestyle creep in a bigger home is real. More space is a psychological temptation to buy more stuff to fill the space.
  • House hacking – This isn't a tool for everyone, but having roommates can save you thousands of dollars a year. Renting out a room allowed me to buy my first property immediately after graduation. Even now, I utilize co-living to cut my housing expenses and live in a better apartment.

 INSIDER TIP : Want to see if housing hacking is for you? Do a roommate test run. You can rent out a room temporarily on Airbnb. Without making a long-term commitment, you can test if having a roommate is worth the cost savings. You might even make more money charging more for short-term rentals. 

  • Minimalism – This doesn't mean living like a monk and giving up all your possessions. At its core, minimalism is a philosophy based on simplifying your life and not letting the impulse to own "things" control your behavior. I practice varying levels of minimalism in my life. I still own stuff, but I focus more on experiences than material things. In 20 years, my memories of traveling with my parents to Asia, Europe, or South America will mean more to me than a Mercedes I owned. 
  • Remote Work – COVID has shown us remote work is here to stay. There is nothing good about this pandemic, but it has shown us that jobs don't need to be tied to a physical location. There are already over 4.8 million digital nomads in the US. If you can do your job without going into the office, why not cut your living costs and move to a cheaper location

 INSIDER TIP : If you are living outside the United States for more than 330 days, you can save big using the Foreign Earned Income Exclusion (FEIE) to exclude $107,600 of earned income from US income taxes (2020 amount).

Get A Free Tax Consultation and $25 off your US Expat Tax return

Americans abroad need expert advice from people who understand the complex and ambiguous laws applicable to United States citizens living overseas.

Full Disclosure, this is an affiliate link. If you use the link, I earn a commission from the company at no additional cost to you. You get the benefit of $25 off your return and a FREE 30-minute consultation with a Tax Advisor.  

Each of the strategies above deserve their own article. But this should give you an idea of how to ramp up the Triple Benefit of geoarbitrage to smash your financial targets. 

What are the Indirect Benefits of Geographic Arbitrage?

The math behind geographic arbitrage shows clear advantages of adding location flexibility to your financial toolkit. The direct benefits of leaving a high cost location for a cheaper place are clear: 

  1. Magnifies your savings rate
  2. Supercharges your investment strategy
  3. Reduces the amount of money and time you need to hit financial independence

Geoarbitrage is the fastest way outside of the gambling to reduce the time you need to hit financial freedom. Hitting your financial goals years earlier means more time for family, hobbies, and all the things in your life more important than work. 

The indirect advantages of living abroad are pretty compelling, as well. Living abroad allows me luxuries (eating out, massages, maid service) I could not afford in the US. Geoarbitrage provides the savings of a low cost life without requiring a low cost lifestyle. I dedicate an entire article to the indirect benefits of living abroad.

The first step most financial planners recommend is living below your means. There are entire FIRE websites dedicated to Financial Freedom through minimalism, walking to work, packing your lunch, and avoiding luxuries to increase your savings rate.

Yet, few strategies can cut your expenses by 50% as efficiently as living abroad. You don't need to sacrifice living life now for a financial future tomorrow. Geoarbitrage offers you the alternative of world travel, luxury apartments, dinners out, and maid service for less than the cost of a middle-class budget in the US.

"Bottom Line: Jumping on a plane can level up your life, lifestyle, and finances at the same time."

Final Thoughts: Geographic Arbitrage Drives Financial Freedom

Geographic arbitrage is a fancy term for a simple premise: save money by relocating from a high-cost area to a low-cost area. You can move neighborhoods, change cities, or live in a different part of the world for maximum benefit.

The Triple Benefit of international geoarbitrage significantly reduces your cost of living, increases your savings rate, decreases the requirements of your financial goals, and fast-tracks your path to financial freedom. To me, living in a cheaper country is the single best tool to reach financial independence. The differences in moving overseas are life-changing in both the literal and economic sense of the word.

Changing locations is not without compromise. Moving from the suburbs to a less expensive neighborhood meant being further away from social activities. Moving from San Francisco to Portland meant trading California sun for Pacific Northwest rain. Moving from Portland to Medellin meant I see my friends less. The key is prioritizing what matters to you vs. what are things that don't add to your current or future happiness.

For me, the benefits of living abroad outweigh the disadvantages. But living in another country is not always rainbows and unicorns. In some countries, crime and safety are different than in the US. The cheaper a country is, the higher the poverty and income disparity. Mindless bureaucracy and government corruption feels magnified in LCOL countries vs. the US. There are scams, struggles, and frustrations that are unique to living overseas. I'll be pointing out the genuine drawbacks of living abroad in a future article.

I can say after living in over ten different countries that the drawbacks are overblown. An estimated nine million Americans live outside the United States. We wouldn't be here if the pros vs. cons didn't favor living abroad.

My advice? Do a test run in a new country for a few months. Don't stay in a resort or hotel. Rent an Airbnb or apartment in a local neighborhood you would consider living in. Shop the local markets, get out, and meet fellow expats and locals. If that city or country doesn't feel like home, check out the next place on your list. There are 195 countries in the world waiting for you to call it home.


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We moved the comments to the New Expat Forums

  • I agree, moving to lower cost areas can save tons of money. For some people, this is not an option. If there is one good thing about the pandemic, I think it has shown us that life continues without eating out, going to the movies, always having the newest clothes or cell phones or tablets or cars. I can tell you that, even though we were always frugal, our living expenses are now significantly lower than before the pandemic. So for me, toning down the endless consumption of products and services and living a more frugal life is an step that can be augmented by Geographic Arbitrage.

    • Hi Rudy,

      Yeah, 2019 was my lowest year of expenses. I spent roughly $1000 a month living abroad. It was my lowest year of living expenses, until this year. If you don’t go out, travel, go to the gym, or meet up with friends, you don’t spend much money. 2020 will be my lowest year of spending ever, but I hope to never repeat it.

  • I’m a long ways from retiring, but this definitely gave me some food for thought.

    • Hi Ada,

      I’m glad you found it useful. Early retirement is achievable. It only took me 15 years and that was with 2 market crashes and a small business failure that nearly bankrupted me.
      If you are new to investing, take my Risk Tolerance Quiz to find out what investment style fits you best.

  • Geoarbitrage is a fascinating subject, but how do you think this will work in the changed scenario on account of the global pandemic?

    • Hi Sandy,

      Great question. There really is no great scenario with a pandemic, right? Living in the US during the pandemic was arguably the worse country to be in. I had friends leveraging geoarbitrage in low cost “developing” countries like Vietnam, Thailand, or Taiwan with barely any interruptions in their life. As an example, Vietnam shut down for 3 weeks in April, then life returned back to normal.

      The countries I have been living were not so lucky. I was in a 5 MONTH HOME QUARATINE in the Philippines.

      I have a great post about being an expat during the pandemic, where I interviewed 15 people who where living abroad when the pandemic hit. Read Stay or Go Home? The Challenges of Living Abroad During a Pandemic to hear some geoarbitrage expat perspectives.

  • Geoarbitrage does sound interesting, especially when so many of us are working from home. My husband and I were considering this (not moving country, but moving closer to the mountains for cheaper housing and closer access to hiking/skiing…) the main problem for us is that we are not sure how long this working from home will continue.

    If it is longer than a year, we’d want to move, but if it’s only for six months, the cost of moving and then returning would wipe out any savings we’d make…

    I can totally see why this would make massive savings once you retire.

    • Hi Josy,

      Thanks for the comment. I personally think the pandemic has fundamentally changed how employees and corporations will view work.

      Facebook, Twitter, Microsoft, Google, and several other major firms have already announced remote work as part of their long term business strategy. Workers need to take advantage of the opportunity.

      I’m a big fan of International Geoarbitrage, but Domestic geographic arbitrage (moving to cheaper neighborhood or city) can be a big money saver as well. Good luck.

  • Great post and such a great idea! I had heard about this is the past (although I did not know the term at that time) and how much you can save in some of the lower cost areas around the world. Unfortunately in my current situation I am unable to do this, but it is something that I hope to do in the future. It was great to see the cost differences living in the United States and definitely gives me some ideas for the future.

    • Hi Melissa,

      I’m glad you liked it. The term geoarbitrage is relatively new, but the concept has been around for decades.

      Not only are prices lower outside the US, but the quality of life is much better IMHO. Especially in the current state of the US, I’m suuuuuper glad I have the ability to avoid living in the US.

  • I really like this concept, but I’m not sure it fits every one. Especially if you have kids, it’s harder. And the hardest part would be maintaining a steady income in US dollars.

    • Hi Moshe,

      I have to admit, you are correct. Kids in this lifestyle would be challenging. I know people that are doing it, but I have to imagine it is difficult.

  • This is amazing. I had honestly never heard the term Geoarbitrage but it makes 100% sense. In my travels, I have often met expats in India, Portugal, Morocco, or Thailand that were living like kings while spending fractions of what we spent in New Orleans, LA, USA. We have often considered we have lived in a city where the Cost of Living was low but not like it is in Medellin! I mean 70% less is crazy! I think this is going to be part of my retirement bucket list to have rentals in America while we live overseas!

    • Hi Eric,

      It makes sense, right? I had the same AHA moment as you. I spent my youth backpacking in low cost countries, then it hit me in my 30s. Living long-term in a lower cost country would save me more money than just visiting there for a couple weeks. 15 years later, off I went. Rentals are a great strategy for geoarbitrage. My rental property is my primary income source until I hit 59.5 years old, when I can access my 401k and IRAs.

      I’m a little jealous of you though, NOLA is still one of my favorite places in the US.

  • Alfred Daluyaya says:

    Very cool. I think as growing up in Manila & moving to California for tech work, this is definitely something to consider as I still have friends & family there. I just came back w/ an amazing time in Manila – w/ restaurant & other costs in Makati, SM Aura, BGC etc. are all being super reasonable. A paced move approach could work while kids are in college

    • Hi Alfred,

      California is such a strange economic bubble, nearly every place I have lived in the world has “super reasonable” prices in comparison 🙂

      You should see how far your dollar goes outside of Makati and BGC. Manila is my recommendation for social life and entertainment, but the capital is by far the most expensive place to live in the Philippines.

      Check these articles out if you haven’t read them yet:

      Retiring in Manila

      Best Places To Live In The Philippines

      Let me know if you have any questions.



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    About the author

    Hi, That's me. I'm Marco Sison. I am a survivor of the corporate rat race. I started Nomad FIRE to show you an alternative to the stress and grind of 70-hour weeks to pay off a mortgage, student loans, and countless bills. After getting laid off in 2015, I said screw it all and retired early at 41 years old. I have traveled the last eight years to over 50 countries to show you the best ways to save, invest, and live in amazing countries for 70% less cost than the US. I have been featured in: US News & World Reports, HuffPost, MSN Money, USA Today, ABC Network, Yahoo Finance, the iTunes documentary Seeking FIRE, and the Amazon Best-Seller, Abroad: Expats That Thrive. [view press...]