What is geoarbitrage? I’ve tried to explain it to family and friends, but I struggle to explain the concept. I am guessing it is probably because you can’t explain something to people who don’t want to understand. It is not a part of their overall plan so why should they care, fair? Why should they be different than everyone else if they are happy? My thought is that they may not don’t know any other which is why I started this website. Some people may want something different if they knew it was possible. I can promise you, it is possible if you put your mind to it just like everything else.
Personal connections, cultural inspiration, and practicality away from home all while saving money! Waking up every day to prices you have not seen in decades and perfect weather. Yes, please!
Short of handing them a copy of The Four Hour Workweek – there’s no getting through to some people. I have experienced that life is too short to work, pay bills, retire, and die no matter what happens in between. Again, my life is just “different” but yours can be different too as the sky is the limit!! ✈️
The Basics of Geoarbitrage
In the United States and Canada, we associate cheap with having little value. If it’s too cheap, it’s too good to be true mentality. While we all love a good deal, anything too cheap is generally not worth it or there is a catch. This is a common occurrence around the world, or is it?
Yet, what’s cheap to someone earning in a hard currency, like US or Canadian Dollars, is quite different from what’s cheap for someone earning in a soft currency – like Mexican Pesos for example purposes.
I remember being baffled when my Ukrainian Family balked when I told them how much I was paying for my hotel room when I visited. I felt like I was getting an incredible deal for one night. They thought I was getting ripped off and could live the whole month with that money. We were both really confused!
An Example of Geoarbitrage
Examples are the easiest way to understand exactly what is geo arbitrage. You probably drink coffee. I know I do every morning, two cups. You’ve also probably been to Starbucks, once a year for me.
Maybe you frequented a few coffee shops like Timmys, Second Cup, or the many pop culture internet cafes opening in North America. Often, a decent coffee costs $3-7 USD, a breakfast pastry is $3-4 USD which is fairly standard pricing post-COVID.
I had a favorite coffee shop in Lima, Peru next to my Airbnb in Mira Flores (click links) which is the nicest area of Lima. I went for my walk which you can do comfortably year-round in Lima. I’d start with a mocha and treat every morning as I am not normally a big breakfast person. I’d walk for 2-3 hours to get my 10K daily steps in to start the day along with hundreds of others. Then I’d order my fancy coffee and a treat which could be anything from carrot cake to a cheese bun.
Guess what my bill was every day without tip (~10% in Lima) for a fairly fancy mocha, a small breakfast treat, and often times a fresh-pressed, organic juice. Less than $5 USD depending on the treat!
If you were to purchase the same items at a Starbucks or similar style coffee shop in the United States or Canada, I’d estimate the bill would come out to $14 USD give or take a few dollars. $4 for the mocha, $3 for the breakfast pastry, $6 for the fresh juice, and then taxes and a 20-25% tip as that’s how baristas roll. That’s Paying one-third the price for the exact same goods. You can also have an ocean view and not wear a heavy jacket, or long johns after warming up your car for 30 minutes!
Visiting Lima twice, I never did my laundry or shaved my mug. My weekly laundry was less than two dollars with overnight service folded and ready for the drawer. I had a local barber which I find in every low-cost city that gave me a hot shave and a trim for less than $4 a visit (FOUR USD). Those prices hardly cover the laundry pod or shaving cartridge FFS which allows you to make the worker’s day with a good tip. Win-Win!! (click link).
Taking Geoarbitrage to the Extreme as that is what I do!
I have experienced that the most popular locations for individuals with USD, Euros, Pounds, or whatever currency is strong at the moment to take advantage of geo arbitrage in Asia, Eastern Europe, Central America, and many others listed on the Country’s menu. Many living the lifestyle only live in these areas full or even part-time for Family reasons and a lot of them do it on social security or their CPP, hell yeah!!
Imagine this…
You have a brand-new studio apartment furnished with every amenity you desire is found in your stunning studio: air conditioning, a full kitchen, hot water, and often a great balcony view for your morning coffee or evening nightcap if you choose.
Outside your front steps, your community features a stunning resort-style pool to help endure the hot days. You wake up and walk to the gym ten minutes from your pad. Free weights, machine weights, pool, sauna, steam room – the works as the gym is like a resort, too.
You stop off at a restaurant after the gym to grab a big, garden-fresh salad prepared right in front of you and a freshly squeezed juice that wasn’t shipped two months ago and full of pesticides that cost $25+.
Lunch is downed while you work or take care of whatever else needs to be done even if it is nothing. You walk home to drop off your laptop and then walk to a North American-style or local restaurant for dinner.
After dinner, you meet up with some EXPATs or local friends for drinks at a bar within walking distance of your pad. Depending on the bar, a local or even fancy beer can cost less than a couple of dollars.
Then it’s off to sleep. No alarm clock set. You wake up the next day. Rinse and repeat. You never think about money, and you buy what you want – when you want to. You legitimately can’t overspend your budget. It’s damn near impossible in most of these places as long as you’re not a drunken sailor which again, is another story.
How expensive is this lifestyle?
In a place like Thailand, Vietnam, Peru, Columbia, Philippines (see my list of Countries) you can live like this, like a king, for $1,000 – $1500 USD a month! Many have done it for $700-800 a month if you want to eat and drink your coffee at home and live outside the city. There’s no need to budget or pinch pennies when you can live for less than $1,500 USD a month. That may even be less than your pension for a social security check if you are retired or have a seasonal job back home to go back to half the year.
Another example…
For $500 a month with a 6–12-month lease (slow travel), you can easily rent an apartment in parts of Asia that has a swimming pool, and a gym with top-notch equipment and machines. That leaves $1000+ spending money!
How much for the equivalent in Canada and the USA for this retirement plan? Imagine, you can spend half of your time in your home country and half of your time be a Geoarbitrage. The choice can be all yours!!