I recently re-watched Downsizing on Netflix, starring Matt Damon. It didn’t do terribly well at the box office (okay, it totally bombed), but I loved it the first time I saw it. For those of you who haven’t, the basic premise was that a Norwegian scientist found a way to safely shrink humanity into a mere 12 inches. The scientist, his wife and a few other brave volunteers proceeded to shrink themselves to become the first small community in the world.
Being small helped with consumption of the world’s finite resources, and literally a much smaller carbon footprint. Most importantly though, it meant you could live large.
For the Safraneks (Husband and wife duo of Matt Damon and Kristen Wiig, it meant a life of luxury. In the normal world, they would have just paid off their student debts, and after liquidating all of their assets, have a net worth of $152,000. But in the small world… that $152,000 would translate into $12,000,000, allowing them to live in literally a castle, and never have to work again their entire lives.
That idea would sound amazing to anyone, and it definitely appealed to me. And this was before I’d discovered the FI/RE community. But while becoming small to become rich currently only exists in the realm of Hollywood, the FIRE folks have already come up with their version of it.
It’s nothing new, and it’s called Geoarbitrage.
What is Geoarbitrage?
Geoarbitrage is the process of moving to another location that has a lower cost of living, allowing your existing net worth to stretch further. This could be within the same country (say, moving from New York, to Albuquerque in New Mexico), or cross country (From Singapore to Thailand).
Wherever you go, the aim is to increase your discretionary income, to lead a better quality of life.
Some digital nomads have taken this a step further, by earning income in their native country (USD or SGD), and spending in their adopted country (Thai Baht or Indonesian Rupee).
In fact, if you google “best places to retire”, you’ll find no shortage of articles like this one. Portugal, Columbia, Indonesia, Thailand and Peru often make these lists. And with clickbaity headlines like “Quit Your Job And Live Abroad in 2019: 10 Places So Cheap You Might Not Need to Work“, you’d be insane not to click.
So, would you uproot your family to settle somewhere where your dollar can fetch you more? If not, what’s holding you back?