If you had told me a few years ago that I would be moving from Sacramento, California to Hot Springs, Arkansas (or literally anywhere outside of California), I wouldn't have believed it. I was a long-time California resident and didn't see myself living anywhere else. However, when I started the process of researching mortgages and homes to buy, I felt so discouraged. Home prices were skyrocketing, beautiful homes were out of my budget, and I felt that the only way I would get what I wanted was if I resigned myself to a life of being "house poor".
After living in Arkansas for over a year, here are some ways that I've been able to save money compared to living in California:
Housing: My mortgage in Arkansas is nearly $1,000 less than the rent I was paying in California. Utilities are also far cheaper, anywhere from $50-150 per month, depending on the season.
Savings & Investments: I'm now in a position where I can max out contributions to my HSA and Roth IRA each year. And my savings accounts have never been fuller or healthier, which means I stress less if/when there is an emergency.
Personal Care: Anything from haircuts and treatments, massages, clothing, and exercise equipment is about half of what I would've paid for in Sacramento.
Extras: Being able to afford a housecleaner now has greatly reduced my stress and allows me extra time to work (and earn more income if needed). I also have extra funds to travel to different places and knock out some of my Southern travel bucket list places.
What is geoarbitrage?
Geoarbitrage, or geographic arbitrage, is moving to a place that offers a relatively lower cost of living while maintaining your current income level. A lower cost of living can be great for the following reasons:
Allowing your money to go towards the things you need, such as housing, food, and healthcare.
Allowing your money to go towards the things you want, such as traveling, a housecleaner, or a chef.
Freeing yourself up to work less, meaning your expenses are still taken care of even at a lower income.
Giving yourself a chance to experience a different place and way of life, especially if you love to travel.
How can I still earn an income if I move?
This really depends on what you do for work and what your incomes sources are. Personally, I was already working remotely and had the freedom to move wherever. (As a healthcare worker, my company only required me to reside within the United States.) When I moved out of state, my pay wasn't cut and I still qualified for my merit increases each year.
A lot of the folks I know of who moved to a place offering a lower cost of living were able to maintain their incomes by working remotely. Depending on your role and how long you've been at a company, you might also be able to negotiate fully remote work.
If this isn't an option for you, consider how you can earn an income regardless of where you live. You might be able to secure in-person work depending on your role (for example, if you're a healthcare worker like a traveling nurse). You might also consider a new role that is fully remote, such as starting a small business or consulting.
Moving from state to state.
What's easy about this option is that if you're already a citizen, you can more or less choose whichever state you wish to live in. People may choose this option for a variety of reasons:
Moving to a state that has no state income tax, so their money can go further.
Moving out into the country (versus living in the city) to reduce living costs.
Moving to an area that offers lower property taxes.
Keep in mind that any move can be expensive. Moving out of state even more so. Carefully consider what you need and what you can live without. I've found that there is little that I actually need, and if I require it, I can usually find it where I'm at.
Moving outside of the country.
Personally, I'm less knowledgable about this area as I have not (yet) moved outside of the country in my adult life. If you want to learn more, I found a wonderful post called The Ultimate Guide to Geoarbitrage that goes into great detail about what you need and what to consider.
Does your quality of life increase?
Maybe. Before packing up and moving, I highly recommend staying for 1-2 months in a place you're considering before committing to a long-term move. I'd also recommend choosing the months that you might like least (for example, dark winter months), to see if you can tolerate the seasons that are not so great. While I'm not a fan of Arkansas winters, knowing that I am able to survive them gave me the confidence boost I needed to permanently relocate.
Some ways in which your quality of life may increase include:
Having a bigger place to live at a lower cost.
Living in an area that you prefer (near nature, in the city, etc.).
Being able to afford nice-to-haves at a lower cost, such as dining out, housecleaning services, salon/spa services, etc.
Having a generally healthier place to live. (For example, cleaner air and water.)
Living in a place with a far more temperate climate or better weather.
Having more money to be able to max out on retirement contributions (like an HSA, Roth IRA, or 401(k)).
Having access to healthy activities. For example, there are many hiking opportunities in Hot Springs and nearby areas.
Having access to free or low-cost entertainment. (Jazz festival in the South anyone?)
Having access to low-cost transportation options, such as a good metro system or easy walkability.
Having opportunities to experience a different culture and make new friends.
With all the potential benefits, I'd also advise being mindful of potential lifestyle creep, which could take you off track from your FIRE goals. Your life should feel freer and better with geoarbitrage, but be mindful of where your money is going.
Does your quality of life decrease?
Maybe. This really depends on where you go and what you have access to. For me, the grocery stores in my area are far less diverse than the ones in Sacramento, so I either have to travel a bit or order online if I want an oddly specific ingredient.
If you're like me and also need access to quality healthcare services to manage any health conditions, do your research. You may need to prepare yourself to travel out for more speciality services, such as if you were to need a surgery.
If your work is fully remote, you also need to have good quality internet connection. While there are options to resolve connection issues, make sure you know what you're in for before relocating.
You might also be moving to a place where the weather or climate may not be your thing. I adore Arkansas summers and enjoy a good thunderstorm. However, the occasional tornado warnings and cold winters...are less appealing. :) While we live in a good area, have a safety plan in place, and can cope during the winter, I'd recommend moving to a place that you mostly enjoy.
It can also be rough when you're living further away from friends, family, or a community that you really connect with. It's not impossible to make new friends, and I love that we live in an age where we can stay connected via text and Zoom calls. Be aware that homesickness after a big move like this is normal. Find ways to stay connected and make new connections.
Do you have any thoughts, ideas, or recommendations about geoarbitrage?
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