HELLO FROM AVERAGE-VILLE USA

Have you ever heard about Geo-Arbitrage?

I first learned about it in Tim Ferris’ book, “The 4 Hour Work Week,” and it is an interesting way to stretch your earnings from a developed nation such as the USA, much farther by living in a nation with lower costs of living, which is most of the developing world. 

Imagine this, two men each earn $5,000 a month but one lives in Average-Ville USA and the other lives  in a developing nation in East Asia, Africa, South America, and even Mexico. 

• Mr. Average-Ville will likely spend $1,500+ on a mortgage or rent. 

• He’ll spend another $500 a month on all the expenses that come along with owning a car, repairing it, fueling it etc. 

• When he goes to buy a latte and a bagel in the morning he’ll spend around $10 and another $20 at lunch. 

As you can imagine, his $5,000 a month, a good income in much of the USA will not go very far. 

• On the other hand Mr. Developing-Nation will likely spend around $500 or less a month on rent or a mortgage. That’s about 1/3 of Mr. Average-Ville. 

• His car would be about the same and fuel would actually be more, but if it’s a warm climate he’d probably buy a “Moto”, basically a 50-150cc scooter that might get 100 miles to the gallon and spend between $1,000-$2,000 to buy it. 

• When Mr. Developing-Nation wants to get a coffee and pastry it will cost him as little as $2 and he’ll eat well at lunch for another $4. Once again for about 1/5th of the cost that Mr. Average-Ville will pay. 

Mr. Developing-Nation can eat out 5x as much if he likes and he’ll still have massive savings from his vehicle and housing expenses to put towards other goals or creating more wealth. 

So what’s my point? 

1. Where you earn matters. 

As mentioned in last weeks Wise Letter, just by living in a nation like the USA, you will likely earn 5-10x more for doing basically the same job. 

2. Where you live matters. 

Even if you never plan to move across the world to save money, the difference in costs just among different states and cities is huge! 

 This makes it possible to benefit from Geo-Arbitrage in your own country and even state. 

You could work as a developer for a Silicone Valley tech company, but live in another state with housing prices 1/3 or less.

3. Where you invest matters. 

My wife and I have one investment property that we rent out. It happens to be in our own state and near our hometown, but it doesn’t have to be that way. 

Have you been saving up to buy 1 rental property in your state where real estate is expensive? What if you bought 4 units in another less expensive state in the USA? Or what if you got into the market by purchasing 1 unit 4x times faster due to the lower entry investment cost. 

4. Where you vacation matters. 

You’re probably seeing the pattern here, but there are warm sandy beaches available to you for much less than you might spend in lovely San Diego or Hawaii. 

In a less expensive locale, it’s not just the food and lodging that’s more affordable, it’s often the tours and experiences like ATV’s, Jet Ski’s, & Zip Lines too. 

I look forward to visiting Hawaii in the future and San Diego is awesome, but it’s nice to know you have choices. 

5. Where you hire matters. 

This is a lot bigger decision than where you vacation, right up there with where you personally live. A decision that comes with responsibility for others livelihoods. 

But I am becoming more and more intrigued by the idea of hiring locals from developing nations to do remote work that I can use to fuel my present and future ventures here in the states. 

Remote Virtual Assistants for example are already a thing businesses hire for, but done right this can be hugely beneficial for both the employer and employee. 

Imagine giving someone a good wage in their own nation but paying 1/3rd or less for the service. 

Hopefully you found this little introduction to the world of Geo-Arbitrage interesting. 

Better yet, I hope it’s got your mental wheels turning to optimize your earning and your spending more effectively instead of just living in your own little bubble. 

The possibilities and possible life lessons here are plentiful, but I’ll leave you with that for today! 

If you want to bounce any ideas off me or share your perspective, feel free to reply to this email and I’ll do my best to reply! 

See you next Thursday!

Geno Schmelzer,