Geoarbitrage is short for geographic arbitrage.
A simple search on the internet about geoarbitrage mostly gives results about moving to a place where living costs are significantly lower than your current home.
However, after five years of exploring, I have come to believe that geoarbitrage is more than just living in cheaper countries—it is a way of thinking and creative problem-solving.
My “Aha!” Moment
I first heard about the concept of geoarbitrage from The 4-Hour Workweek by Tim Ferris when I started my experiment with the digital nomad lifestyle in 2018. I did reduce my living costs by moving to Vietnam, a much cheaper country where I had a better quality of life.
But then I thought, “Don't I always do something like this?” In fact, my first and only job was helping people arbitrage the differences between Hong Kong and mainland China.
Being able to speak Cantonese and Mandarin fluently and understand both cultures gave me many advantages. Learning how to get the best of two cultures and locations early in my life seems to have planted the seed of geoarbitrage inside me.
For example, Hong Kong has much lower taxes and more financial freedom than mainland China. One of the obvious advantages is shopping for cheaper international brands. Or one simple hack is using Hong Kong bank accounts to bypass capital control in mainland China. Setting up a company is a simpler process too. It’s easier access to the international market at a lower cost, and there are many other benefits!
But Hongkong has disadvantages too; For example, real estate prices are skyrocketing; Living there is expensive—an average one-bedroom costs more than $3K monthly but less than 40 sqm. People are too busy with work there. I guess it is the same as all major financial cities, but I prefer working to live, not living to work.
Eventually, I quit due to my craving for freedom and curiosity to see what the world could offer.
Making the Most of Your Money
For the past five years, I have explored my way throughout Southeast Asia, the Caucasus, the Balkans, Eastern Europe, and Southern Europe, and now I am moving slowly toward Northern Europe.
People think I must be super-rich to be jumping from country to country—sunbathing in the Mediterranean, enjoying exotic wine and art in Europe, and sipping coconuts in Southeast Asia.
But the truth is: Most things are priced differently between countries.
The trick to geoarbitrage is knowing what you want and understanding the difference between imaginary borders. Below are a few fun ways to make the most of your money and arbitrage the difference. Some of them are more doable if you are location-independent. However, you could still use some of these tricks even if you live in one country.
Leverage the Currency
One simple way to geoarbitrage is to earn a strong currency but spend weaker ones.
For example, I am earning US dollars while spending mostly Turkish lira, which gives me a great amount of currency leverage and makes my money worth more. Due to the current hyperinflation in Turkey, $1 can be exchanged for ₺17,27. I still remember that $1 used to be worth only ₺7.86 when I settled here in October 2020.
If you want to take things further, the current exchange rate between Tether (USDT) to Turkish lira is 1:17.38 (Tether is a stable coin cryptocurrency pegged to the US dollar.) I mostly use this way, especially during weekends—when the banks shamelessly offer the worst rates.
Turkey is not the only good place to leverage the currency difference. Imagine if you are making USD or Euro, living in SouthEast Asia, Eastern Europe, or South America are nice options.
But you also need to consider what kind of cultural setting you enjoy being in. Otherwise, no amount of money-saving is worth living in a country you do not enjoy.
“Go where you are celebrated - not tolerated.”
Most people’s default shopping mode is to buy everything in their home country, but I tend to buy expensive things when traveling, with the perks of tax refunds or privacy protection.
For example, I recently bought a MacBook and phone from Amsterdam, Netherlands, and saved $335.44 simply by a tax refund. I got the keyboard I needed too. Fun fact: The Dutch keyboard is almost the same as the American English one.
Tax-free shopping is not rocket science. Simply ask the store staff for a tax-free form when paying (this is easier to do in big shopping outlets). Keep the receipts and prepare enough time to get the stamps at customs, ideally before check-in.
Another hack is buying crypto gadgets when traveling. I believe it is more private too, as I don't need to give out my real address or name.
For example, I prefer ordering ledgers in Europe. It is faster to get them delivered and much cheaper since Turkey has a high import tax. The last time I ordered a speaker from Denmark, it was taxed at almost 50% of the price I paid for it... lesson learned.
I used to use a VPN for services that weren't available in my location, but I got to test out more geoarbitrage fun after living in Turkey.
I learned that most SaaS services price differently to meet local markets, a.k.a. localized SaaS pricing.
For example, the chart below shows the services I am paying for with my Turkish bank card. Few of them even offer cash-back promotions, and I pay those that offer international standard pricing with my American card to eliminate the currency exchange rate.
Saving $40+ monthly just by switching locations is doable for most people. All you need is a good VPN or a local bank account sometimes.
Make the msot of VPNs! You might be surprised that many websites are blocked in different countries—the internet is not as free as we think. Also, some content is unavailable in some areas due to IP protections, but simply changing the VPN location often solves the problem.
Certain medical treatments in some places become very popular with tourists because of the huge pricing difference between countries. For example, many British people fly to Turkey to get hair implantation because it is much cheaper than in the UK. Some Middle Eastern women come to Turkey to get nose jobs. Laser eye surgery is quite popular in Hungary, while many people go to Thailand for orthodontics, Korea for plastic surgery, etc.
Why pay more when you can pay half or even less and get better quality?
But you need to do some digging to find good services. One basic rule is to stay away from those that target international tourists. I have tried annual checkups, mold removal, orthodontics, and laser hair removals during my adventure.
I enjoyed my checkup when I was living in Penang, Malaysia. It was a great value for the money. It had good service, and there was excellent English and Cantonese available.
As for orthodontics, I compared Thailand, Malaysia, Georgia, and Turkey during my travels. Eventually, I chose Turkey last year, which cost less than $3k. It was an amazing experience, although I’m not finished with it yet.
As for laser hair removal, I found during my exploration that different cultures see body hair differently. For example, most people do not pay much attention to body hair in China or Asia in general. Hair removal is quite expensive there. While in Turkey, even men care about maintaining well-groomed eyebrows 👀 I did full body laser removal last year in Turkey, which cost less than $300 and had amazing results!
Mole removal was quite an interesting experience. I tried three different methods in three countries:
1. Laser removal in China. It was quite painful and left scars…
2. A more traditional method with natural herbs in Kuala Lumpur, Malaysia. It was an amazing experience, as there were no blood and nice results!
3. Removal surgery last month in Turkey. There was no pain, and I’m still waiting for it to heal.
That is how much I enjoy exploring to see the difference, slowly building up knowledge and experience too. And I know getting treatments abroad could be scary and confusing, but it does not have to be this way.
One of the positive things about the pandemic is that more and more people have started to work from home. For employees: Did you ever think of working for companies in higher-paying countries? Or for entrepreneurs: Have you ever considered hiring people from lower-cost countries?
Here are some of the setups I use for my websites: I am hiring developers in Tunisia and Turkey, designers from Armenia, and administrators from the Philippines. I value skills and experience over degrees or nationalities. But the hardest lesson I’ve learned is eliminating as much as possible before delegating.
Hot tip: Upwork is your best friend for reaching global talent.
Value Comes from Scarcity
Let's start with dating.
Dating culture differs a lot in different places, and so do standards of beauty.
Beauty is in the eye of the beholder, and most of us are drawn to exoticness. Simply by looking differently, you might already be ahead of the local competition in the dating market. Did you notice you get more attention when abroad? Westerners might be asked by bystanders to have their photos when traveling in Asia. This happened to me when I was traveling in Armenia, even though Armenian women are quite beautiful. I was considered special because Asian features are scarce here.
However, I think it is quite superficial when others only like you for how you look, not who you are. I think the real hack is to keep improving yourself. Even though your differences can help you stand out at first, relationships are a long-term game.
“Be worthy of a worthy mate.” —Charlie Munger.
Besides looks, let's talk about skills. An average westerner in Asia could quickly get a job teaching English, French, or Spanish with good pay by local standards; What you think of as common and ordinary skills might be worth a lot more in other countries due to their local scarcity.
The trick here is knowing that scarcity creates value.
Leveling up the Fun
These are just some samples of geoarbitrage in daily life, but maybe you don't care about making the most of your money. But what if geoarbitrage could also help you gain more freedom in this unfree world?
When I accidentally learned about flag theory, it almost felt like a cheat code in life. By arbitraging differences among countries, I was able to maximize my freedom, which is something I will share more about in upcoming articles.
Simply by being creative, using your imagination, and doing things differently—the world becomes your playground…
Updated in 03. 2023
I realized that flag theory is indeed great in theory, but I found some problems with it, and as times have changed, we can simplify things with less setup.
However, the most important thing I realized is that freedom is not the goal; the real goal is to have free time and mind to explore our potentialities.