Forbes has a report on 150 cheap places to live. Author Richard Karlgaard points out the obvious: it’s more expensive to live in some places than others. A $4,000,000 home in San Diego might only cost $700,000 in Bend, Oregon. Why hasn’t everyone moved to Bend? Karlgaard contends that most of us are trapped in old ways of thinking, that we believe we must live where we work. Technology is changing that.

This is the 21st century, man! Today you can enjoy the best of both worlds:

  1. Live where you want.
  2. Get paid like you’re in a big city.
  3. Never be isolated or bored.

Say you’re a bright knowledge worker and have spent a decade or more in your industry, sharpening your skills, making the right contacts. You earn a decent salary on the metro coast, but those dollars just don’t stretch like they used to. So you decide to shake off the costly coastal infrastructure and relocate to a cheaper rural region. But you maintain your ties to the larger metro area and pull down the same amount of money as you did when you were living in Profligate Corners. In other words, you still harvest your dollars from Silicon Valley, Washington and New York, but now you spend and invest them in Bend or Boise.

Karlgaard dubs this concept — earning big-city money while living with a small-town mortgage — Geographic Arbitrage. As with all Forbes articles, this one is aimed at the wealthy, but the concepts are applicable to the poor and the middle-class. If you can create a work-from-home job for yourself with an employer in a large city, but actually live in a small town, you will have gone a long way to optimizing the fundamental equation of personal finance.

I know a few people who do just this. It amazes me that a person living in rural Oregon can be holding down a job in Chicago or Boston or San Francisco, but it is possible, and not just for tech workers. Consultants can do this, too. So can freelance writers. I’m sure there are lots of careers that grant this freedom.

The 150 cheap places to live rich? Forbes divides them into several categories:

  • Porch-swing communities — family-oriented places like Lincoln, Nebraska.
  • Happy Hootervilles — porch-swing communities with less than 25,000 people, such as Durant, Oklahoma (“the magnolia capitol of Oklahoma”).
  • IQ campuses — college towns like Bozeman, Montana.
  • Steroid cities — fast-growing metro areas like Santa Rosa, California, an hour-and-a-half from San Francisco.
  • Bohemian bargains — lively cities with reasonable costs-of-living, such as Clevelan, Ohio.
  • Telecommuting heavens — places such as Bend, Oregon, which have great climate and many recreation opportunities, while allowing access to high-tech.

[via A Whole Lotta Nothing]