Geographic arbitrage: Save money by leaving the country

Let’s start with the obvious: Costs aren’t the same everywhere.

You may already be aware of this on some level, but until you’ve traveled extensively, it isn’t something you really understand. The cost of living in major cities can vary by as much as 500% or 1000%, depending on how you want to live. I’ve found that it’s almost impossible to reduce your living expenses as much as you can by living overseas.

Leaving the U.S. and choosing to live abroad (assuming you live in the right place) is the single biggest thing you can do to reduce the amount of money you spend. Period. Yes, it requires changes and sacrifices in other areas of your life, but if you’re looking for adventure and to radically cut your costs, nothing can beat living overseas.

The cost savings don’t just come from living in a cheap place, however; the very act of living abroad will bring changes to your lifestyle, which will produce additional savings.

Cost of Living

Every year, Mercer Resource Consulting issues a list of the most expensive places for American expatriates to live. What the list doesn’t capture is the magnitude in the difference in the cost of living between cities.

Take New York, for example. The smallest, dirtiest place you could find in Manhattan will probably cost you $1,500/month at the low end. This would be an unfurnished studio in one of the less trendy parts of town. This would, of course, probably be without an internet connection.

A nice, furnished, single-bedroom apartment in Bangkok can go for $400/month with internet included. I know people who rent less impressive apartments for $200/month. Bangkok is a vibrant city with all the stores you’d find in most major North American or European cities. The internet infrastructure is good, and there’s large community of expats and bloggers.

Food can easily be purchased from local street vendors for $1-2 per meal, so you’d never have to cook if you didn’t want to. Fresh fruits and vegetables can also be bought from street vendors at a much lower price than you’d find in a store.

While Southeast Asia is a popular destination for westerners, you can find places with lower living costs all over the world in cities like:

  • Kuala Lumpur
  • Istanbul
  • Panama City
  • Bogota
  • Buenos Aires
  • Cape Town

Even Eastern European cities can provide a lower cost of living than what you will find in the US or Western Europe.

J.D.’s note: I’m editing this article from Cape Town, just two days before flying back to Portland. I can vouch first-hand that the cost of living here is much lower than back home (because incomes are much lower, too): $6 for a t-shirt, fifty cents for a can of soda, three bucks for a glass of wine. Most things seem to be about half the cost I’d expect to pay in the U.S.
Cape Town fast food
Sometimes lower costs are tied to lower incomes, but that doesn’t mean geographic arbitrage is wrong. Your money still helps the local economy. [Photo by Joan Rhodes]

Renting and Subletting

If you do own or rent, one easy way to earn money while you’re overseas is to simply rent your place to someone else. Depending on where you live (and where you move), the income earned from renting could easily cover all or most the costs of living in a foreign country.

If you’re looking to start an online business, the freedom and capital provided by moving and renting might be enough to get you started.

Getting Rid of Your Stuff

Aside from the benefits to living in a city with a lower cost of living, the very act of moving overseas will save you money. You can’t move to the other side of the world as easily as you can move to the other side of the country. You’ll be forced to pare down your possessions to something you can easily transport.

Most people who move overseas take only a few suitcases full of possessions: clothing and small personal effects. Larger items, like furniture, have to be put in storage, given away, or sold.

While you certainly don’t have to leave the country to reduce the amount of Stuff you own, it does force you to deal with your possessions in a way that you otherwise wouldn’t have to.

Also, when your life is in a suitcase, you’ll pay much closer attention to what you buy because you incur the additional cost of having to carry it around.


I’m not a tax professional, tax attorney, or accountant so please take what I say with a grain of salt and contact a professional before taking any action on your taxes.

If you’re living outside the United States, you’re not using many of the services that your taxes go towards. As such, there’s a significant tax benefit to living overseas.The first $80,000 on income for U.S. citizens isn’t taxed if you spend 300 consecutive days outside the country. For citizens of other countries, you usually don’t have to pay any income tax if you live outside of your country.

This alone may be enough to economically justify a move for many people, and might even make an otherwise unaffordable city (like London or Paris) affordable. For some, the reduced tax burden could increase their income from 30-50%, depending on where they live and what tax bracket they’re in.

Another strategy I’ve learned from American expats: Before you move overseas, change your residence to a state like Florida or Texas that has no income tax.


Last summer, I had to return to the U.S. because my father was in the hospital. I stayed at my parents’ house for several months, and I noticed I was spending more money in the United States than I was in Bangkok even though I didn’t have to pay for rent or food. This was almost entirely due to the cost of operating a car.

Gas, maintenance, parking, and insurance cost an enormous amount of money. If you move to a major city somewhere else, you can completely eliminate this expense by just taking public transportation. Even taxis in a city like Bangkok will cost no more than $2-5 for almost any trip you can take.


Probably 95% of the people reading this either have no desire to relocate to another country or conditions in their life simply don’t allow it. Mortgages, family, children and careers make this something that’s only an option for a small group of people. Leaving the country isn’t for everyone. I understand that.

Nonetheless, it’s something you should keep in the back of your mind. Even if it’s something you don’t find appealing at the moment, circumstances in your life could change in the future such that it might be possible and necessary to move. Many people I’ve met traveling have retired overseas and live a much higher standard of living than they otherwise would live at home on their pension.

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There are 76 comments to "Geographic arbitrage: Save money by leaving the country".

  1. LifeAndMyFinances says 25 February 2011 at 04:33

    My wife and I have toyed with the idea of traveling overseas, and now that the U.S. economy is still a little rocky, we’ve been talking about it a little more.

    I my business and my wife’s business takes off, I think it might be a great adventure for us! 🙂

  2. Katy says 25 February 2011 at 04:38

    Great article. There can be compromises though, such as working for the U.S. Government abroad. Working for the Department of State can have many benefits. You’re still able to work in an American environment, but you have all of the advantages and adventures of living abroad. It’s also been a financial boon for me in many ways.

    If you do move abroad please be sure to register with your local American Embassy! It’s important even when you are traveling for short periods, too. is an important website to use when either traveling or living abroad.

  3. Money Maker says 25 February 2011 at 04:39

    As an American expat currently living in the Middle East, and who travels extensively all over the planet, I find the cost savings of living outside the states to be somewhat exaggerated.

    First of all, practically all manufactured goods are cheaper, often substantially, in the states than almost anywhere abroad. Everything from toothpaste to tablet computers to automobiles costs much more in most countries than in the states. The reason is simple: usually it is imported, and US has lowest import duties anywhere on the planet. US is where people from all over the planet come to shop cheap. Almost every country that I am aware charges 100% duty for an imported automobile, so a Hyundai will cost you like $40,000 almost anywhere else. Funny how you compare taking public transportation to owning a car. Because if you do own a car (and who doesn’t want to own a car?), US is the cheapest place on the planet to do it. I hear folks in the states worried about gas approaching $3.00 or $4.00 a gallon (I have no idea what it is now). I dream of $5.00 gas, I pay like $9.00 now. Yes, Bangkok has almost every store you can find in the states, but you forgot to mention for Apple, Gucci, Hermes, etc. you will be paying more and on top of that you have to pay VAT something you don’t have to pay in US.

    Real estate is a bit of an enigma to me. US real estate is less expensive than Europe, Japan/Korea, or more affluent Middle East nations, but more expensive than Africa, South America, and Asia. Why is this? Part of it is supply/demand (US having far lower population density than the more expensive places). I think the biggest cost in real estate is labor but as far as I know it is pretty cheap labor (in US mainly migrant labor – approaching zero cost). Maybe you can get an apartment for $400 in Bangkok but it is not going to be located in the best area or a very nice place. I believe the reason real estate is perceived as cheaper abroad is simply because dwellings in third world countries are a lot smaller than in the states. It is just lifestyle inflation in the state, so when you live in the states you are paying for the extravagant lifestyle.

    Labor is relatively expensive in US so anything which is labor intensive is going to be more expensive in US than a third world country. For example, a hair cut.

    Medical treatment is probably the best example of something which is dramatically cheaper (and better) almost anywhere on the planet compared to the states. Living or traveling abroad, it is never ceases to shock me how dramatically better the medical system is anywhere on the planet compared to US. Probably the main reason I would never move to US is the horrible and expensive medical treatment which exists in that country. Better pray you never get sick if you’re in the states! US has worst and most ineffective medical system on the planet, and all Americans should hang their heads in shame at how atrocious it is!

    Prices for things like energy & food are mainly due to local resources. If you live in an agriculture rich area, local crops will be cheap. Energy, same same. The rule applies always, domestic = cheap, imported = expensive.

    • jd says 25 February 2012 at 08:13

      I’m sorry, but that last post is so misrepresentative of the facts. I worked in Saudi as well and virtually everything is cheaper except frivolous things more representative of an extravagent western lifestyle. This person must be living the high life. I have been in Saudi and South Korea and it was slightly cheaper if not greatly so. And as this site says, public trans eliminates the huge expense of a private automobile. And then there’s Thailand and Prague-MUCH CHEAPER. So don’t let this last post discourage you.

  4. Nicole says 25 February 2011 at 04:47

    @2, Moneymaker

    Technically that’s not correct, the US has the BEST medical care of anyplace on the planet. It has the WORST access to it, unless you have money (and great insurance). (And it does tend to overuse intensive care, especially in areas like childbirth.) Conditional on having insurance, US health outcomes are top flight. On average, outcomes are not very good for the developed world, but that is mainly because we don’t insure everyone.

  5. Jasmine says 25 February 2011 at 04:52

    I live in a clean, modern city in Asia, pop. about 1.5 million. My monthly income is around US$2,800. My basic monthly expenses, including rent, all utilities, insurance, and groceries, are around $800. That leaves me with $2,000 of play money every month! Fortunately I’m very frugal, and save most of that money. And even more fortunately, I am working in the kind of job (teaching English at the university level) that I can do for the rest of my life, because there is always going to be a demand for it in this land.

    The downside? I’m really lonely and I miss my family, even with plenty of local friends and my own high-speed internet connection. But I’m not homesick. No way would I ever go back to that crazy keeping up with the Jones’ lifestyle.

    • Leah says 02 January 2012 at 11:33

      Hi Jasmine! Happy New Year to you.

      I was reading your blog response and I find it interesting, as I am currently wrestling with the idea of relocating overseas, and I find it refreshing to learn of your experience living in Asia. May I ask you what made you decide to leave the states and move overseas. I want to teach in an academic setting, but have had no success in finding anything here in the states. Was it, if at all, difficult to find an opportunity in Asia?


  6. Daryl says 25 February 2011 at 05:00

    As someone who spent three years living abroad, I’ll say that it really isn’t easy. Living abroad for just economic reasons can turn out to be a very expensive mistake is you can’t hack it. Culture shock can be a very stressful reality when you’ve settled in one place for an extended period of time. My suggestion would be to explore a country’s culture before deciding on going. Choosing a culture you’re at least partially comfortable with (not just familiar) can increase your chances of being able to stick it out for the long term. Finding a country with a good-sized ex-pat community is also a big plus. I lived in the country where my family left a century ago. I studied that country in college and visited once prior to my move. I studied the language since high school. I went with a built-in advantage into a place where there was a large, vibrant ex-pat community, and there were some really, really tough days and weeks in three years.

    And while start up costs in another country can be cheaper, they are still start up costs. Sometimes they will have start-up costs that you may not know about before you go without research. For example, to rent an apartment, there maybe a form of “thank you” money or other extra deposit on top of your security deposit, etc..

    Overall, I think living abroad is something every American should try at least once. It can be rewarding in a lot of ways, not just economically. But like any big decision, some real research and self-reflection can make it easier and more successful.

  7. Pamela says 25 February 2011 at 05:16

    @MoneyMaker’s comment shows that geographic arbitrage can be different to different people. When I think of traveling, I think of living simply and altering my choices to be more in tune with the people of the country I visit.

    Someone who travels for business is probably taking their usual American habits with them and paying more for the privilege.

    I hope that travel changes me so I can’t imagine wanting to buy a car, or anything with a Gucci or other designer label on it. Of course, I don’t buy that stuff at home, either.

    As Gary said, “… the very act of living abroad will bring changes to your lifestyle, which will produce additional savings.”

  8. Kevin says 25 February 2011 at 05:42


    You’re doing it again. STOP IT.

    Nobody likes a comment-whore.

  9. Curtis says 25 February 2011 at 05:43

    @Money Maker

    Your observations largely match my own after having lived 3 years in Costa Rica. How about spending $70 for a larger plastic ice chest that would cost a fraction of that here. Anything imported is much more expensive.

    Also, you must be very aware of the two-tiered pricing structure for most local services (taxi, farmer’s market,etc.). The local, native price vs. the gringo price. If you don’t speak the language, many will take advantage of the ignorance.

    Rent, phone, water, electricity etc were all cheaper.

    Medical costs are often 1/5 to 1/2 the costs of the U.S. This savings greatly depends on which hospital and region of the country you choose. I have seen people treated for gall stones spending all day in an emergency environment and spend $70.00. In Bolivia as hernia operation was $200.00, etc. However, if you are treated outside the largest cities, skilled treatment is a crapshoot and some don’t get back home.

    If you decide to die in a country like Costa Rica, you will be buried within 48 hours. They don’t embalm and they don’t wait a week for your relatives to arrive for a funeral unless you’ve made extensive pre-arrangements and died in a convenient location.

    You must also factor in air travel for visits home (if you’re inclined). That adds up very fast and reduces the Net value of your expat savings.

    Many expats will still spend as much in a foreign country as at home just because you can. You must live frugally or at least have the mindset to actually save money living abroad.

    Petty crime was rampant. We lived in a nicer area of the country and had our car broken into twice and our house 7 times. My friends often lost purses, cell phones, ipods, cameras, etc while taking a bus, or visiting a fair or just doing anything where there was a crowd. If you look american you are automatically rich and ripe for the taking.

    I could go on. But suffice to say but reading articles about the glamours of living abroad is like reading a tourist brochure. It’s all good. Yep, it’s all good if you don’t leave the artificial tourist environment. It’s all good until you get there and are faced with the realities of actually living there. The real [insert name of any country].

    I don’t mean to seem negative. I thoroughly enjoyed my experiences in Costa Rica. But it wasn’t what most imagine. Do it, by all means, but go in with both eyes open. We lived among the locals, spoke the language, drove an older, modest car that was about middle of the road. We didn’t live in an exclusive gated community (couldn’t afford that anyway). We blended in about as much as any foreigner could without Michael Jackson-like plastic surgery. But it didn’t totally protect us from those who preyed on foreign money. On the other hand…we met some outstandingly generous and interesting local people who are still close our very close friends. I wouldn’t trade that in for anything!

  10. Tom Garrard says 25 February 2011 at 05:48

    Well, I’ve been beaten to it. I was going to try to submit an article to grs along similar lines. I have just moved to India (only for a year) I have a bigger apartment than in the UK yet am able to save a lot and still pay off the last of my debts due to limited housing / transport / food costs.

    My partner was very supportive of this move – giving up her job and moving, this now means she is a lady of leisure. This also means I support her (until we return to the UK). She now has chance to do lots of things she’s been putting off – teacher training, getting fit and soon she’ll volunteer in the local community. I’m not sure whether it’s allowed but it’s in context so here is her blog with some insight into such a big move –

    I did not come to save money, I came for the adventure. The increased standard of living along with lower prices is just a happy side effect.

  11. Health Care Geek says 25 February 2011 at 05:55

    @ Nicole: Those are some really broad generalizations. It depends on how you define “outcomes” and which medical condition you’re looking at (among many other things).

    For example, it has been recognized for some time that the US lags in infant mortality rate and life expectancy when compared to other industrialized countries, despite leading (by a huge margin) when it comes to spending. Of course, high per capita spending might be indicative of the huge inequalities that you pointed out, so you really have to look at the outcomes for people who are receiving medical care.

    When you do this, you see that the outcomes are variable. The US leads in some categories (e.g., breast and cervical cancer 5-year survival rates) but lags in others (e.g., colorectal cancer and childhood leukemia 5-year survival rates). This discrepancy is not unexpected, or even necessarily bad, but reflects (I think, to some degree) cultural values, scientific tractability, and even political lobbying efforts.

  12. Kate says 25 February 2011 at 06:23

    I’ve lived in the US, Canada, France, South Africa, Botswana, Zimbabwe, Senegal, Israel, and Afghanistan. I find this article to be something of a surprise, because I think of everything in the USA, with the notable exception of health care, to be exceptionally expensive. It’s where we go to stock up on cheap stuff! Cheap clothes with a huge variety. Cheap gas and cars. Way cheaper food.

    I think that the main reason people see living overseas as cheaper is because so many of your build-in costs appear to out the window, especially if you’re travelling through for a few days or weeks. Things like commuter tolls, internet service, PMI, etc. You’ll still pay them (and usually at much more expensive rates- high-speed internet for 150 USD a month, for example) if you stick around, but they aren’t immediately obvious.

    Expensive habits can also fall by the wayside. It’s tough to blow your money stopping by the bookstore on the way home from work every day (Trent from TSD’s favourite example) when there just aren’t that many English-language bookstores, let alone remotely affordable ones [have you looked into overseas publishing fees lately? Ouch!] Social expectations can be different too- tougher to prioritize keeping up with the Joneses when you’re the richest person on the block (this only works in some of the above countries, obviously)!

  13. TK says 25 February 2011 at 06:28


    “The U.S. health system spends a higher portion of its gross domestic product than any other country but ranks 37 out of 191 countries according to its performance, the report finds.”

    “Using five performance indicators to measure health systems in 191 member states, it finds that France provides the best overall health care followed among major countries by Italy, Spain, Oman, Austria and Japan.”

  14. Nicole says 25 February 2011 at 06:55

    @5 Kevin… who made you the comment police? I personally don’t like reading negative comments like yours first thing in the morning. It’s very jarring. And then it forces me to make a negative comment myself (like this one) which makes me feel dirty. The bad kind of dirty.

    @1 Life and my finances… Keep sharing your personal experiences!

  15. El Nerdo says 25 February 2011 at 07:15

    For me, the issue is not how to live abroad (piece of cake, I came from “abroad”), but how to earn in dollars while living abroad. Anybody got tips?

  16. Anonymous says 25 February 2011 at 07:18

    I lived comfortably on a $6000 annual salary in 2003 in a small country in SE Asia. I rented a 2-bedroom house for $190/month. The food was ridiculously cheap and healthy, but I made a point of de-worming every few months and took doxycycline daily as an antimalarial prophylaxis. Internet ranged from $20-100/month. My work fortunately included medical insurance, including the option of evacuation flights (e.g., in case I was bitten by a potentially rabid dog and had to get rabies shots, which the local hospital did not keep on hand). It made me very conscious of the lousy options available to the millions of people who lived in the country… and wonder why I should be “worth” so much more.

    I’m a big fan of living abroad, but there are obviously steep tradeoffs. My internet usage was monitored by the government. Price tiering (charging one price for locals and another for foreigners) varies enormously by country; it was terrible when I lived in Russia but not in SE Asia once I learned the language. Some cultures are much more welcoming than others. People from home will have an easier time visiting you in some places than others.

    The major caution I have is to consider seriously your impact (personally and through your spending) on the country. I’m going to stereotype here, but when I travelled, I saw a lot of older white male expats in Thailand (especially rural) who were spending money but with an arguably negative impact on the culture. It’s possible to consume much more in developing countries when things are cheap, but the consumption can come at a much larger social/environmental cost than we’re used to: Many of these countries don’t have basic laws in place to prohibit dumping, protect their workers, etc., etc. By consuming uncritically with the mindsets from back home, we can unwittingly encourage some awful messes.

    People who recoil at the thought of poorer medical care abroad, more pollution, bad legal protection, etc. but who don’t donate generously and consistently to international charities should think seriously about why they “get” to maintain higher standards for themselves.

  17. sarah says 25 February 2011 at 07:33

    While the cost of living is certainly lower in some countries, I think in a lot of these examples you’re just tricking yourself into living differently by living somewhere that you aren’t tempted to spend.

    For example, you can live in the US without a car. True you have to choose where you live, but the same is true in Thailand or elsewhere. And I doubt your $400 Bangkok apartment is in the trendiest area of the city, whereas you specify “Manhattan” (where you can certainly find a dank studio for far less than $1500, even in the east village or lower east side, which is quite trendy). Overseas you can trick yourself into living somewhere less trendy because you don’t know it as well. After my first apartment in Manhattan, I got smart and moved to Brooklyn for half the price.

    You say, “Leaving the U.S. and choosing to live abroad (assuming you live in the right place) is the single biggest thing you can do to reduce the amount of money you spend. Period.” I have to disagree. There are plenty of places in the US that are dirt cheap, you just don’t want to live there (a friend of mine pays $190 a month for an apartment in Utah) – it’s just more exciting to live abroad.

  18. Crystal says 25 February 2011 at 07:47

    My husband and I thought about the lower costs of living elsewhere, but we decided we were in that 95% of the population that just couldn’t ever bring themselves to leave the place that we are happy in right now. Moving to a cheaper country is a nice backup plan for us though in case our early retirement dreams are just not possible here in 25 years. 🙂

  19. Kevin says 25 February 2011 at 07:50


    LifeAndMyFinances has been reprimanded for this before. He doesn’t even read the article, he just waits for a new one to be posted, then immediately jumps in with a brief, fluffy comment that doesn’t actually add any substance, just so he can pimp a link back to his own “me-too” finance blog.

    As I said, he’s been reprimanded for it before. If he were actually adding anything to the conversation, nobody would mind. But his entire purpose for posting is to get a comment as close to the top as possible, for maximum exposure.

    It’s disingenuous self-promotion, and it’s extremely aggravating to those of us who use these comment sections for actual, meaningful discourse.

  20. retirebyforty says 25 February 2011 at 07:59

    My parents moved to Thailand 10 years ago and their cost of living is very low compare to living here in the US. You can get a nice condo in Chiangmai for $50k. What can you get for 50k here in the US? Food is cheap, Health care is public, what more do you need?
    Well, they are from Thailand so they enjoy it too.
    It could be expensive it you want to eat like you eat in the US (steak, pasta, etc.) , but if you eat local food and live like local people, it’s cheap.

  21. Andrea says 25 February 2011 at 07:59

    I would love to take off and live overseas for a year or two.I would get to eat good food that is not only cheap,but I wouldn’t have to cook.

    Also staying in a furnished apartment for a month and pay less than $500 my bags are packed, and I’m ready to go!

  22. Anne says 25 February 2011 at 08:07

    Thanks Curtis for your more realistic perspective. I had a friend who lived in South America for work. I wish I could have visited. But I didn’t envy him because he wasn’t bent on convincing everyone that his life was super awesome (for the purposes of selling said lifestyle online to willing dupes like some bizarre lifestyle pyramid scheme). There were good things and bad things.

    I’m sick of reading about the cyber-hobo lifestyle. Locals don’t think Bankok is exotic or cheap. The most interesting thing I learned when I lived overseas is how beautiful North America is and how lucky I am to have been born here. I really do love where I live.

    I feel this blog is becoming a place where I’m encouraged to think my life is subpar. If I wanted that I’d be reading fashion and decor magazines. And I KNOW travel isn’t my priority and I certainly don’t want to be nomadic. (Everything is nice if you can afford it.) I also know I don’t want more clothes or new furniture or any of the other junk I’m told would make me more interesting, happier and overall a better person. But it’s easy to want everything when it’s being sold to you. That’s what these cyber hobos are doing. Marketing their lifestyle the way vogue sells the idea high fashion to average women.

  23. Adam says 25 February 2011 at 08:13

    I did this when I was 25. I dropped my job at Deloitte & Touche as a tax senior and moved to sunny Bermuda for 2 years. Tax free pay check, my spacious studio was $1100 a month furnished, across the street from the beach, and I learned the insurance accounting industry enough to start a new job outside of public accounting while there.

    Best of all, I sent money home every month and in the 2 years saved about 5 times as much as I was saving living in cold/snowy Toronto!

  24. Nicole says 25 February 2011 at 08:21

    @13 Kevin

    I’m afraid that I find your explanation even more obnoxious. His comment fits in, is perfectly fine, and yours is mean, picky, distracting, and annoying. If you don’t like his posts, then just read don’t read them. Seriously. And I don’t care if you have reprimanded him before. (And if you’re talking about what I’m thinking about, JD gently suggested that folks not put their bloglink in each post proper, unless they had a post that directly added to the discussion. Which, Lifeandmyfinances did not do.) Stop trying to silence people.

    Dang it, now I feel like I’m a troll since this discussion is adding far less to the discussion than Lifeandmyfinances did. I blame you, Kevin. Knock it off. My only hope is that other people do not take up the cry against you, no matter how deserved, because that is just feeding the troll.

    Um, on topic… I also like living in the United States… I spent a summer in Spain and was incredibly homesick for the states. I think I would be fine living in Canada, but don’t really have much desire to leave North America.

    @retireby40… you can get a condo for 50K in the town I live too.

  25. Clare says 25 February 2011 at 08:36

    You can also get a condo in the US for less than $50k, you just have to live in specific areas of the country. Just one example:

    In regards to reducing your US income tax, wouldn’t you have to pay income tax in the country you move to if you’re working there? I would assume working in Paris would come with a pretty high tax rate.

  26. Laura in Cancun says 25 February 2011 at 08:39

    Great article! I’ve been living abroad (Mexico) for almost 6 years now.

    Things that are more expensive in Mexico: electronics, furniture, imported items at the grocery store

    Things that cost the same in Mexico: clothes, cars, most foods, phone bills, restaurants

    Things that are cheaper in Mexico: housing (by A LOT, although interest rates are ridiculous), transportation (taxis cost $1 – $3 anywhere in the city I want to go, and there are tons of taxis available), cable, internet, electric, water, fun activities, health care

    I earn a Mexican salary, so my lifestyle is probably similar to people my age in the US (maybe a little more fun haha, and with no debt). However, I know many expats who earn American and Canadian salaries from here, and they have incredible lifestyles and homes.

    Even though I’m not “living large” here, I’m still able to go on small adventures every weekend, go to the beach regularly and hang out with friends several times a week while staying within my budget. This month we’ve started saving for the first time (thanks in no small part to GRS), and once my husband starts working soon, we’ll be saving about 50% of our combined salary. I hope no one takes this the wrong way, but people living in Mexico (expats and locals) seem to be much happier than our American counterparts. I don’t know if it’s the laid-back culture, the sunshine, or the incredible scenery, but I don’t think I could ever go back to the US after experiencing life here… even though my salary here is near the US poverty level hahaha

  27. jim says 25 February 2011 at 09:12

    You can do almost as cheaply in a rural or small US city. But this article makes some good points. At least they aren’t recommending that Americans go live in some impoverished 3rd world nation where electricity isn’t common and malaria runs rampant.

  28. Meghan says 25 February 2011 at 09:16

    Good article. For me this is not possible right now. I don’t have the type of job that I could do from elsewhere, but if I wanted to take a year off and freelance I would consider something like this.

    I’m wondering what type of visa you would need to live in some of these places.

  29. clammy hands says 25 February 2011 at 09:29

    This article reminds me of the old joke..

    A: I know a way you can lose 20 pounds in a hurry?
    B: How?
    C: Chop off your head.

  30. Tyler Karaszewski says 25 February 2011 at 09:29

    I like it here in California. I have job opportunities at the biggest names in my industry and my kids will be able to know their grandparents.

  31. Jeremy Burlingame says 25 February 2011 at 09:36

    I’d say this is a better option for retirement. Not many people make enough money off of their blogs or work for a company that lets them work from home and doesnt care where home is.

  32. yw says 25 February 2011 at 10:05

    I’ve been in Canada and away from home for about 9 years. Last month I finally went back home to Indonesia for my brother’s wedding and I couldn’t believe what I’ve been missing out!

    Everything was so cheap – from food, clothes, even electronics. For most items you can haggle the price, but this works best with locally made goods rather than imported stuff (Gucci and the like) – those probably cost the same wherever you go.

    It’s true that maybe the prices are only cheap because I’m earning money in dollars and spending in the local currency. So that is the key 🙂 Earn money in dollars, spend in local currency.

    As with the two tier pricing structure – yes that does exist in some places. But then it exists everywhere – I went to university in Canada and paid exorbitant international student tuition. I heard that some universities in the US even have different rates for local and out of state students. So how is that different from having to pay a bit more for whatever in another country? If anything that’s an incentive to learn the language, appear like a local and so on.

  33. Amy! says 25 February 2011 at 10:11

    I agree with @El Nerdo; how the heck are you earning money while living abroad? Are you working in the local office of a US company? Not everyone can earn the big bucks through their blog or have several years worth of living expenses saved up.

    My boyfriend, who is from Cape Town, has said that yes, some stuff is cheaper there, not all is, like books and other imported items, but everything seems really expensive to locals because no one makes that much money. His standard of living is much better in the states than it was in Cape Town or the US simply because he is paid more than twice as much here as he was when he worked abroad.

  34. Amy! says 25 February 2011 at 10:12

    *Or the UK, not the US. They pay shit in London for the same work he does here.

  35. Lindsay says 25 February 2011 at 10:15

    @ Anne- I don’t think that this blog (or this post) is meant to make one feel that one’s lifestyle is sub-par. I think that it is refreshing to read about different takes on frugality. To learn about all of the options available. Of course, not all options will be suitable for everyone. What is your story? How did you attain a frugal lifestyle? I’m serious! Maybe you could do a guest post.

    I’m young (25) and I’m trying to learn how to be a financially responsible and practical person. I’m very interested in living-abroad for a year at some point. I think It would help me gain a new perspective on things…even if it doesn’t save me money : )

  36. chacha1 says 25 February 2011 at 10:39

    I agree with others that it’s possible to live very cheaply in the United States, but I don’t think that is a valid criticism of this article.

    This article isn’t really saying the “only” way to live cheaply is to move out of the U.S. The definitive language of the second paragraph isn’t supported by the rest of the article. What *is* supported is that if you have a degree of personal and financial mobility, living abroad is a valid option and shouldn’t be dismissed out of fear.

    Also … cheap living in the U.S. is all about supply and demand. Cheap places are cheap because nobody wants to live there. Too isolated, too remote, weather too bad, services too bad, crime too bad … whatever the conditions may be, there are many reasons why you can get an acre for a few thousand in an uninhabited area, while an acre in West Los Angeles costs about a million dollars; or a house in Detroit for $50K while a comparable house in San Francisco is $1.5 million.

  37. secret asian man says 25 February 2011 at 10:47

    Sure, you can save a lot of money moving to Bangkok.

    You could also save a lot of money moving to Detroit.

    The reason Americans aren’t doing either is that it’s hard for us to find jobs in Bangkok or Detroit.

    Remember, for every American that wants to move to Thailand, there are a thousand Thais that want to move to America.

  38. El Nerdo says 25 February 2011 at 11:10

    I think Anne has a point in that these “lifestyle gurus” (i.e. Timothy Ferris et. al.) do make a business of promoting their own lifestyle as desirable and that’s where their money comes from. They manufacture desire like so many other businesses out there.

    I do think however that taking that business promotion as somehow reflecting poorly on yourself is more of an internal issue that the person has to deal with. I can watch commercials and read magazines and go to the mall and I do not feel threatened in the least– actually I think looking at all that crap is very funny, like watching a National Geographic documentary about consumerist monkeys. “Ha ha, look at that fool drinking soda!” or “Yeah, I’d die tomorrow if I don’t get an iPhone, pfffftttt”. We are not helpless victims of media– we can learn to read it critically, and if we know what we *really* want, we don’t have to have our desires “manufactured” for us.

    So, no, other people’s lives are not a putdown on yours, but yes, let’s read between the lines & realize that this is just another business. This post/article’s author clearly makes money off his traveling blog. Good for him, but what does that have to do with me and isn’t there a glut in that job market already?

    As I said before, this article discusses only 1/2 of geographic arbitrage, the other half (actually more than half) is how to run a successful business that lets you earn in dollars and spend in rupees. If this was so easily done, we could stop illegal immigration today by showing desperate border-crossing workers how to make a bundle from home.

    Timothy Ferris attempted to present a business model to allow for his global wanderings, but his lackadaisical “for hour workweek” starts easy but ends up requiring that you appear in Oprah– good luck with that (well now that show is cancelled as far as I understand) and that you build some kind of cult around yourself while engineering million-dollar deals. That takes more than for hours a week. Still, the book has a lot of good ideas which may or may not be useful to some.

    Now, about going to live in countries with malaria, and how the US is better etc: any country in the world is awesome provided you have money. Where I come from, even lower middle-class families have a maid. The upper middle classes have two or three maids, a cook, chauffeurs… The rich– forget about it. Yes, if you have money in a third world country you can live a very pampered life.

    And yes, health care is better in other countries because, besides being more accessible, it is more of a calling than a business, and when you visit a doctor you will spend a good amount of time discussing your symptoms, pinpointing possible causes, and having a nice talk about what you can do. Here, even with good insurance the doctor talks to you for 60 seconds and dispatches you with a kilo of prescriptions that will short-circuit your body chemistry– they must go through a ton of patients every day to pay off their student loans, malpractice insurance, and bloated billing staff. Sure, you can get a better heart transplant and critical care here, but if you don’t get to that point of physical dilapidation you’ll get better prevention there.

    Now, about the best places to live– the experts differ, but no U.S. city has made it to the top 10 in any list I’ve seen.

    World’s most livable cities

    Honolulu gets close, but no cigar.

    I’d kill to live in Paris, though Vancouver is within closer reach, but you can’t “arbitrage” your way to either place. In the U.S., I’ll settle for New York (some day, some day!)

  39. Suzanne says 25 February 2011 at 11:10

    I’m sure this is good for people who are adventurous and enjoy the experience of living in a different culture. Clearly there is a huge drawback in leaving friends and family (for those who like their friends and family) but I think especially for very young people it could be an interesting idea.

  40. Julie says 25 February 2011 at 11:11

    Just for the record, health care in Thailand is not “public”, if by that you mean paid for by the government. That being said, health care is very inexpensive in Thailand compared with the U.S. For a consultation with a doctor and a prescription in a Bangkok hospital I was charged about $15. My Thai friend just had major surgery and a hospital stay and the bill totaled only $4,000 (although since she has private insurance, she paid only a $10 copay.) This is far lower than what the U.S. cost would be. In fact, I think it’s safe to say that health care in Thailand is cheaper than veterinary care in the U.S.

  41. Ru says 25 February 2011 at 11:21

    Recently, I’ve heard more and more Americans talking about leaving and for good reasons too- political disagreements, healthcare, poor education etc.

    It makes me laugh though, because I’m trying to get in! The USA to me seems very cheap. I am from the South of England and everything here is much more expensive and you get much less for your cash in many areas (the one that springs to mind is housing, we all live in shoeboxes for twice the price of the US). My last boyfriend was from Seattle, and quite often I’d check out property prices online. Did you know you can get a 70s house in King County for under $30k? That’s unfathomable to me.

    I also think it’s easier to save and set up a business in the USA. As long as you don’t get sucked into keeping up with the Joneses that is…

  42. Suba Iyer says 25 February 2011 at 11:35

    Excellent article! As someone who was born and brought up in India, I have definitely considered retiring in India. But here is the shocker – I can’t afford it anymore. The cost of living has sky rocketed. I left ~10 years ago and India has changed beyond dreams. A lot for better and some for worse. There are malls everywhere, there are BMW show rooms, everyone has a car and the real estate is no longer affordable for anyone other than software engineers. In these last 10 years, I visited India thrice. The first time in 2004, when I came back I brought a lot of stuff I regularly use here because it is cheaper over there and I stocked up. The second time I went for “my” wedding, so didn’t have time to shop. Third time, last December I tried to stock up, I ended up converting everything to dollars and rejecting a lot of stuff because it is cheaper over here!

    Medical facilities are much more accessible there than here though. I give that to the mainly sue-free society and the not-controlled-by-insurance environment. If you have the money you can take an MRI scan just because you felt like taking one.

    So there are pros and cons to moving to a different country. And may be the experience/cost of living for other Asian countries are different than India. But please spend 6 months – 1 year as a tourist before retiring and make sure, make really sure you can afford all your plans.

  43. Pat S. says 25 February 2011 at 12:14

    Definitely a give and take. I recently read an article about how many American retirees are moving to Costa Rica, Panama and other Central American nations, which are currently stable economically and have a much lower cost of living and in many cases, excellent medical care at much lower costs. I don’t know if I could do it, but it’s certainly an option.

  44. Tyler Karaszewski says 25 February 2011 at 12:18

    One more comment on this article. Here’s a picture I took in India:

    It’s a cow, sleeping in a giant pile of trash left in the street in the middle of a major city. Sure, you may live in the fancy apartments in the neighborhood where all the foreign expats stay, but when you venture out, you’re going to notice where you are, and you’re eventually going to realize why the cost of living is so much lower there.

  45. retirebyforty says 25 February 2011 at 12:38

    @ Julie
    Hmmm.. My parents are Thai citizen so they can go see doctors for about $1 per visit. If they need serious medical attention like surgery, then I’m sure it’s more expensive and we probably go with private hospital at that point. But for general health care like keeping down my dad’s blood pressure and eye check up, public doctors are good for that.

  46. Jacq says 25 February 2011 at 12:59

    I practiced geo-arbitrage by moving from Canada to the US to work for a couple of years a number of years ago. We had “loads of adventures and radically cut our costs…” 😉

    This advice:
    “For citizens of other countries, you usually don’t have to pay any income tax if you live outside of your country” – is not correct – for Canadians anyway. Even though I changed residency while I was gone, I still got dinged when I moved home.

    I’d love to go live for a 6 month stretch or two in a couple of different foreign countries (and NYC!) down the road. Sadly, they aren’t the places with the lowest cost of living but some of the highest. It seems that living somewhere for 6 months at a time won’t cost much more than a one month trip with a tour company.

  47. ExpatEngineer says 25 February 2011 at 13:05

    I just returned to the US after 4 years in the UK. I realize that this article is mostly referring to living in third world countries, but the reference to potential tax savings in London or Paris really threw me for a loop.

    #19 is right – you may not be paying US taxes on your first $80k of income, but you will most likely be paying foreign taxes on it. The income tax rates in the UK are 20% and 40%… once you earn over about $55k you are in the 40% tax bracket. Ouch. Also, once you earn over $80k you are taxed TWICE – by the UK and the US.

    Not to mention the 17.5% VAT which is added to every purchase except staples like milk – and the $9/gal gas. The train, which I took every day to work, cost $200/mon for a less than 30 min trip. If I had travelled into London (40 min) it would have cost almost $600/mon.

    In addition, #25 is right on the money when she noted that the pay is way less (for professional services, at least) in many other countries. My husband and I have now moved to low-cost Colorado where we have each received a 45% pay increase, we have reduced our expenses by over 30% and we can buy a house that is twice as big for about 70% of the cost as in England.

    I loved living overseas… sometimes. And there are real benefits which are not financial. But to gain financial benefits, in my opinion, you either have to move to a third world country or be sponsored by a huge American corporation that pays you a per diem and takes care of your tax obligations.

  48. Andy Hough says 25 February 2011 at 13:07

    I actually wrote an article last year about how you could live in the U.S. as cheaply as abroad. Not many of the comments agreed with me though. From my living in Central America I’d say other than the cost of health care you can live just as cheap in the U.S.

    Here is the article if anyone wants to read it.

    Retire in the U.S. as Cheaply as Abroad.

  49. PigPennies says 25 February 2011 at 13:14

    Ru – I’m not sure where you’re looking, but it’s definitely not accurate! I live in the Seattle area and work in real estate, and I can promise you there is literally no house in King County for $30k. You could buy a house in Washington State for $30k, but it would be in the sticks (nowhere near King County) where job opportunities are limited to non-existent.

    Maybe you mean 30 in pounds, but even then any opportunity you see at that price point in King County is going to be either on the extreme outskirts (and not the outskirts of Seattle, the outskirts of the county) or in need of leveling. There are many real estate sites that track foreclosures, however, and post the debt on the property as the “for sale” price. Perhaps this is what is confusing you. If someone has a loan of $200k and a loan of $50k on a property, and the $50k loan is going through foreclosure, it could appear on sites like Trulia that the house is for sale for $50k when that isn’t the case.

    The Seattle area is one of the most expensive places for real estate in the US, and that impacts less desirable parts of King County as well. You can’t even get a 1 bedroom condo in King County for less than $30k. The median price of a single family home in King County is $356,000 and that’s the lowest it’s been in 6 years. I WISH you were right, tho! 🙂

  50. khadijah says 25 February 2011 at 13:48

    Saying to live “overseas” is quite a general statement, its obviously different from place to place.

    Obvious choices are like Southeast Asia, but most cities in SEA don’t have as good public transport as european/western metropolis.

    You may think you don’t need a car in Kuala Lumpur, but when it rains and monsoons and its 95 degrees outside with 80% humidity, come back and tell me you don’t need a car.

    One thing I think is worth mentioning is the price of alcohol/beer in KL. Be prepared to change your lifestyle.

    I believe drinking is really cheaper in the US than a lot of other places in the world. Malaysia specifically imposes higher tax on alcohol.

    If cost of living means literally cost of basic life requirements in order to *live*, then yeah, its cheaper in cities mentioned above. You need shelter, food, basic clothes, communication and transport.

    Lifestyle is expensive, cars, electronics, clothes like gap and forever21 have inflated prices like you would not believe, outside of US, entertainment like cinema, theater, movie concerts.

    if you’re earning local currency, your quality of living may be about more/less/equal to what it is now. You can just as much move to a different city in the US to save money.

  51. Jaime B says 25 February 2011 at 13:55

    I knew a woman in college whose parents were from Vietnam. She said back then that they planned to return after retirement since their retirement dollars (US) would spend much farther in Vietnam. now, they’re “local” so they won’t have a problem with local vs. native costs and are essentially returning to their extended family, so I think they’ll definitely make the most of a geographic arbitrage.

    For most though, I think it would take careful planning. Kind of like the article by the missionary, I think if you’ve already decided to live overseas that any financial advantages would be icing on the cake. Of course, if all other things are equal, it could be the tipping point to giving something like this a try.

  52. KS says 25 February 2011 at 14:34

    This summer, my husband and I will be moving to Ireland where I’ve been offered a position. It will be an interesting time to move there, but for personal and professional reasons, it would be a good move. My husband and I have both wanted to live abroad and this opportunity seems to be a good one. But I find many aspects of this post rather…naive.

    1) Establish residency in Texas or Florida before leaving? Is it really THAT easy?! Or does the author advocate moving to one of those places for a year before moving abroad?

    2) Abroad is not all created equal, as many commenters have posted. I know Ireland has gotten to be a less expensive place re: renting housing due to the overbuilding, but other aspects of life are still somewhat expensive (esp if one wants to buy a house).

    3) This advice seems great if you’re young and single, but that’s not all of us. Depending on where you go, challenges with a spouse re: work visa issues, educational options for children, health care (which others have noted), unexpected health issues in general (many of my family are from India and are moving back but the air quality is taking a toll on asthma and other respiratory problems).

  53. L. Marie Joseph says 25 February 2011 at 14:37

    Wow after reading these comments, it makes me want to say “no place like home!! “

  54. Anna says 25 February 2011 at 16:04


    He’s close but not quite right. You have to pay income taxes in your host country in order to not pay US income taxes if your income is under $80,000!

    People can and probably do skip out on filing their Federal taxes and not get caught, especially if they didn’t make a lot of money. But if you do get caught, you may have trouble coming back to the US permanently. They won’t arrest you at the border (uh, probably they won’t) but you will have problems with the IRS and this could lead to complications resettling.

    CONTACT A TAX PROFESSIONAL before you leave the US if you are earning money in another country!!!!!!!!!!!

    Also you’d be surprised at the stuff that’s more expensive than you think it is. Shoes were astonishingly expensive in Eastern Europe when I lived there.

  55. Debtheaven says 25 February 2011 at 17:53

    You have to pay income taxes in your host country in order to not pay US income taxes if your income is under $80,000


  56. Debtheaven says 25 February 2011 at 18:01

    I did this when I was “young and in love” nearly 30 years ago. I don’t feel it was a mistake because I don’t regret my life choices, but I am in Paris. As the OP suggests, forget Paris or London if you are leaving the US in an attempt to save money.

    I think that to make this work you definitely need to opt for a LCOLA. Or to do it later in life, to either slow down or retire.

    We spent a summer in Panama (and a bit of time in Costa Rica) two years ago. There are MANY US retirees living very well there. The medical care is both financially accessible and stellar.

    But you also have to factor in the non-quantifiable cost of living far from close friends and family, especially if you have children. You should also determine whether or not you can continue to “grow” your career / job in your new environment.

    I think it is a wonderful, invaluable experience short or even medium-term. But long-term, I’m not so sure.

  57. Mike Hunt says 26 February 2011 at 04:48

    Great article.

    I can certainly attest to saving much more working overseas in Thailand compared to the USA. The main savings comes from the nickel and dime additional taxes that hit you when living in the USA: state taxes, social security, medicare, medicaid, unemployment, local taxes, property taxes, personal taxes on cars (some states), plus federal taxes.

    When you work overseas (provided you reside the entire calendar year abroad and pass the residency requirement of 335 days a year outside the USA, this is one of a couple of tests for residency) the first $85k is exempt from federal taxes. If you are married and filing separately then this would go up to $170k for the couple (haven’t tried this but believe it’s the case).

    It is true that you will have to pay foreign taxes and in Thailand it is higher than US Federal taxes, for example my effective tax rate is 32% on all income earned in the country. The top tax bracket in Thailand is 37%. However you can get a foreign tax credit on any taxes paid in excess of your federal tax liability, and this carries over into the next year(s).

    If you live in a low tax country like Singapore or Hong Kong (both under 20% top tax brackets) then you would likely owe additional federal taxes if you make significantly over $85k US a person.

    The slick thing is that you can offset income made on investments in the US and other locations with the foreign tax credit so long as you are out of the USA, also if you can get income that is not taxed in your foreign country you still report this on US Federal taxes but use the foreign tax credits against it. This is quite similar to what US companies do when having offices outside the USA and is why they are paying very low effective tax rates in spite of the US corporate tax rate being 30%… be prepared that it is complicated – the tax return in Thailand is a single double sided page meanwhile my US tax return is up to 58 pages now!

    It also means that a retired couple could live outside the US, have combined US and overseas investments earning up to $170k without paying a dime of tax. Pretty slick if you set it up right and perfectly legal.

    Keep in mind the US tax forms are complicated but after learning how to do this once you can use turbotax to run the forms every year without too much trouble.

    You can find very high paying (top 1% of US salaries) jobs in places like Thailand, Hong Kong or Singapore but they are competitive. You will certainly have to work hard and deliver results plus in a new culture. It is not easy. But these positions exist and it is possible to land one of these. If you live with a low cost budget, you can save quite a lot and accumulate a nice level of savings in a short time. The key is to avoid lifestyle creep, just like with anywhere in the world.

    In Bangkok food is widely available and there is a huge price range- you can spend from $4 per person up to $400. I’ve found good value for money for 2 to eat out including a starter, main, alcohol and dessert for about $15 a person. Taxes are normally included (7% VAT) and there may be a service charge of 10% added. Additional tipping is unnecessary. I find the US tipping rates of 20% on top of taxes and meal to be pretty steep by comparison.

    Clothes are cheap but designer brands are costly. Electronic goods (especially the ones made in Thailand) are much more expensive than the USA, that’s why I use internet shopping and get stuff shipped to family & friends in the USA for when I make trips back :-).

    Cars are much, much more expensive than the USA. By that I mean a BMW 525 is $110k USD, a loaded Honda Accord is $60k USD, a loaded Honda Civic is $35K USD. Cars with horsepower over 219 are in a special luxury tax bracket. A BMW 7 series can easily run $330k USD, a Ferrari California is about $700k USD. Prices can get silly fast.

    That being said, most foreign employers provide a car and driver in the employment package. In the 5 years I’ve been out here, my first car was a BMW 525 and my current car is a Honda Accord. I haven’t had to pay a dime for repairs, insurance, gas, tolls or car payments. It sure feels great never having to pay for gas (use the gas card) and I don’t want to go back to paying for driving like in the USA. But when I do go back I will buy a used BMW 5 series just because it’s so much cheaper than over here 🙂

    Labor is cheap- a driver with overtime is $400 per month, part time maids would be $50 per month, etc. I am not a fan of having help in the house, I like my privacy and like doing my own dishes, laundry, cooking. Makes me feel normal. I guess that is what comes up with being born & raised in the USA.

    Health care is so convenient here. Government hospitals are $1 per visit and citizens and residents (myself included) can go there for treatment. But it is very crowded and you have to wait all day to be seen by a doctor. It is not worth it.

    A private hospital is like a 5 star hotel, with a very nice lobby / waiting area, free bottled water / coffee and parking. There are doctors available all the time so no need to wait or make an appointment to see a specialist unless you want to have a meeting with a particular doctor beforehand. Normal doctor visits plus medication would be $70 in these type of hospitals. Having a full physical checkup is $500 but this includes full labwork, X-rays, etc. All results are processed within 1 hour and you talk with a doctor directly afterward before leaving. A free breakfast is thrown in while you are waiting. I have health insurance from the company and my monthly charge and copay is zero but it does not cover dental or vision.

    I find the US healthcare system appalling because even if you know what you need you need to see your PCP to get a referral (plus wait for an appointment), then wait for the specialist, then go to the pharmacy to get medicine. 3 people are paid (PCP, specialist, pharmacy), lots of paperwork filed, insurance claims need to be sorted and lots of time is wasted. And people are terrified to lose their insurance.

    Here you can go into a pharmacy and get most anything without a prescription (addictive drugs are not available though) or if you see the doctor they will dispense medicine as part of this. It is a good system.

    The USD has gotten much weaker abroad over the past 10 years and relative prices in USD are 30% higher than 7-8 years just because of the exchange rate. Living abroad, you quickly learn to despise the policies of the Fed because pouring money into a black hole is not good for the value of your home currency!

    Housing is much cheaper than in the USA simply because there is no property tax! I have grown disenchanted with housing in the USA because even if you fully ‘own’ the place you have to pay property taxes every year or you lose the house. Out here there is a tax levied when you buy or sell but no property taxes. Same with Hong Kong, Singapore, Malaysia, etc. Therefore asset prices are high but annual expenses are low. I bought a 900 sq foot condo in a very central part of Bangkok for $175k USD back in 2005, today it’s worth about $270K USD mostly because the local currency got so much stronger. But since it was fully paid at the outset there has been no rent or property tax check for 5 years…. no car or house payment means you have a huge amount of disposable income.

    It is the perfect formula to become the millionaire next door (MND).

    There are some disadvantages to living overseas:

    1. I miss the hiking and outdoor opportunities in North America- it is very hot here year round and highly populated in the city. You get used to it but it is definitely not as nice as back home. You can offset it by having regular visits to some amazing islands and beaches but if you are a mountain / winter person it’s no good.

    2. You may get tired of hearing the USA is the greatest country on Earth and everybody wants to go there (don’t flame me please) from your friends and family. The USA has some opportunities but not many of late. It is not a great place to make money because of high income taxes. It’s easy to get trapped into a high housing / car payment that eats up your disposable income.

    3. It is far to get back to the USA from SE Asia (at least 24 hours door to door).

    4. You have to learn more about the local culture, language, and customs to be successful. In other words you have to invest your time and energy and this ends up changing you for better or worse. There is no such thing as plug and play global relocation. Usually when you plug and play then you are living in a gated community in a Truman show type of existence, which would be no fun for me. You need to be willing to learn to be successful.

    5. If you are a big fan of Football (called American Football out here) or basketball you will find it hard to follow games live. Out here people are getting up at 5am to see the superbowl and drinking at 7am. Hey, could be fun for some!

    Sorry about the long comment but I’ve said my peace.


  58. soultravelers3 says 26 February 2011 at 05:36

    Interesting thoughts and comments. We retired extremely early, sold our home in 2005 ( peak for our area of California) and have been traveling slowly around the world and living internationally ( 39 countries on 5 continents) ever since… living large on just 23 dollars a day per person. ( We mostly got out of the dollar in 04/05 and so glad we did now!).

    You don’t have to live in a 3rd world country to do this..we’ve spent time in London, Sydney, Paris, Bora Bora, Stockholm and more. We travel the world for MUCH cheaper than we lived at home and we travel with a school age child ( we are monolinguals raising a fluent-as- a -native trilingual/triliterate and love the freedom, bonding time and education advantages.

    We’ve spent the last 4 winters in a beautiful new furnished homes near the sea with spectacular ocean views in an historic white village in Spain situated between Granada and Marbella.

    This winter we are in large, new furnished 3 bedroom, 2 bathroom flat with spectacular sea views from every room and a luxury resort with every possible convenience from work out room and free wifi to saunas and pools.

    Cars are very cheap in Penang ( where our child is going to a Mandarin school) but we just use the air conditioned buses that all have wifi and taxi’s from time to time. Malaysia is one of the few places that one can buy landed property in Asia, the people are very friendly and everyone speaks English. We’re not big drinkers so don’t miss that at all, we’ll make up for it soon in Europe where good wine is cheap. I was worried about the heat, but we haven’t even needed to use our air conditioning here yet. ( We’ve been here since Nov ) so that’s been a pleasant surprise and this area is world famous for the food!

    Certainly this life is not for everyone, but for those who are interested, living abroad can be MUCH cheaper and easier than the USA. We like the idea of several global homes that we return to at the best time of year. We save a bundle just on health insurance and have gotten better medical and dental care abroad for a pittance ( including hospitalization and surgery in Europe). If you want quality of life and low prices, think differently.

    We didn’t plan on leaving the US for ever, but we are so spoiled now ( and continue to grow our nest egg as we roam) that it would be hard to move back there now. It’s never been easier to live abroad and tech makes it so easy to stay in touch with business,family and friends ANY where. We will visit some and my 83 year old mother is spending 6 weeks with us here now. Life is good doing winter in tropical Asia and summer in Europe! 😉


  59. bakednudel says 26 February 2011 at 06:20

    This reminds me of a recent article in the AARP maazine (yes I’m that old) about living abroad. In what world can you just move to a country and live and work there, with no reference to work permits or residency permits?

    I get quizzed by the recently “made-more-intimidating “UK BORDER” people when I’m just going for a vacation. Not sure how you can just breeze into a country and tell the border patrol “I’m coming to live here.”

  60. Maddalo says 26 February 2011 at 12:28

    I was surprised to read that there can be a tax savings in living abroad; #47 is right that you can often pay higher taxes, depending on where you live, and the exemption that Arndt refers to only protects you from paying taxes twice. There’s no way a U.S. citizen pays less than the U.S. tax rates, although I’d love to hear differently. I agree with the article in general, and I’ve found that living in Paris, for example, is cheaper than living in many U.S. cities, but this comment about taxes deserves further research because it usually concern more money than everything else combined.

  61. jim says 26 February 2011 at 14:53

    Ru said :

    “My last boyfriend was from Seattle, and quite often I’d check out property prices online. Did you know you can get a 70s house in King County for under $30k? That’s unfathomable to me.”

    If you can find something in King county for $30k then you are looking at a mobile home in Enumclaw 45 miles from Seattle. Not a practical commute to Seattle. And its also quite likely theres other problems like it might be in the ghetto or a recent meth lab etc. With mobile homes you don’t necessarily own the land and also have to pay rent for the spot on top of buying the home.

  62. El Nerdo says 26 February 2011 at 15:01

    Dear Jeanne,

    Your system sounds wonderful, and I would love nothing more than to live like that with my family.

    You are already retired, which puts you in a position where your income comes from investments, which is why (unlike some of us) you can benefit from geographic arbitrage. However, you also explain that you managed to retire extremely early.

    Can I ask how you managed to do this? And may I ask for your retirement ages? Because if it were feasible for me, I’d love to get the blueprint for that! Even if I couldn’t do it myself, I could write a nice how-to book 🙂

  63. Anonymous says 26 February 2011 at 15:18


    Sorry. I don’t believe you are doing all of that traveling and living as cheaply as you claim.

    Just don’t.

  64. Jan says 26 February 2011 at 15:19

    I lived in Germany, Hong Kong and Saudi. Loved the health care in each.
    I’ll never forget paying $7. for Jockey underwear for my daughter, $9 for a gallon of milk and $3 for a box of Mac and Cheese.

    Remember that in the early 70’s Mexico took back most “foreign owned” land…it was our friend’s one day- and Mexico’s the next.

    I will never, willingly, give up my rights as a US citizen for the rest of my life. US and Canadians have rights here that you will rarely find in a third world country. That passport is valuable- and many many people in the world would give just about anything to get one. It is not a “get out of jail free”card though- so be very careful.

    We moved overseas when we retired—to Kansas. To each their own:>)

  65. Gregory says 26 February 2011 at 16:27

    Great article. Living overseas in a country much cheaper than the USA would most likely be suitable for people without children as you would have live in a third world country. Also how about visa legal requirements you can’t just decide to move and stay in a country. To apply to become a permanent resident of most countries takes at least 1 year and will involve some legal costs.

  66. Becky P says 26 February 2011 at 23:25

    I am an American living in Poland (near Warsaw). People here talk about how things are so cheap in the states…They all want to go there and work.

    Medical care here is cheap. But…such medical care. BYOTP (bring your own toilet paper) is common practice in the hospitals (no joking). Just imagine the rest.

    I think that MANY of the differences are…downsize in the US to a place that is about 500 square feet. That would be standard for an apt. here. For that the rent in this area is about 1500 zl which is about $500. Add to that your monthly czyns (about $200, or 600 zl) for gas and roof replacement, etc.)
    Add in water bill and electric bill. Food. Definitely not cheap, but if you want to eat potatoes and cabbage, could be cheap.

    But take away all the birthdays that you don’t have to participate in, parties you don’t go to, etc (because you are too far away). You also can live pretty cheaply…without leaving the US. You are downsizing “big time” to live here. What could you do in the US if you were equally determined to do so? I saw homes (1200-01500 sq. feet) in Greenville, SC for $32,000. You pay over $100,000 for 500 ft. apt. in this area.

    I think each area has its pros and cons. If you want to live overseas, it really isn’t cheap, but it can be done.

    But I think that some are ignoring the very real problem of work and visas. Who is paying for your visa–you have to have a job. It isn’t easy just to pick up and say, “I’m going to live in such and such a country.” They don’t just say, “Come on…here’s a visa..want to stay?” Jobs in many countries really aren’t easy to come by (and good jobs even harder to come by). People have a hard time making ends meet by teaching English, for example (at least here in Poland). You have to have permission to live here for more than 3 months–6 months if you leave the zone and want to risk breaking the EU law.

    Add in cost of tickets to the states once in a while and it isn’t so cheap. If your job will pay for them, then great, but otherwise…

  67. Jeanne @soultravelers3 says 27 February 2011 at 07:05

    Dear “El Nerdo”

    It is true that it is easier when retired, but we live an extraordinary life on so little ( and could do it on much less, but we love luxury) that I think it shows many ordinary people could do this and in fact many ARE today as “location independent” is a fast growing trend. It’s actually easier to do than most realize but it obviously helps to create a job that one can do anywhere if one is working. The joy of living well on little is that one can work much less and still save and build a nest egg.

    I retired at 36 and my husband basically retired a bit before 50. We’re frugal by nature so like most folks who retire early, we’ve lived under our means for most of our lives. We also try to stay ahead of trends ( everyone thought we were nuts when we sold our house & Time magazine cover that week was a photo & story about what a great time it was to buy a house..but our research showed a recession and housing crash coming). We try to be very conscious of what we buy and try to buy low and sell high. We think differently and are willing to take calculated risks.

    There are actually plenty of good how-to books on this subject. We were inspired by many like the Terhorts ( who wrote Cashing In on the American Dream: How to Retire at 35) who have been perpetual travelers for over 25 years…classics like ‘Your money or your life” , 4HWW ( we’re case studies in it) or Vagabonding and more give the basic keys.

    Truly, almost anyone can live the life that we do if that is what they want. If there is a will there is a way. Instead, most prefer a “normal” life.

    “Normal is getting dressed in clothes that you buy for work, driving through traffic in a car that you are still paying for, in order to get to a job that you need so you can pay for the clothes, car and the house that you leave empty all day in order to afford to live in it.”

    — Ellen Goodman

  68. Jeremy Martin says 27 February 2011 at 10:16

    Hmmm. I agree that living overseas is a mixed blessing, but loved it and would like to get back. I lived in Taiwan for 11 years, and used the time to travel through Australia, the Maldives, Hong Kong, Thailand, and Europe.

    I never made more than $80k, so only had to worry about local taxes, which were around 6% there. Rent was $300 for a large 2 BR, 2 bath apartment (moved up to that when I got married), and a bowl of noodles and dumplings ran about $1.50. A trip to the dentist was $24 when I didn’t have insurance, and $2 when I did, though I didn’t have a thorough cleaning while I was there…

    The local Western restaurants were around $15 a meal before drinks, and the bars charged around $6-10 for mixed drinks. So it depends on what kind of lifestyle you were looking for. Many of my expat friends went out and partied a lot, and were living paycheck to paycheck. I was married, ate local food mostly, drove a scooter, and saved over half my income every month – then spent a lot of it on trips once or twice a year.

    As to visas, there are two ways to go – tourist and work. When I was on a 2-month tourist visa, I would study Chinese so I could apply for extensions (twice), then go on a visa run every six months – $200 mini-vacations to Okinawa, Hong Kong, the Philippines, and so on. When I had a work visa, I was tied to a company, didn’t have to leave the country so often, but had to apply for time off to travel. I was looking at getting a visa through my family when we decided to move back to the States.

    As to how to afford it, there are four common ways, and probably some less mainstream ways that I don’t know about.
    1. Live there, work for a local company. This can make work visas pretty easy, and you’re on the same scale as the locals.
    2. Work for a company in their overseas branches. I know people who lived in Taiwan, Indonesia, etc and worked for Nike, K-Swiss, … This can be incredible, as you get paid well for ‘being willing’ to live overseas and often have a living stipend as well. You’ll almost always have a work visa arranged for you, and often paid trips home annually.
    3. Some online business that you run, or a version of telecommuting. This would include travel writing and such. And you’d probably be on your own for tourist visas.
    4. Retirement. The US gov’t will send Soc Security checks anywhere, and it’s easy to have it deposited at home, then use a debit card or such to access your home accounts. Just watch the fees and exchange rates, but it’s usually better than traveler’s checks for costs.

    Hope that added some technical details to the discussion!


  69. G says 28 February 2011 at 01:20

    I’ve been living and working overseas since I was 20 and have been in Indonesia for the past 10 years. While I love it, it is not recommended for everyone, in fact, most of my family who’ve spent time here have enjoyed it as a holiday but expressed no interest in a longer term adventure.

    The simple fact is that, unless you already have wanderlust and have had the urge to live abroad for a long while, doing so for financial reasons will probably not work out long-term.

    It takes a certain kind of individual to put up with the heat, illness, communication issues, cultural misunderstandings, separation from family and friends, and occasional dangers of living overseas. So much so, in fact, that in my company, I will no longer recruit expatriate employees straight from overseas because they are too likely to give up and go back home after as few months.

    I much prefer to recruit someone who has already spent a year or so in Asia because they already know whether they are going to like it here. Living in a foreign land ain’t for everyone and unless you seriously dislike living in your own country, the financial imperative will not be strong enough to keep you overseas for long, IMHO.

  70. Becky P says 28 February 2011 at 02:52

    Jeremy, I agree all of your how tos (as to how to pay for your living overseas) except nr. 4.

    Most countries don’t just let you retire to that country, do they? I know you have to have a reason to live in Poland. You have to sponsored by a company or organization. You can’t just walk up to the agency who handles the residency permits and say, “Well, I want to experience life in Europe, so, since SS sends their checks here, I’ve decided that I want to live here.” They will just laugh at you.

    I’d venture to guess that it is like that everywhere. One has to have a valid reason to give the government as to why you are there. If you are a business and sponsor yourself, there are lot of hoops to go through in order to get that business recognized as a legitimate business in that country. This costs money–at least it does here in Poland. You won’t do it all on the “cheap”. People that try end up leaving.

  71. El Nerdo says 28 February 2011 at 14:05

    @ Jeanne,

    Thanks for the reply! My wife and I are not “normal” at all, so that hurdle is already out of the way, ha ha ha.

    I’m definitely encouraged, and will check out those books.

  72. Phil Bryant, CEO says 28 February 2011 at 22:01

    Excellent post. I’ve thought extensively about retiring overseas because the cost arbitrage would allow me to retire *much younger* than in the US. The trick will be convincing my significant other 😉

    I first got turned on to this idea by reading,, and then more recently by the book Get Out: Your Guide to Leaving America. [I have no affiliation with either of those websites or that book.]

  73. Liggs says 11 April 2012 at 05:36

    The article is a very good one. It is so correct, from the cost of living decrease for those prepared to make the change to the fact that many will never find themselves in a mode of being able to make the change. Sure, you can’t have it all. That is true if you stay put or change. Sure, the selection of where to go is critical if there are several factors you really cannot go without. If you are care and/or wish to use less financially, either put up or go and have a look. It need not be to a substantially less developed country too. It could be to a neighbouring state. But if you are thinking non-USA, I can assure you that many in North of West Europe have made hay by moving to South of West Europe. I challenge those who have made the comment to clarify in what way South of West Europe is that much less “civilised” or less “developed”.

    Well written, well done.

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