Updated: Apr 7, 2019
Geoarbitrage is an interesting concept, often closely related to the definition of lifestyle design. It basically means relocating in order to take advantage of the lower costs of a city/country.
Live in Spain
What if I told you that you can live in Spain for ten times less than you can live in San Francisco, California. Well, you can because I am living proof! I moved from the San Francisco Bay Area to the south of Spain in 2018.
I was lucky enough to discover the town of Garrucha. It is a small, fishing village on the Mediterranean an hour west of Alicante.
I had no idea what the cost of living was going to be and even how I was going to be able to find an apartment.
Both were huge surprises. I found a four bedroom house on the Mediterranean for $300 / month.
It was a beautiful house with a large patio and on the beach. The best part was, I moved in almost immediately, there was no waiting to the end of the month. The landlords finalized the contract and met me at the house the following day.
The Math Behind Geoarbitrage
Of course, me being me, I immediately started to think in mathematical terms. I had just moved from the San Francisco Bay area where a one-bedroom apartment can easily cost you $3,000 a month. A four-bedroom house, maybe, $5,000 to $8,000 a month for a similar house as I rented for $300 per month in Garrucha, Spain.
So, I quickly did this calculation in my head:
$3,000 ÷ $300 = 10 months of rent.
Basically, for every one month of rent in San Francisco I could live ten months in a beautiful, Mediterranean village in Spain.
Or even a step further, one year of rent in San Francisco equals ten years of rent in the South of Spain.
1 year of rent in San Francisco ÷ 1 year of rent in Garrucha, Spain = Years to live in Spain
$36,000 ÷ $3,600 = 10 years in Garrucha, Spain
That is right, you can live in Spain for ten years for the same amount it costs to live in San Francisco for one year.
I get it, we all can’t up and move to Spain. But if you are looking for more free time and a higher quality of life, then the south of Spain is for you.
If you like it so much, you can buy a beachfront apartment starting at $75,000. It’s insane and I still catch myself in awe every time I walk by the real-estate office and check out the listings.
The best part is Garrucha, Spain, is safer, cleaner, and cheaper than San Francisco, CA. I can’t think of anywhere in the United States where I felt as safe.
There are no guns, therefore there’s no gun violence. Pickpockets might happen, but I’ve never witnessed it or heard of it happening to anyone.
At night, streams of families walk down the boardwalk at all hours of the night without a problem. And the kids stay out late playing soccer on a beautiful lit-up field next to the beach. It’s a magical place.
And Garrucha is not one of a kind. There are many beach towns places along the Mediterranean coast.
Value Life Over Work
The Spanish are known for having the longest life expectancy. They live to an average age of 83 years. This is largely due to their lifestyle and culture. They value life over work.
In Spain, people work to live, not live to work.
Families eat five meals a day together. Yes, they eat five small meals each day in Spain.
They are also known for taking a siesta every afternoon and long walks together at night.
And they take care of their elderly because they all know one day they will grow old as well. It is a beautiful thing!
Another benefit to geoarbitrage is the lower cost of your day to day living expenses. Not only is rent inexpensive, but so is everything else in Spain.
Typically, I go grocery shopping once a week and my average grocery bill is around forty dollars. Which comes to about $2 per meal. Because everything is so cheap, I find ways to treat myself. I have no problem splurging on chocolate, jamon or local pastries. In the states, a similar grocery shopping trip would cost between $100 to $150 for the week.
What about dining out? It is part of the Spanish culture to dine out and have tapas with friends.
Tapas are healthy, tasty snacks for sharing. In the south of Spain, it normally costs $2.00 for a tapa, plus a beer or glass of wine. That’s right, you get a small plate of food and a drink for $2.00.
We typically have three to four tapas when we go out and it costs each of us $6.00-$8.00 for a few hours of fun.
And get this, there is no tipping in Spain, and the taxes are already included in the bill. If a tapa is listed for $2.00 on the menu then you pay $2.00. There’s no tipping 20% and then paying an additional 7% for taxes.
Coffee is another example. I pay $1.80 for a latte every morning. A $4.00 latte doesn’t exist in Spain unless you are dumb enough to go to an American branded coffee shop.
Find Joy in the Journey
I get it, all of this requires moving away from what you know. It is not for everyone. but if you think you could enjoy this lifestyle, don’t be afraid! We only have one life to live and there are ways to spice up your life in an inexpensive way. Spain is a safe and inexpensive country and I highly recommend it!
Geoarbitrage is a concept that has become popular by the FIRE (Financial Independence Retire Early) community. Europe has been a hot spot for the early retirement community, with many of them moving to Spain, Portugal, and Greece.
Albania! Where’s that?
Another country I would like to check out is Albania. Albania shares the Adriatic Sea with Greece and Croatia. It is also the only country I know of where Americans can live there for up to a year without having to apply for a special visa. Most countries in Europe only allow you to stay there for up to three months without a special visa. More and more people are moving abroad and enjoying early retirement.
Action Item: Figure out how much you currently spend a month. Now compare it to the country of your choice. Here are a couple of good websites to help you make the comparison:
Cost of Living or Geoarbitrage Calculator