You might have heard this term coined by Tim Ferris in his The 4-Hour Workweek. In the essence geo-arbitrage is about outsourcing your professional and personal life, making use of the fact that the world is turning into a global village. In his book Tim was mostly talking about it in the context of hiring a virtual assistant that would do both your professional and personal errands at a fraction of your calculated or assumed hourly-rate. In that way, while your virtual assistant from, say India, is searching for a present for your mother-in-law, you can do yoga, or spend time eating-out with your customer, or do whatever you wish to do.
Yet, in my perception geo-arbitrage extends beyond pure making use of a cheap labor in a faraway land. Stretching it a bit, it is also about looking around within your own country. So, how do I apply geo-arbitrage at this point in time? I am saying “in this point in time” because I am constantly in search for ways to optimize our life.
- The choice of location for a house. We have a lovely house (still partly only partially finished though) with a big garden in one of the Belgian villages. Having the same size of a house (and I am not even talking about a garden!) in Antwerp or in Gent would not be affordable. Yet, Antwerp is 20 minutes drive north-east and Gent is 25 minutes drive south-west.
- We buy groceries and occasionally alcohol in the Netherlands (Hulst is 15 minutes drive), where the VAT is lower and overall prices are cheaper than in Belgium.
- For diapers it is frequently cheaper to order them from Germany.
- We regularly travel to my home country – Latvia. If we would travel from Belgium that would cost us a fortune every time, but low-coasters don’t fly to Riga airport from Belgium. So we travel from Eindhoven (NL).
- I go to the hairdresser’s in Latvia, not only because I like my hairdresser and I don’t want to change her, but also because every time it saves me something around 80 EUR (less than a return airplane ticket with a low-coaster if you’re lucky). Even if I would not be travelling to Latvia to visit my family, I would seriously consider keeping this habit!
- Also in Latvia my husband and I did the green card course in golf…
- …and regularly go to opera.
These are just some examples that first came to my mind. The point is – the world is indeed becoming a global village and there are more and more possibilities out there. Of course you have to take into account e.g. time and additional effort and all the other things, and yes – if you don’t live next to the border with a cheaper country or regularly travel to one – it might turn out to be not worth a hassle. Yet, possibilities do exist.