Episode 131

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Published on:

3rd Jan 2024

Using Geo Arbitrage to Save a Ton of Money and Reach FI/RE Sooner | E131 Rachel Covert

It’s hard living a frugal life. I’m constantly questioning myself whenever I do things like taking leftovers from a free corporate lunch or doing date night at 4pm so we can get happy hour pricing.

Although these frugal practices are simply a journey all 20-somethings need to live through, it’s not what I want to be doing forever. But what if I told you you could live it up now while also accomplishing your financial goals like paying off student loans or heavily investing to reach financial independence early? This could be a reality with a strategy called geo-arbitrage.

Ignore the fancy words, the concept is simple. Have a steady income in a strong currency, then spend money in a cheaper country.


Imagine this, you live in New York City, making $70,000 a year and your monthly costs are $5,100. You work from home and can easily pack up and leave so then you move to Mexico City where your monthly costs are $1,900. That’s a difference of $3,200 or over $38,000 a year. A decision like this magnifies your savings rate and allows you to make some serious progress on your financial goals in just a few short years without sacrificing your comforts like a spacious apartment or trying new restaurants a couple of times a week.


If you are open to an idea like this but don’t have a portable job or you are not ready to move, the same strategy could be applied to reduce your final FI target number. Instead of needing $1.5M dollars maybe you only need $700,000 to retire to a more affordable city.


This is what today’s guest did. Rachel Covert retired early at the age of 36 from her high-stress job in fashion and decided to move away from expensive NYC. She’s been fairly nomadic the last few years but currently resides in Portugal.


In this episode, we dive deep into geo-arbitrage. Rachel will share examples of low-cost-of-living cities you could move to, prices you can expect to pay, how to prepare for a change like this, and more. Once again, if you are adventurous and have career flexibility this could be a really powerful strategy you could employ.


Let’s learn some more about it. I hope you enjoy my conversation with the early retiree and world traveler…Rachel Covert.


Key Takeaways:

  • What is geo-arbitrage and is it right for me?
  • Best low-cost-of-living cities to consider
  • The power of the American passport
  • The impact of time freedom
  • How to escape golden handcuffs
  • Staying focused on your financial goals and avoiding social pressures
  • How to apply geo-arbitrage domestically


Mentions:

Compare the cost of living: https://www.expatistan.com/cost-of-living/oaxaca?currency=USD


More of Rachel:

Get the Free Lifestyle Spotlight Spreadsheet: https://www.electrifiwealth.com/optin1654273482604

Instagram: @rachel_talksmoney


More of The Struggle is Real:

Find show notes and more at https://www.tsirpodcast.com/

Follow us on Instagram at https://www.instagram.com/tsirpod/

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About the Podcast

FI Minded - Financial Independence, Early Retirement & Lifestyle Design
Achieve Financial Independence & Have Fun Doing It
Pursuing financial independence, financial freedom, or early retirement often leads to the same questions: How do I become financially independent? How much should I save? What happens after I reach FI?

FI Minded helps you use money to create more freedom, without turning your entire life into a financial optimization project.

Host Justin Peters explores the decisions behind building a flexible, work-optional life, from reaching financial independence and navigating Coast FI and Slow FI to spending your money, changing careers, stepping away from work, and figuring out what comes after FI.

Each episode combines practical personal finance with conversations about early retirement, lifestyle design, work, spending, healthcare, self-employment, and life after financial independence. The goal isn't simply to reach FI as quickly as possible. It's to make progress toward financial freedom while actually enjoying your life along the way.

On FI Minded, you'll learn how to:
- Reach financial independence without burning out
- Build a flexible, work-optional lifestyle
- Navigate Coast FI, Slow FI, and other paths to FI
- Make smarter decisions about spending and saving
- Prepare financially and emotionally for early retirement
- Figure out what life can look like after financial independence
- Think through the tradeoffs behind major money and lifestyle decisions
- Make progress toward financial independence while actually living your life.

Some of our past guests include Carl Jensen (1500 Days), Jeremy Schneider (Personal Finance Club), Nick Loper (Side Hustle Show), Andrew Giancola (The Personal Finance Podcast), Jordan Grumet (Earn & Invest), Rachael Camp (Work Optional), Jillian Johnsrud (Retire Often), Sean Mullaney (FI Tax Guy), Jill Sirianni (Frugal Friends), Jackie Cummings-Koski (Catching Up to FI), Joel Larsgaard (How to Money), Cody Garrett (Measure Twice), Jesse Cramer (Personal Finance for Long-Term Investors), Jess (The Fioneers), Chris Hutchins (All The Hacks), Diania Merriam (EconoMe), Andy Hill (Marriage Kids Money), Fritz Gilbert (Retirement Manifesto), Maggie Tucker (Inside Out Money), Cody Berman (The Financial Independence Show), Joe Saul-Sehy (Stacking Benjamins), Doug Cunnington (Mile High FI), and and others helping you rethink how to approach financial independence.
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