Can I be financially independent today // Geoarbitrage

I recently came across a cool website called Nomad List Financial Independence Calculator. By entering your age, net worth, location, current income, current expenses, and other investment related numbers, the calculator then determines how early you can be financially independent if you were to move to a different city. There are 306 cities on the list and the information is tabulated by expats that are currently living or have lived in these cities. I am not sure what the sample size is like for each city, so some of the numbers might not be the most accurate. Since we do plan to live abroad for an extended period of time (Denmark & Taiwan) in the future, I was very curious about which other cities might also work for us. I used our 2017 numbers for the calculation and below are some interesting findings.

Some Interesting Financial Independence Numbers

Cheapest city to live for a family: Khartoum, Sudan. $486 USD per month. 

Most expensive city to live for a family: San Francisco, United States. $6,725 USD per month.

Vancouver spending per month for a family: $3,300 USD per month. (This is our baseline, I based this number on our 2017 spending).

It is worthwhile noting that weather for Vancouver is rated bad (presumably because of the rain). But the weather is such a personal thing, if you don’t mind the occasional rain, you would love living in Vancouver.

Copenhagen is ranked 5th most expensive city on the list with a monthly spending $5,504 USD for a family of 4. I knew Copenhagen was expensive but I had no idea it’s THAT expensive!

Some Interesting Findings

With $500,000 USD ($646kCAD) net worth, at 4% withdrawal rate ($20,000 USD per year) one could be already FIRE’d in 132 cities plus 19 within the next 12 months. Out of the 132 cities, I could see us living in Taichung, Quebec City (gotta learn French first?), Santiago, Budapest, Buenos Aires, Porto, and Hoi An. I was very surprised to see a major Canadian city on the list.

With $750,000 USD net worth ($967k CAD) net worth, the list of cities increased to 219 cities plus 16 cities within the next 12 months. The additional 87 cities on the list that could be worthwhile for us included Prague, Montreal, Ottawa, Madrid, Hiroshima, and Taipei. I have been to all 6 of these cities while Mrs. T and I have been to 2 of these (Hiroshima & Taipei) together. I would really love to live in Prague and Madrid to soak in some European histories. It would also be very neat to live in Hiroshima and Taipei for an extended period of time.

If we increased the net worth to $1M USD ($1.29M CAD), one could be financially independent in 278 cities out of 323 on the list (86%). If this was the case, based on the numbers, we would become financially independent in 309 cities before the age 40.

At $1.5M USD net worth ($1.94M CAD), one could be financially independent in all but 8 cities (Washington, Boston, Menlo Park, Copenhagen, San Mateo, Palo Alto, New York City, San Francisco). If this was the case for us, we could reach financial independence in 7 of these cities before age 40, and be FI in San Francisco by age 41.

We received almost $15,000 in dividend income in 2017. That amount was a mix of USD and CAD. I did not convert USD to CAD with our dividend income reports, rather, I treated USD and CAD at a 1:1 exchange rate to simplify the math. If we took a closer look at our 2017 dividend, the USD and CAD breakdown was about 20-80. This would put us around the $12,000 USD in dividend received for 2017. By calculating backward, at 4% withdrawal rate, that would give us a net worth of $300k USD (note: not our actual net worth. I’m basing net worth purely from our 2017 dividend income). I then plugged in $300k USD as our net worth into the Nomad List Financial Independence Calculator and kept all the other numbers the same. The calculator then showed that we could already be financially independent in 65 cities on the list with 17 additional cities within the next 12 months. It was very reassuring to know that we could already be FI in many cities based on our 2017 dividend income and expenses.

Interestingly, I didn’t see cities like Melbourne and Chiang Mai on the list. Since the list was crowdsourced by people already living or lived in these different cities, we should view the list with a grain of salt.

Here a more detailed calculation on whether we can be financially independent today by geo-arbitrage and living off dividends 

Financial Independence vs. Retire

You may have noticed that I have not used the term “retire early” so far in this article. This was done on purpose. I believe retire early is a term that gets thrown around on the internet and is very loosely defined. What exactly is retire early? Does that mean you are no longer working at your full-time job before age 61 (or whatever the standard retirement age is now)? If you are still making income through some active work, does that mean you aren’t retired? For me, I would rather focus on being financially independent. Because once you are financially independent, whether to work or not is now entirely a personal choice. You are working because you choose to, not because you have to.

Macro View of Financial Independence

As already mentioned, we are considering living abroad in Denmark and Taiwan sometime in the future. We see this as an opportunity for the kids to learn more about Danish and Taiwanese cultures. We would also love for them to learn more Danish and Mandarin/Taiwanese. At the same time, living in Denmark would allow me to learn more Danish. Vice versa, living in Taiwan would allow Mrs. T to learn more Mandarin. Our plan of living abroad in Denmark and Taiwan has nothing to do with expediting our financial independence journey. Taiwan has a lower cost of living while Denmark has a higher cost of living, so perhaps they would cancel each other out, leaving a neutral effect on our financial independence journey.

There are many factors that determine whether you are financially independent or not. One of the biggest factors is cost of living. If you live in a city with a low-cost of living, it becomes easier to be financially independent. On the flip side, it is harder when you live in a high cost of living city. Thanks to advancing technologies, the world is becoming a smaller place each day. Therefore, geoarbitrage is something to consider as a method to expedite financial independent. And this calculator has shown financial independent is possible at different net worth amount by moving to another city.

Dear reader, did you get a chance to play around with this calculator?

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37 thoughts on “Can I be financially independent today // Geoarbitrage”

  1. Hi Bob
    I have spent time in a number of cities abroad and cost of living is not everything. Weather can be a deal breaker, and a person has to research carefully. Humidity, for example, can amplify conditions greatly. Environmental factors, such as air pollution, are also extremely important. So is city size and services provided. In Canada, I am used to having a wide variety of international cuisine available; in the smaller centres in many countries, this option is often not available, unless one lives in a tourist mecca which can have its own pitfalls. The temperament of the locals can make it break a location as a place to live. For example, I lived south of Saigon in a city of about 100,000. Very hot and humid, with flat, somewhat boring geography. I also lived in the Central Highlands of Vietnam where the landscape was pleasantly hilly with extensive national parks, and good weather. In the end, I preferred the hot lowlands because of the people.

    One possibility is to become a seasonal nomad. The French developed Da Lat in Viet Nam as a place where they could escape the heat of summer.

    In the end, the old saying about not buying a house until you have lived in a place for two years is wise.

    • Hi Bill,

      Very good points indeed, I definitely ignored some of these key factors in the post. If we were to pick a few places to live, we need to access everything rather than just looking at cost of living. 🙂

  2. Haha! I love it. The Nomad List’s geoarbitrage calculator blows away the crude one I put together. And even though it’s a crude tool, as some commenters have pointed out, it still helps you realize your options. A much more enjoyable life may be a mere 1,000 miles away. How awesome is that. Cheers.

  3. Some of the numbers seems a bit off for Japan/China cities, it’s telling me I can retire on ~$900 to $1100 per month as a singleton in Okayama and Shanghai, which I find a bit low. It really depends on housing costs I think.

  4. Great post and love the FIRE calculator!

    Sadly couldn’t find Switzerland on it but since we FIREd and live geoarbitrage we do know where we stand. Over the past 15 years, we’ve been living in Taipei, Zurich and Singapore. Currently, we reside in Basel, Switzerland. From Basel, it’s a 10 min drive to either France or Germany where grocery shopping, dining and many other things come at very different prices. Basel is THE place for tri-national geoarbitrage. We can go grocery shopping in three different countries in less than 2 hours. Purchase some delicious French cheese, a baguette, wine and chocolate croissants in France, then stack up beer, meat and candy in Germany before going back to Switzerland to refuel the car with cheaper gas. Also, whenever we travel back to Taiwan and Singapore we have our “usuals” to purchase/ follow-up on while there. I believe we have a mindmap with prices of most goods, services and other stuff for 5 countries embedded in our brains. Haha.

    If you ever consider moving to Copenhagen Tawcan, ensure you fully understand the way assets and passive income are taxed. Every place has very different tax laws – active income, rental income, dividend income, interest income, capital appreciation, option premiums or even a wealth tax are different in each and every place.

    Fully understanding this is something very complex but not to be underestimated. It makes a difference if your passive income is not taxed at all (e.g. Singapore) or if they regard it like a salary at 30-40%. Right after taxes comes currency fluctuation, some places might simply appear cheap because domestic currency has been kept low or linked to other currencies, not reflecting its true purchasing power. I do love to compare PPP (purchasing power parity) numbers. Currencies even of rather nearby countries can move tremendously over the years – up or down. I’m thinking of EUR vs. CHF, GBP vs. CHF (down from 12 to 1.2 in 35 years). Who knows where Asian currencies will be vs. their European or North-American peers 10 years from now.

    Great post, many thanks!

    • Very good points, I need to take a closer look at Taiwan and Denmark tax laws to understand how outside country income are taxes.

      Sounds pretty amazing to be living in Basel Switzerland. I guess you are reducing the cost of living by shopping in France and Germany. How do you get around the visa for extended stays?

  5. Okay, “Occasional rain”? It’s not occasional rain in Vancouver (or at least it doesn’t seem like it!! It seems much more often than occasional lol). It’s raining right now as I type this.

    I think $4000+ per month in Vancouver is a bit low (or high!) depending on how much of the mortgage is paid off or if there is a mortgage. E.g. if a family lives in an apartment expenses are lower than if they are living in a house.

    We are also thinking of living elsewhere for a year, maybe Singapore but it would really depend on the school system etc. Lots to think about, we are lucky in that the world is our oyster and geoarbritrage is possible.

    • Haha if I look outside right now it doesn’t look like occasional rain. More like downpour. 🙁

      It really depends on your mortgage amount and if you live in an apartment or a house. Property tax for houses is typically higher compared to apartments. Also there are just more expenses when living in a house.

      Singapore would be a cool place (never been). A good friend stayed there for 4 months while in university had great stories about living in Singapore.

  6. Nice article, enjoyed the read. Montreal is getting pretty expensive to live as well. Unless you leave 1 hour away from the city. On average, the family of 4 will cost around $3,700 per month just to provide basic needs. Not talking about going outs, restos and entertainment. And yes, you do need French lol!

  7. Quebec city is a lovely city. Clean and lovely view. It’s windy and colder as downtown is near water. Yes an incentive to learn french and mingle with the local if one lives there. I can foresee myself living in qc city. The downside is that the major airport is in montreal. 2 hours drive away.

    • I really enjoyed Quebec City when I visited a number of years ago. The downtown core you can easily get around without knowing French. My family ventured outside of the city but still managed to get around fine without knowing French. But I can definitely see the need to learn French if you live there permanently.

      • I’ve lived in QC, definitely don’t recommend staying there for any amount of time without learning French.

        Montreal on the other hand, you could easily live without French and there are plenty of people who do. I’m still working on mine and get by just fine with my Franglais.

  8. Oh I am just writing about my friend’s geoarbitrage experiment in China. This is killing me…is it one word or two or…a dash in between or just….capitalization? Oh good gravy help.

    I think it’s a tremendously good hack and one of the best things about living near any coast – the escape button is there for you! And…$3,300 in Vancouver? Oh my god! For a family!!!! That’s so inexpensive!

    My husband bought up a strong point tho (he’s sort of hesitant on GA) that those inexpensive places will get very expensive, very fast because there’s usually a jump in cost of living as a country moves up closer to first world standards. Before you know it, if there’s not enough left in the budget, you see yourself feeling the pinch.

    • Geoarbitrage in China might be interesting but I suppose any of the major cities might be rather expensive. But I have only been to a few Chinese cities so far so can’t say I’m an expert.

  9. $3,300/m in Vancouver? Wow, nice job. I thought you guys spend more than that.
    Nice plan with Taiwan and Denmark. Can you write more about that? Or maybe you already have a post. It’ll be interesting to see what’s the plan for the kids.
    I’m thinking about taking a year off to travel. We can road school for a year. I don’t think we can live in Thailand for long with a kid. I guess we could pay for private school, but I never liked Asian school systems anyway. Too much emphasis on academic. Anyway, the calculator is kind of neat. Needs more work.

  10. This is really cool stuff Bob. Thanks for sharing. Financial independence is all about thinking outside of the box and this strategy is just that.

  11. i was just telling someone else last week about my mom’s place in upstate,ny. it’s right near vermont and in the middle of cow country. it’s a little house (about 1200 sq. ft) with a 2 car garage on 1/3 acre and you could buy it for about 55-60k! country living isn’t for everybody but if that’s your thing you sure can save a lot on housing and get lots of fresh air.

    but it’s socially crippling.

    • Mrs. T actually wants to move to the countryside and grow our own veggies. That’s how she grew up. I can see myself doing that later but maybe not right now. 🙂

  12. Playing around with that calculator is so much fun! Like the previous replies the info seems a bit off but that is to be expected. Unless the list was a combination of results from a 1000 or more people in each location, it is hard to give accurate readings.

    However, It still makes me want to tell the wife – lets go! Pick your best place out of the 50 we can reasonably afford and lets try it haha

    Thanks for the link!

    • I think the numbers are from younger nomads so they might be a bit off for families. We definitely wouldn’t be eating out/party/drinking as much compared to single nomads. However, the calculator does give a general sense where cheaper cities are.

  13. That is a really cool idea for a website, but like what they said above, it’s hard to judge accuracy when the information is crowd funded. And I personally think the northwest has pretty great weather because we can get outside 12 months of the year. Then again, most people don’t choose to camp in January like we do 😉

    • Haha and Vancouver doesn’t actually rain all that much. Many of these ratings are very subjective so it was interesting to take a closer look at the different cities on the list.

  14. Fun post, Bob! I’m curious how legit the numbers are, but even so, it’s definitely an interesting calculator and fun to toy with!

    We’re actually pulling the trigger to use geoarbitrage and moving to Panama as part of our plans in a couple of years. It’s fun to dream about the different places, but on the downside, if you retire to another country based on what you have and then don’t like it, you can get stuck. If you move back to the U.S. or Canada, you might end up needing to go back to work. We’re trying to build up our numbers to cover our expenses here first just so we don’t run into that problem.

    — Jim

    • Yes I wondered how legit the numbers are myself too, but it was fun the play around with the calculator and see the different possibilities.

      Panama is a great choice as it’s close enough to US/Canada. When it comes down to it, it’s about what you’re comfortable with and what works for you.

  15. Very skeptical of that site’s info as well. Plus so many of the factors are subjective like rating the weather. I’m sure they rate cold = bad. Many of us like winter and snow 🙂

  16. Yup, I checked out the site when I saw it posted on twitter. Since the data was all crowdsourced, I’m pretty skeptical about the actual numbers.

    Some of the cities seemed more expensive than what I personally know, and others seemed cheaper than what I’ve personally experienced.

    The site is also targeting nomads — people who hop around from place to place and staying only as long as a visitor visa lasts. That’s great for young people *without* families, but we’re looking for a home that’s more stable.

    It’s fun to dream about, but legal realities make moving to other countries difficult. 🙂

    • Yup, the data was all crowdsources so need to be skeptical about the actual numbers. Plus like what you said, nomads do hop around so the numbers might be a bit high. There is a checkbox for “family” and that’s what I used. Apparently, it multiplies a certain factor to increase the monthly cost basis.


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