Pharmacist going travel developer to explore the world and to live a fearless life.
Current Location: Medellin, Colombia
Lifestyle Design Concepts
Geoarbitrage to me is simply leveraging the cost of living in one location to another. Think about when students apply to university. If they are not trying to go to the most prestigious and expensive college, I think most would opt for a decent program with a lower price tag. I did much the same when I decided to live at home during my first year of graduate school as the school offered a satellite campus only 15 minutes from my parent’s home. I picked that option because it was cheaper to live at home from sharing food with the family, using furniture I already had, having my own room, and the peace of mind of a place to rest my head. Continue with that train of thought and ask yourself why that concept was suddenly lost when you got into the “real world.”
This concept is immensely powerful and helps gets you thinking about places where you don’t have to work as hard to make ends meet AND have more time to pursue other topics in life that are important to you. This concept was popularized by Tim Ferriss claiming the New Rich are participants in Lifestyle Design who utilize time and mobility to create the lifestyle they want without all the bravado and stress of corporate millionaires. The very idea of its accessibility by all sparks a new hope for anyone who might be awakening from the cyclic, pointless work culture of the corporate world.
The cunning execution of this plan is simply moving your life to a cheaper country in Southeast Asia, South America, or Eastern Europe. As of this writing, more and more global hotspots are pulling in expats and digital nomads from all types of 1st world nations. Leveraging the income earned online in dollars/euros/pounds and spending it in baht/dong/pesos affords an individual more time and freedom to live their lives as they wish. This individual who has a deep understanding of geo-arbitrage and cunningly executed a lifestyle design plan is no longer bound by the chains of heavy taxation, organizational fees, and insurance cons. The future moves forward into a global economy and those stuck behind in one location miss out on opportunities in dealing with markets abroad.
The argument for the uninitiated would be that traveling is expensive and the standard of living is much lower in other countries. You’ve been taught wrong by the travel companies and commercials. Traveling is expensive because you live on the two-week budget and spend all your hard money on expensive getaways and locales designed for tourists. Rather, travel more slowly every 3 months and live in quaint villages among the locals instead of at some beach resort for a tiny vacation stint. Not only would you learn more about the culture and learn to love life a little more slowly, but it’s a lot cheaper too! A popular digital nomad out in Chiang Mai shares his take on living in the country.
The standard of living around the world is also rising from country infrastructure, medical, and lifestyle. Medellin in Columbia has been a rising hotspot in South America and is a far cry from the saturated country of crime, drugs, and rebel armies we knew since 2000. Lots of people are traveling for medical tourism around the world since they get the same quality of care for a fraction of the price. These 3rd world alternative countries might not be on the cutting edge of entertainment, technology, or GDP but they still offer phenomenal care of people. Imagining not having to wait an hour in the doctor’s office just to get your turn because of some insurance issue. Then finally when the doctor sees you, they spend less time with you than the time you had to wait! I don’t know about you but there’s something awkward about that to me.
As a disclaimer, this concept is not suitable for everyone. Those who might not enjoy this monumental shift might include people who enjoy routine, the same bed every night, working at the same place every day, have deep relationships where they live, afraid of new places, or those not cut out for this adventurous life. Heck, this guy didn’t even enjoy Bali as a nomad but I think maybe that place just wasn’t right for him. There are a lot of difficulties surrounding this lifestyle like WiFi connection, hot showers, being on the road, loneliness, or relationships. However, most of the stories I’ve read revealed the leap is completely worth it because let’s face it: cubicle life for 40 years isn’t all that great and the life might have been sucked out of you already.
Foreign Earned Income Exclusion
Ah, the FEIC. It’s a wonderful little tool in the nomad’s toolbox to leverage this lifestyle. In a nutshell, income made outside of the states is not taxed with the stipulation that you only in the states for less than 30 days a year. The funny thing is that the government doesn’t know how to classify the digital nomad so we get away with this really cool concept. Check out the IRS website for more information.
The basic requirements are either the person passes a physical presence test or bona fide resident test. The cool thing is that you can exclude housing expenses too. This worldwide income for self-employed persons is completed by filling out form 2555.
Check out more information at Wikipedia.
Tax-Free Income States
There are currently seven states in the union that does not have income taxes: Alaska, Florida, Nevada, South Dakota, Texas,Washington and Wyoming. These states become a beacon for growth by being attractive to young people to stay and work in that state. It has shown to improve in the economic and population sectors.
The argument is that the government makes up for these taxes by collecting in other ways such as sales tax, property tax, or gasoline tax. However, where the nomad comes in is the fact that they don’t actually reside in that state so not being subjected to this subterfuge manipulation. It’s been said to place a heavier burden on the poor due to sales taxes, considered to be regressive.
Whatever your viewpoint on the issue, one thing is clear…using this can help nomads bring home more of the money they make while off living somewhere a fifth of the cost of in the states. Not being subjected to the pesky sales taxes at home, that effectively brings increased returns yearly .