Transcripts Including Tag: geoarbitrage

Description: Expenses :: Domestic Arbitrage

These are the transcripts that include the tag geoarbitrage.

Please note

These transcripts are a work in progress and the initial transcription occurred via automation, so transcription errors are not just possible but likely. Please report transcription errors by clicking the icon at the end of the stanza containing the error.

Episode Speaker Text
013: The Unfair Advantages of Being a Teacher Jonathan Mendonsa And the thing is you're doing all that. I mean and from what I understand you're just three or four years farther down that path. And one thing that you do that probably a lot of other people may not feel that they can do or are going to do. But when you find someone that really does it it obviously makes a cool story is this idea of geo arbitrage you are perfectly willing just to pick it up and move somewhere else and start. And that's I mean it's really cool.
013: The Unfair Advantages of Being a Teacher Millionaire Educator Well and that's the thing you know it's not that they look at this town. Oh that's a podunk town I don't want to go live there. They got all the retirement plans you need. They have nice people low cost of living. You might be you know a little piece of paradise for you especially financially so geoarbitrage, you know a lot of people they know that term from Tim Ferriss and they're thinking about going to some low cost country. Yeah you can do it that way. You can do it within your own county and you should you know keep that in mind if you have to jump jobs to get a better lifestyle arrangement. By all means do it because not only will it increase your savings possibly it will also give you an avenue to move your money to a better investment option. For example when I left those jobs I knew where I was going to be sending money to Vanguard and I did.
013R: Friday Roundup John - (voicemail contributor) And actually if you think about it you know we spent the majority of the episode of millionaire educator talking about 457 and your side of the ledger. But if you remember how he got his start it was Geo arbitrage as well so. And actually even a consistent theme throughout his career was Geo arbitrage although in some cases you know he was still inside the states. I think there's really something there maybe it's something we'll explore further. I love these stories of people that make unconventional choices and supercharge their path to FI by just doing things a little bit different and so. Tyler thanks for sharing that with us. I think our audience will find that useful. I love hearing stories like that. And until you send it to me I didn't know that Brad's brother had actually done something some or as well so that's story is case studies just all together of people that made that choice and used it to supercharge the path to FI. And that's not even counting the other tools that we unpacked with the 4:57 and the 4 3 be your side of the ledger type stuff so that's really cool. All right so next we have two iTunes reviews. First of all we're up to 26 reviews we got 23 of those are written reviews. We keep talking about it because it really is the number one way that we can get some exposure out there. But this first one was by Oddy Ann or Odd am sorry if I said that wrong. And they say entertaining relatable and powerful as someone who has been devouring content on financial independence over the past few months. I consider this podcast one of the best resources I have stumbled upon. It's great to hear what the pursuit of FI actually means in the daily lives of these two normal guys. Personally I enjoy their perspective on the importance of investing in relationships and experiences as a way not only to achieve financial goals but also as a way to flourish people. That is awesome you just made my day. Thank you so much for taking the time to write. That is super cool. I'm glad it's helping you. I love doing this. Brad loves doing this but that sort of feedback just makes it worth it.
018: Go Curry Cracker Capital Gains Losses Roth Conversion Jonathan Mendonsa Well I certainly hope so. Well we throw the bar out there you know as high as possible and then we just try to get close. You know. So you're you're not in the United States You're living in you know living the life you doing exactly what you say you're doing and your Geo arbitraging and where are you and Winnie at right now.
018: Go Curry Cracker Capital Gains Losses Roth Conversion Jonathan Mendonsa OK choose F-I fans. Welcome back to the show today. This is going to be episode 18. And let me start by introducing our guest today this is Jeremy from go Curry Cracker. Jeremy and Winnie retired in 2012 to travel the world and start a family and they did this while still in their 30s. On his blog Jeremy shares how they were able to become financially and location independent at an extremely young age. They also share the specific details of what a full life of full time travel and childrearing looks like and they include photos stories and the cost of living for each country they visit. This is Geo arbitrage at it's finest. His signature articles include how they got over $10000 of free travel to Europe how they plan to never pay taxes again which we're going to talk about today how they invest in their portfolio and why they will be renters for life. This is going to be a phenomenal episode we're going high level with you today and I hope you look forward to it.
019: Jim Collins Stock Series part 1 JL Collins Yeah WA state's one what I like and I can't name them all. But yeah there are there are a handful of states and you know you mean people get hung up. I have to live in California. California is a beautiful state. I mean I love traveling to California I have friends in California. I understand absolutely the deal with living in California. But Oh my goodness the taxes. And every state has has has beautiful places to live in. And you know you for whatever I mean it's your life. You know if you want to live in California or any other or New York which is a high tax state I mean that's that's wonderful do it. I would suggest that you appreciate that you are paying a premium in the tax structure to choose that place. And there are other states that there are also beautiful and great amenities that don't carry those burdens. You know I talked about Millennial revolution a little bit earlier. Kristi and Bryce you were in their early thirties. They started the blog last year when they retired in the early thirties. Being Financially independent and they are now doing what go Curry cracker with Jerry and Winnie are doing which is to say traveling around the world and living in different places. It's interesting because one of the things that they observed in that experience is that because they live part of the year in Southeast Asia which is so inexpensive you know they have enough money to retire when they quit their jobs. Well they didn't fully anticipate I think is that because of this geographic arbitrage that their cost of living would drop so dramatically. And then by extension their investment portfolio would have even more room to grow.
019: Jim Collins Stock Series part 1 Jonathan Mendonsa Yeah that's great. And you know both of those themes have popped up before we really see that with the high level thinkers in the fi community the library a very common theme. 1500 days. Passionate about libraries frugal woods passionate about libraries and also Geo arbitrage. Obviously you know go Curry cracker very passionate about Geo arbitrage millionaire educator very passionate about Geo arbitrage and I love that there's Geo arbitraged that's international. But then also there's the arbitrage that may just involve moving two miles across the border of your state to another state where it's a completely different tax situation. And I think there's a just and I hate to slow us down on this but there's actually six states that have significant tax advantages from an income tax perspective am I right about that Brad.
021R: May Case Study Jonathan Mendonsa Well what's I can actually get to 50 for real. I'll start working on the beach body video and we'll just we'll just set up with premium subscription you know follow your FI plan. I'm on it. You've got to set a goal and aim high shoot high. All right guys we've got a couple comments. Charlotte she checked in with us and she said Hi Jonathan and Brad I've enjoyed your podcast on the pillars of FI episode. I think you may have forgotten an important pillar that many in the fi space used in this is geographic arbitrage. This can be used in the U.S. or abroad. Many of your guests use this to find low cost living areas and sometimes no state income tax she says. Personally I am looking for the perfect location that I would enjoy living in with no state income tax. Thanks for your addition to the community I have benefited from this already. That is super cool and I think thats great feedback. I'm just trying to decide is it a pilla I love it. I absolutely love it. I think that it is something that really the FI community is able to use more than any other community just because of the way that we strategize our taxes we get to pick our tax bracket and we arrange our finances in a way to do it. I think if it's not an absolute pillar it's got to be right there right there at the door of being a pillar of FI.
023: Career Hacking ESI Part 1 Jonathan Mendonsa Very cool. You know we talk a lot about geo arbitrage and I can't help but feeling that when we come to the end of this story we're going to find out that it doesn't matter what the numbers say. Colorado might be the perfect place to live.
025: Wealthy Accountant Keith - the Wealthy Accountant All the bases covered. And I have to say that it's kind of strange that I am from Wisconsin though because coming from Wisconsin being the eighth highest tax state in the country and I'm going to read a blog on how to cut your taxes. I haven't understood this you know geographic arbitrage thing very well yet.
026: Physician on Fire Milo "Physician on FIRE" Andersson Yeah thanks and that kind of reminds me of you know I kind of alluded to earlier that where I live that's not the norm which is really great. There's not as much peer pressure but you know in medicine we have this geographic arbitrage I call it where the highest paying jobs tend to be in the places where there's less demand for people to live. So on the coasts and the big cities that's where the action is that's where people want to be. Actually they make less money. Whereas in most professions bankers lawyers tend to be more well-paid in those big cities in a lot of professions you have to live in maybe a six or ten different places if you really want the best jobs. Whereas in medicine if you live in a small town in the heartland you're probably going to not only make more money but also spend a whole lot less and have very little pressure because you can be a big fish in a small pond on a very you know modest lifestyle.
026: Physician on Fire Milo "Physician on FIRE" Andersson I mentioned this earlier and it's somewhat specific to my field but geographic arbitrage. So I live in the upper Midwest in a fairly small town and I'm compensated well and make a bit more than the average for my specialty even and the cost of living is much much lower than it would be living on the coast living in that big city. So I you know if I lived in a low tax state which I have before that would be even bigger arbitrage. But you can save an extra you know many tens of thousand dollars a year even hundreds of thousands or 800000 maybe for a physician living in the heartland versus living in San Francisco or in New York.
026R: The Friday Roundup Paul Case Study Final Wrap Brad Barrett Yeah and I think that geographic arbitrage just within the U.S. is something that's important. I know we've had a lot of people mention that in the Facebook group right Jonathan about about geographic arbitrage in the U.S. as a topic of conversation for the future. You know we're not prepared to fully discuss what are the top 10 cities in America to live in or small towns. That's not where I'm going with this but I think this is something we'd love feedback from the community. So if you have and it doesn't have to be of a medical profession it could just be in general like where do you live and what's the cost of living there. Is it a fun place to live. I know like Richmond I as I've said many times I'm from I'm from Long Island New York come from you know the suburbs of New York City like I'm not born and bred in Richmond Virginia. But but I love this place. I mean Lauren and I talked we wouldn't move back even if we had 20 million dollars. It's not about money anymore. Whereas you know it was when we moved down here. This truly was a geographic arbitrage decision to move to retirement for us. It was we could not have the life that we wanted on Long Island but we could in Richmond. And that really drove the decision. But now I know this is a really vibrant place. I mean it's I read articles constantly about how the beer scene here is the craft breweries scene and the local restaurants. I mean they're really getting on the map in terms of just the east coast certainly if not the U.S. and Richmond for a long time was this little place that nobody really cared about. Honestly and it's growing out so I know personally like I would put Richmond as as a really great place to live. It's very inexpensive but. But Richmond is one of probably hundreds of places that people would mention. So yeah I mean I know I'd be interested in hearing some of your options for geographic arbitrage in the U.S. So as always please send us e-mail to feedback at ChooseFI dot com or now we have our nice Facebook group which is even easier.
027R: Friday Roundup Jonathan Mendonsa I will be following their story with interest and I'll also be trying to develop based on the input that we get back from them and from people that have already made those first few decisions. One of the frameworks we need to develop is that transitional period of time that weighed in between 20 and 30 and actually fiery millennial would be a perfect guest to come on to explore that concept because she actually made a lot of those choices already and it's just crushing it. I mean she did the college acking she did the house hacking. She's got the job in the Midwest so she's got the arbitrage thing going on it just at every single level. She's crushing this game so Fiery. Millennials will link to her blog and the show notes that is a guess that we plan on having on and I think she can help us flesh out what this path to FI looks like. While you're in your 20s and you're all this essentially right now the single path to Fi right Brad.
027R: Friday Roundup Jonathan Mendonsa The other half of this is just the impact of teachers and people's lives so millionaire educator was one of our first guest is one that we're super excited that he actually has offered to also come on and be a part of our team and be an in-house expert really helping us handle case studies dealing to some degree with pensions but also mostly with the 457. He has a lot of experience dealing with the situations that teachers face and those scenarios he's also really good at GEO arbitrage especially inside the United States so he's going to be an in-house expert helping us really navigate some of these lanes that are maybe outside of Brad and my comfort zone. And he also is in a unique position to help us with second generation fire. As a teacher but also as a parent that is trying to pass this stuff along to his kid and perfectly timed as we were about to do this. We actually got a message from one of millionaire educators former students. I think he's an 18 year old out of Georgia and he's interested in pursuing this path for him and his buddy. Can you imagine the power of soaking up this idea in your teens what that means for you. Even if you are in your teens you're a first generation fire baby. That is incredible. The timeline that you have now you have these ideas locked up before you lose that decade of your 20s you're just going to crush this game. So Brad tell us a little bit more about that message you got from Austin.
030: The Side Hustle Jonathan Mendonsa And I'm sure most of our audience picked up on that right away. But for the rest of us the fact that you are at FI frees you up to get that flexibility because you are not your income is no longer tied to to a job. It's now coming from your portfolio or it's coming from your side hustle or it's coming from one of these other income streams that you've created. So you have that flexibility to make decisions like that and I think that goes back to the fully funded lifestyle change that we talked about was slowly sipping coffee. It's incredibly powerful and I think honestly Brad we need to make it a priority to get a solid Geo arbitrage episode under our belt within the next within the next six months.
030: The Side Hustle Alan Donegan So actually this one. I love traveling to the States especially when the dollar to pound right is good. Which is not so good at the moment because we're having a few problems with our government. But back in the day it was two dollars to the pound and I would travel out to see you in America and it was like everything was 50 percent sale. Jeans were so cheap clothing was so cheap I would travel to America and I would stock up on clothing and it was incredible. And that was my opening foray into the world of geo arbitrage which is where the money you earn is worth different amounts in different countries. So when I travel like we went to Ecuador November last year and the money we earn in England is worth 20 times as much in Ecuador. And the money you earn in your different countries can then be used to leverage to get an even different lifestyle or cheaper lifestyle or a different lifestyle in a different country. And Jim Collins really hit me with dates when he was saying the only true security in life is flexibility. So if the market takes a dip and you don't have as much money coming in. Well move to Thailand for a year it will half your expenses and using that combination of geo arbitrage and things being cheaper in different countries and your money being worth different amounts at different times gets you true flexibility of purchasing power. And that has changed the way I look at things and I'm sure will change where I operate and how they operate in the future.
032: The Milestones of FI Jonathan Mendonsa You're in fantastic shape. And now this is where you use the same amount of creativity that you've been using this whole point to turn up your hustle and either go back to work. Oh what a horrible thing. Right. Everybody else is going to work this whole time. Now it's an option. You're going to go back to work for a short period of time. Or you can start using some of the other tools that you have in your tool bag like the side hustle or geo arbitrage right.
034: The Stock Series Part 2 Jonathan Mendonsa Awesome. We'll be forced a mike on you this time and we know you can be doing some geo arbitrage soon so hopefully we found one small enough that you'll be willing to put it in the bag and carry it along with your very limited personal belongings on this trip.
034R: What s Your Risk Tolerance Jonathan Mendonsa Yeah I don't want to come back to that idea of rebalancing but just because where you get was so valuable I think we should talk about that. OK. Volatility is not just psychological It's also financial and it involves flexibility. That's the key here and that's why when we started this episode we talked about the idea of flexibility in reducing your lifestyle reducing your core expenses. Jim gave us the perfect analogy for the difference between the person that has the 60 or 70 thousand dollar lifestyle. But they can cut it down to 30 if they need to as opposed to the person that has a $40000 lifestyle that they need every single penny of that in order to maintain that lifestyle. And so those are the two different situations in which the person has more flexibility and because they have more flexibility they can tolerate more volatility. And if you have that flexibility that allows you to accept higher levels of risk because you are able to pivot with what the market does and make adjustments to your lifestyle. And that once you bring all those tools together that's going to be what's going to allow you to determine your asset allocation and your ratio of stocks to bonds. The more volatility you can tolerate the less conservative you need to be. I could talk about this much more. I hope that that's enough to communicate the point. But when you have this person or persons over the age of 60 maybe 70 80. Their ability to scale their lifestyle to reflect the returns of the market that is going to directly impact how much volatility they can accept and if they have no margin in their life they have nothing that they can adjust. That means that they cannot accept as much volatility which means that their asset allocation would have to be more conservative. 70 30 60 40 etc.. They cannot accept the volatility. They need more security. Bonds provide the stability and they're sacrificing returns and hopefully they already have enough there that that is going to provide what they need and they don't need to accept any more risk. But it is that ability to accept volatility that allows someone to accept more risk. And then as a result of that have a higher stock allocation. So let's talk let's go back to our initial example here and talk just for a second about what rebalancing would look like. And in many cases keep in mind that you're doing this rebalancing when possible inside of your tax deferred or tax advantaged vehicles. That way you aren't responsible for paying or having to worry about capital gains on this money. So with the example that we just spoke about we started with someone that had 75 25 so 75 and stocks 25 percent bonds the market crashed by 50 percent. The bonds remain relatively stable. And then when you do the math on what their new allocation is based on their present situation they are now down to a 40 percent in bonds and 60 percent in stocks now because they want to maintain a certain allocation in this case. JL decided on 75 25 based on his own current risk tolerance. And as you know he's into Geo arbitrage. He has a little income coming in the side he's perfectly willing to adjust his life to current circumstances. It makes sense to me that he can absorb a little bit more risk. He is going to do some rebalancing and he is going to do that inside of his tax advantage vehicle so what he's going to do is he's actually going to sell some of his bonds which are weighted at 40 percent. So he is going to sell 15 percent of his portfolio and he's going to take that from the component that was in his in his bonds and when he sells that he's going to take the proceeds from that and then purchase additional stocks which is because remember going back to this first part the stock market's on sale. It just crash 50 percent. He is able to now purchase more than he was before it crashed. And that is then allowing him to get his asset allocation back into line. And it is allowing him to then have more of a market for less. And so when the market does its thing and it goes back up he is able to enjoy that ride as well. So he has a play there and it works for him because he has some margin in his life that he can accept that volatility and ultimately end up getting farther ahead. OK. So that was all related directly to the episode that we did on Monday. I hope that between these two maybe you listen to me a couple times but hopefully that makes sense and one that we presented in a clear logical manner. I think to maybe round this out. I know you have a couple of practical examples that you're personally aware of that maybe you could share with us as well.
035: Sequence of Return Risk ERN Brad Barrett All right. Number three your favorite life hack. It would have to be geographic arbitrage because I milked it every way I could so I was going to college for free in my home country then coming to the U.S. for grad school. This is where the good places are to go to grad school for economics. There was a very lucky decision Geographic arbitrage So we plan to move out of state and move to a cheaper location with lower housing prices and lower income tax hopefully no income tax. Geographic arbitrage is everywhere. Everybody can apply. Everybody should apply it it's a very powerful tool.
035R: 4 Percent Rule The Friday Roundup Jonathan Mendonsa And pause on that. That is ultimately what is going to dictate. This idea of what your safe withdrawal rate needs to be it's what is your definition of success I believe and Ern can correct me if I'm wrong. But in many cases Ern is talking about preserving capital and he is basically saying that if you are wanting to preserve your capital and not just your capital but your capital in inflation adjusted dollars his federal rate is 3.3 percent and you know when he adds in others idiosyncratic factors social security possible pensions that sort of thing. It goes back up to like 3.5. But if he's considering that success rate to be preserving his capital in inflation adjusted dollars you can understand why he's going to need a lower safe withdrawal rate for that. Conversely if you are not as concerned about preserving capital or specifically preserving capital in inflation adjusted dollars then potentially you're safe withdrawal rate could be a little bit higher. Also that flexibility component Ern landed on. He was talking about geo arbitrage as the tool. All the other stuff that we talk about doesn't go out the window. You need to realize the more tools that you have in your bag the ability that you have to pivot with what the market sends you all those dictate what withdrawal rate you're going to end up landing on. And the other fact here is that one of the things that makes this so dicey is these tiny margins with which you're working. And also what you're what you're defining as success in many cases you may only be moving the safe withdrawal point by a tenth of a percent but depending on your idea of flexibility in whether or not you're going with fixed or percentage based withdrawals the difference can be hundreds if not millions of dollars when you're projecting out down the road. And depending on on what the market actually ends up doing. So this is a very nuanced game and trying to put this one dimensional number on it makes it extremely difficult. So our goal is not to say this is the one number but we'll let you understand what the different factors are that you need to consider so that you can pivot with your own unique circumstances and timeline.
037: Playing With FIRE Documentary Scott Riecke Yeah. So the thing is is whether we moved a Washington or not. It was it's really about this geo arbitrage idea and that was something had me moving my wife out of this place that is so ideal and perfect for her was not going to be easy and and you know it's not absolutely necessary by any means but for me I started thinking about it and I realized OK we're paying an insane amount of money in rent. We have two full time jobs. We need to pay a nanny to watch our child. Now I'm paying somebody to watch my kid when I would rather watch my kid and I'm going to work to raise the money necessary to pay that person. So half of my day is spent just working so that I can afford to have somebody else watch my my child.
037: Playing With FIRE Documentary Scott Riecke Yeah and geo arbitrage was for me the easiest first step because we don't mind moving or at least I don't being it being a Navy brat I moved like 13 times before I got to high school. And so I started looking around and realized and I'll share some some details with you guys. I realized that if we moved out of the state of California and were able to continue to earn the level that we are earning we would save close to $20000 a year just by moving to another state and I did a little calculation and if we were to invest that 20K into investments over 10 years with a 5 percent rate of return we'd have 251,721 dollars just for moving.
037: Playing With FIRE Documentary Scott Riecke Let's go Tim Ferriss. I did a little research about I believe he. He actually coined the term Geo arbitrage.

Stay Connected