050 | Domestic GeoArbitrage | Freedom is Groovy

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In this podcast we discuss domestic geographic arbitrage with Mr. Groovy from Freedom is Groovy.

1500 days
In Today’s Podcast we cover:

  • A conversation with Mr. Groovy from Freedom is Groovy to discuss domestic geographic arbitrage
  • How Brad made a similar decision to Mr. Groovy to move from Long Island to a lower cost of living area
  • How Mr. Groovy was a “financial moron” until he was in his 40s until Mrs. Groovy found Dave Ramsey
  • What did their financial lives look like before finding Dave Ramsey and the concept of an emergency fund
  • How creating a budget and putting it on paper was a game changer for them
  • What changes did they make after creating a budget?
  • Their debt situation: They had about $30,000 in consumer debt
  • How they created a “transition fund” to help them move off of Long Island to a lower cost of living area
  • They managed to pay off debt and save $80,000 in cash for this transition fund by 2008
  • Their families were supportive of their move off of Long Island
  • The peculiarities of living on Long Island and getting off the island
  • How Mr. Groovy’s cost of living shaped up on Long Island and how the property tax burden is significant there
  • What other costs are smaller when moving out of a high cost of living area besides mortgage and property taxes?
  • How the Groovy family bought a $70,000 condo in Long Beach in 1997 and sold it for $340,000 in 2006
  • They decided to move to North Carolina and happened upon Charlotte where they ultimately purchased
  • They bought a condo for $88,000 in cash in Charlotte and banked nearly $250,000 from the sale of their home
  • Their dollar cost averaging strategy to enter the stock market
  • How Mr. Money Mustache’s article The Shockingly Simple Math Behind Early Retirement change their outlook on life
  • In 2014 they were basically at the 25x expenses definition of Financial Independence
  • Even though the housing situation helped them significantly, they still would have hit FI by moving to a lower cost of living area just because of lowered expenses
  • Takeaways and advice from the geographic arbitrage decision
  • How Mr. Groovy’s family wound up following him to Charlotte
  • How Brad’s brother did both US and international geographic arbitrage
  • Did Mr. Groovy and Brad have “freak out moments” after making the move?
  • Hot Seat Questions

Links from the show:

Books Mentioned in the Show:

3 thoughts on “050 | Domestic GeoArbitrage | Freedom is Groovy

  1. As you well know, I listen to every episode, but rarely comment. However, I wanted to let you all know that I loved this discussion! We are taking a bit of a different approach to geographic arbitrage. We’re actually going from an on paper low cost of living area to a higher one. We’re also moving away from both my wife’s and my families.

    We tied together a couple of ideas you all talked about, but also challenged some of our own limiting beliefs in making this decision.

    First, we found that by tracking our expenses we realized that looking beyond housing costs to total cost of living, we will actually get to do more of what we want on a day to day basis, and spend considerably less overall by moving away and living in the more expensive location. I wrote about that in detail here:
    https://www.caniretireyet.com/designing-home-ownership-retire-earlier/

    We also challenged our limiting beliefs that we would “never see our families again”. This was the part of the discussion I’ve never heard anyone discuss before and thought your conversation was awesome. It was great to hear your, especially Brad’s, experience that you actually spend more net time and better quality time with family as a result of your decision to move away. We came to this same conclusion, though in our case was still wondering if it was more reality or wishful thinking as we won’t actually make our move to our new house until next summer.

    Thanks to all of you for sharing your experiences.

  2. Hey, Chris. Thank you for your kind words. Really appreciate it. And thank you for the link. I’m putting it on this week’s reading list. Finally, I really respect those who can achieve FIRE in a high-cost city or state. Mrs. Groovy and I could probably have pulled it off on Long Island had we had back in 2006 the personal finance knowledge we have today. But back in 2006, we were way too ignorant. And domestic geoarbitrage proved to be a godsend for us. I think the important takeaway is that FIRE can be achieved in a high-cost-of-living area, but the margin of error is terribly small. If you have goofy personal finance habits or a modest of poor income, you’re sunk. Thanks again, Chris, for joining the conversation. Awesome contribution.

  3. I enjoyed this episode as usual but there is an obvious option in between geo arbitrage from Long Island to Charlotte or Richmond vs South America. Consider a truly low cost rural state like Nebraska or Arkansas. While you may not realize it Charlotte and Richmond are still crazy expensive compared to much of the US. Plus you can escape traffic and crowds entirely in rural America in addition to easy access to fresh produce and uncrowded outdoor recreation. You could double your FI over again in a rural area vs metro Charlotte. Just saying. We have less stress and cleaner air and space to breath it without the crowds.

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