Does Geo-Arbitrage Really Work? Living Expensively in a Cheap Country

Is a cheap country a cheap life?

It sounds like the same question. It isn’t.

Before I move somewhere, I do a bit of research. Rent, a coffee, a week of groceries. The numbers usually look great, and a quick sum starts forming in my head: living here will cost half of what it costs at home.

When I went to Poland, that sum was in my head too. I was moving to a cheap country.

At the end of the month, it didn’t come out at half. It didn’t in the countries after that either. It never does.

I was living in a cheap country. My life wasn’t cheap.

There’s a name for the idea: geo-arbitrage. Earn in a strong currency, live in a cheaper country. Tim Ferriss made it popular with The 4-Hour Workweek in 2007.

On paper, it’s flawless.

The problem? Life doesn’t happen on paper.

What breaks the math

Not everything is cheap by the same amount

A “cheap country” isn’t one number.

According to Eurostat’s 2025 figures, Denmark is the most expensive country in the European Union, 40% above the EU average. Bulgaria is the cheapest, 37% below it. But that gap isn’t the same for everything you buy.

Eurostat says it plainly: prices for services differ across countries much more than prices for goods, because services are mostly labour, and wages differ hugely from country to country. For information and communication equipment, the gap within the EU is much smaller.

So in a cheap country, the haircut, the restaurant and the cleaner really are cheap. If your laptop dies, the new one costs about the same everywhere. Imported goods, familiar brands, even some of the things on the supermarket shelf are not cheap just because the country is.

The short-term premium

A local renting a flat signs a yearly lease, moves into an unfurnished place and pays the local price.

You arrive for one, three or six months. You want it furnished, with Wi-Fi, ready tomorrow. That flat isn’t priced for locals. It’s priced for what foreigners are willing to pay.

Looking for a flat by the month in Tbilisi, it was the same.

The rent you found in your research is usually what a local pays. What you pay is a different number.

Living like a tourist

The first weeks in a new city are all discovery. Eating out, walking the streets, trying a new place every day. That’s the joy of travel, and I don’t want to give it up.

I also have a café line. Working from home all the time kills my motivation — I need change — so cafés are a kind of office for me. I keep trying new ones, always looking for quiet places with comfortable seats. For someone who works from home, that line is zero. In my budget, it’s written every day.

Moving itself

Flights or buses. The ride from the airport. A new SIM card. The things you buy for the flat in the first week. Sometimes a deposit.

None of this shows up in a country’s cost of living. All of it gets paid again every time you move.

Exchange rates and fees

You pay by card in a cheap country too. The card’s margin, the ATM fee and “Would you like to pay in your home currency?” are waiting there as well. I wrote about them in detail in my previous post.

Which currency do you earn in?

Geo-arbitrage only works if your income is in a strong currency.

Part of my income is in US dollars, part in Turkish lira. On the dollar side, the math can work the way it does on paper. On the lira side, in most of the countries I go to, it flips: the cheap country isn’t that cheap when you look at it in lira.

One month in numbers

Let’s not use my own numbers. Let’s use a round example. Real figures depend on the country, the city and how you live; the point is to see the size of it.

Say you spend 1,000 units a month at home. The country you’re moving to is 40% cheaper on paper. The same life costs 600 units.

Now add real life:

• The short-term rent premium: +100 units
• More eating out, and cafés: +80 units
• Card margins and fees, about 3%: +20 units

600 + 100 + 80 + 20 = 800 units. Still cheaper than home.

But there’s one more line: the move itself. Say travel and the first week’s setup cost 300 units every time you move. Those 300 units are shared by the months you stay:

• Stay 1 month: 800 + 300 = 1,100 units. More than home.
• Stay 3 months: 800 + 100 = 900 units. 10% cheaper.
• Stay 6 months: 800 + 50 = 850 units. 15% cheaper.

A country that’s 40% cheaper on paper costs more than home if you stay a month.

Geo-arbitrage works. Just not as much as the paper says, and only if you go slow.

What I do now

I stay long, not short. I prefer stays of one, three or six months to short ones. The more months the move is shared by, the more the cheap country is actually cheap.

I look at the lines, not the “cheap country” label. In the early days, before choosing a country, I checked rent, groceries and eating out one by one, strictly. Now I can estimate them better. But I still look at the same thing: what my life is made of, not a country’s overall average.

I keep cooking. I eat out, and I cook at home. Eating out is the joy of travel. Cooking is what keeps a cheap country cheap.

I keep each country’s spending separate. I only see what a country really cost me when everything I spent there sits together. That’s also why, in Nomad Budget, the country comparison is calculated from your own spending rather than from a generic list of cheap countries.

I still do that quick sum before I move somewhere. With one difference: now I add the rent premium, the café and the ticket next to it. A cheap country can still be cheap.

I wish you slow travel, and a life that costs what the paper promised.

Sources

• Eurostat, Comparative price levels of consumer goods and services, Statistics Explained, 2025 data
• Tim Ferriss, The 4-Hour Workweek, 2007