Cheapest Places to Live
Sunset in Cappadocia, Türkiye
Finding the cheapest places to live isn’t as simple as a single list. Thus, this page does more than that - it helps you find the place that minimizes your cost of living while increasing your income to maximize your savings - and allow you to retire early - occasionally within only 5-10 years.
Determining the Cheapest Places to Live
Income and Cost of Living are the two major factors in determining what places are the cheapest places to live.
Income is what an employer pays you for the work that you provide, while cost-of-living is the amount of money that you need to spend in each area to cover your basic expenses, such as: housing, food, taxes, and healthcare.
For quite some time they have been glued together - if you’ve wanted a very high paying income, then New York City, London, or other large cities have been the places to go, and with them have come higher costs of living.
Making $100,000 in New York City 'feels like' only $36,000, according to new study.
Basic things, like rent and food, are generally more expensive in these cities. There really wasn’t much that you could do to separate the two, until recently.
INCOME - COST OF LIVING = DISCRETIONARY INCOME
Before we started traveling, I was earning $94,000 per year, but the current cost of living for our family in Kissimmee, Florida would be $57,500. This would leave us with $36,500 in discretionary income.
“Discretionary income” is just a fancy way to say “money that we can spend or save any way that we want. It is money that is left over after all the bills have been paid.”
Suppose a different company offered me a job paying $65,000 in an area with a cost of living of $20,000. Do you think that I should take the job even though it pays 31 percent less?
To make that decision it is important to determine what your discretionary income would be from each job - how much you end up with at the end of the month after all of your basic expenses are paid.
In the example above, I was able to save $36,500 each year at that job - but, if I were to take the job offer that was paying 31 percent less, I would be able to save $45,000 per year. That means that I would save $8,500 MORE per year even with the lower income!
So, the trick is to find the area that offers you the highest DISCRETIONARY INCOME - not simply the highest income or the lowest cost. So, let’s try to find a place like that for you!
Cheapest Cities to Live In
View of Table Mountain from the Centenary Tree Canopy Walkway - the “Boomslang” - at Kirstenbosch National Botanical Garden in Cape Town, South Africa
The general idea has always been to find the location that ends up giving you the most discretionary income. There are sites that let you compare the cost of living in your current area with other areas around the country, such as NerdWallet’s Cost of Living Calculator. This tool will help you find the cheapest cities to live in.
However, these calculators don’t show you the going rate for employment in each place, meaning that you will have to do a little research to determine that piece of the puzzle on your own. Plus, the prices they use generally seem lower than they really are - and they have a disclaimer for that: “Do these housing costs seem low to you? That's probably because we're measuring average costs for the larger metro area, not just the city limits.”
However, if you were able to compare the income levels for your profession at each of those places, you’d be able to figure out - and take advantage of - the differences in the discretionary income that you’d receive between those cities. This would allow you to know what the cheapest cities to live in actually are for your specific profession.
For example, by using the Cost of Living Calculator, I found that one of the cheapest cities to live in is Knoxville, Tennessee. It shows that if I moved from Kissimmee to Knoxville, my cost of living would decrease by 10 percent, to about $51,750.
However, when I look up the pay rate for the job I had in Kissimmee and compare it to what I would get paid to do that job in Knoxville it would be 6 1/2 percent lower at $87,930.
This means that that my discretionary income would become $36,180 ($87,930 new salary minus $51,750 cost of living) - a decrease in my discretionary income of $320 per year!
If you spend a lot of time comparing places, you may end up slightly better off. However, there are better options we can choose to make it easier!
Cheapest Country to Live In
Breakfast view from the Kar Hotel at Uzungöl Lake in Trabzon, Türkiye
If we were to consider working overseas as an Expat - a person who takes a job that is offered in a different country and resides there while doing that job - we may be able to save even more.
This was the only real way to take advantage of differences in the cost of living in other countries in the past - and something that we can still do. For example, Jenny took a job teaching English in Japan for over 6 years - where the Japanese Yen is about 41.7 percent undervalued compared to the US Dollar, meaning that the cost of living there is much more affordable, but it is still not the cheapest country to live in!
To check the difference in cost of living between countries you could spend some time learning about the Purchasing Power Index, but we really like using The Big Mac Index because it is much more understandable.
Finding a country that is more undervalued than your country allows for greater purchasing power - meaning that you’ll receive more for the value of your money by living there. That could mean that you could buy 2 Big Mac’s in one country for the same price that it would cost you to buy just 1 in your current country. This method applies to just about everything, though, not just Big Mac’s!
For example, Turkey and Malaysia are in the running for the cheapest countries to live in. We know that’s true, because we’ve lived in both of them! Let’s just say that everything felt like it was always on sale at 50-75 percent off in each of these countries. Incredible!
So, should you just move overseas to a country that has a better cost of living? Not necessarily. Again, we run across the issue that pay rates might reflect similarly and you may not end up much better off by doing that.
If only there was a way to get around this problem!
As it turns out, with the boom of remote work that has come from the coronavirus pandemic, it is now very possible to separate the location where you are getting paid from the cost of living for the place that you live, and supercharge your discretionary income!
Remote Jobs
Working Remotely from Afiniti Residences Medini in Nusajaya, Johor, Malaysia
Imagine for a moment that I kept my $94,000 per year job and worked remotely in Malaysia, which has an annual cost of living of only $20,637, then we would have been able to save $73,373 per year instead of just $36,500 - a MASSIVE game changer to how quickly we could reach financial independence, making it possible for us to retire early much sooner than we originally planned.
Remote jobs are ones that allow you to essentially work from home, or work from anywhere, without the need to come into the office. This means that you’ll be doing all of your work from your computer - so, if your current position isn’t flexible enough to be 100 percent remote, then consider checking the highest earning remote jobs page, or our Nomad Guide, to learn some new skills to find a remote job, or even get a few ideas of other options.
Seriously consider the example that is given above and how much discretionary income is available. Since the FIRE movement started in 2010 (Financial Independence, Retire Early), many people have been transitioning to the computer-only lifestyle as Digital Nomads while others have been lucky enough to have been traveling with remote jobs.
These people have been reaching financial independence - and retiring - within only about 4-10 years. However, since 2020, remote work has become much more common - many employers are realizing that they have to offer remote work to attract employees. So, it isn’t super difficult to find remote jobs anymore - you just need to know where to look.
We recommend the Remote Coding Bootcamp as a means to quickly train for, and land, high-paying remote jobs.
Using remote jobs as a means to maximize income while also minimizing your cost of living expenses - by splitting the location of your income and your costs of living - is commonly referred to as “Geographic Arbitrage” in FIRE communities.
Geographic Arbitrage
When you take advantage of lower costs of living - whether by finding the cheapest country to live in or the cheapest cities to live in - while still keeping your income relatively the same, you are participating in geographic arbitrage and supercharging your discretionary income.
With a remote job, you can seek out these lower-cost places to live in and then pocket the cost difference between those places and the actual physical location of your job. Remote jobs are not required for geographic arbitrage though; You could also do it with other sources of income such as revenue from a digital business, or from social benefit payments like social security, NIS payments, or disability payments - it works just the same. All you need is a regular monthly income to get started.
You can get a lot out of short-term geographic arbitrage if you’re focused. It is an excellent way to pay off debts super quickly - like medical debts or student loans, as well as a great way to keep costs low while starting up and running a business over the first few years, or even for reaching your savings needs for retirement within only a few years.
Using geographic arbitrage for the long-term can offer the same benefits as using it for the short-term, but you can also adjust your lifestyle more as you don’t have a specific time horizon required to meet your financial goals. In other words, you can both meet your financial goals AND improve your quality of life at the same time.
Imagine making an income of ~$85,000 per year while your cost of living is averaging $29,000 per year even while you’re traveling the world. That is the lifestyle that you can achieve with geographic arbitrage.
We weren’t offered remote jobs when we started traveling full-time in early 2018, but we did have a fairly steady income that was being produced by our investments. That investment income proved to be more than enough to live on while traveling the world and staying in places like Singapore, Malaysia, Thailand, Bali, Egypt, and Türkiye.
Plus, as we keep our personal budget fairly low, we still have plenty of excess discretionary income to save while living a better quality of life.
Better Quality of Life
A farm-to-table meal at the Fustanella Farm just south of Tirana in Albania
You can look at geographic arbitrage solely from the standpoint of reaching financial goals, but you can also look at it from the perspective of personal adventure. You likely won’t have a work visa to take a job inside of the countries that you go to, so you may only be able to stay for 30-90 days in each country (a few are 180 days or longer). Many countries now offer “nomad visas” that are good for a year or longer as well.
Either way you’ll need to decide where you want to go and what you’ll want to do once you get there. Your plan will end up bringing you through many different countries, but remember that you’ll be traveling and working at the same time, so we recommend planning to stay in each spot for at least 1 full week for each 1 day of exploring that you want to do.
Setting yourself up with 4-12 countries per year can also mean that you’ll be having the adventure of a lifetime. Spending three months working from beaches in the Greek Islands, a month in Cairo with a Nile Cruise, three months working from a seaside apartment in Türkiye, and the next five months seeing the wonders of Southeast Asia will not only save you money, but give you some incredible life experiences that you’ll never forget.
Plus, you’ll be able to stay in many unique and interesting places - quality 2-3 bedroom modern-standard-of-living places - at the same price that you’d be paying for a studio apartment back home. You’ll be eating fine dining more frequently than you currently are, and you’ll get the same quality of medical and dental care at roughly 80 to 95 percent less than you currently pay. We get all of these things included within our annual budget even as a family of 4.
Our standard of living has greatly changed, and we don’t want to give that up now that we realize how much more we get while traveling the world.
Retire Early - Retire Overseas
Here’s the deal, even though we aren’t technically retired yet, we certainly feel like we are already retired! Who else gets to wake up in a different place every few months and see something new and amazing so often?
Geographic arbitrage was designed to help you save money more quickly in an effort to retire early, but they never said that you’ll actually feel like you’re retired while doing it. That’s one of the reasons that we call it REmotiFIRE, and put the “RE” before the “FIRE,” as you will be living as if you were retired early even before reaching financial independence.
It’s an incredible experience that is hard to fathom in society today - that you can actually feel free the entire time and not just after you retire.
Nevertheless, you will still be saving so much income while working remotely and traveling the world that you’ll be able to reach financial independence and retire much earlier than you would have been able to do without it.
So, if you feel like your adventures are over once you reach financial independence, then head back with all of those savings and retire at home.
However, if you are like us, then you may find that the lifestyle itself will change you, and that “home” now exists in a number of different countries around the world - meaning that it just doesn’t make sense to stop going “home” to these different countries while your average costs of living - across these countries - forever remain below that of your original country alone.
Who knows, you might even decide to retire in one of them permanently. We happen to be planning to retire in New Zealand!
Cheapest Places to Live - Choosing a new home
If you’ve decided that this is the path for you, then the first thing that you’ll want to do is to research your options. Our recommendation? Check out Remote Year for some of the best community you can get while traveling the world with other like-minded remote workers, plus they set up trips and accommodations for you just about anywhere in the world for as low as $549 per month. It’s simple, and affordable.
Alternatively, join Nomad List to get access to community events and information in every location.
Feel free to contact us if you have any additional questions.
