Blog Post Focus
This blog post will discuss the idea of geoarbitrage for residents. The cost of living varies dramatically in different regions and even can vary significantly in a local area. Residents are very limited in their ability to geoarbitrage, but can awareness may enable improved finances all the same.
Personal story—Living In Two Different Regions of Different Cost
Going through medical school and internship I had a relatively inexpensive cost of living. Then, for residency I matched to a program in the city and my cost of living dramatically increased. The first year in the new city was particularly challenging as my rent was so high. The remaining years though I found a much cheaper location that still had what I wanted and needed.
Geoarbitrage – What Is It?
Geoarbitrage is basically the recognition that different areas have different costs of living and one may be able to make their money go further by living in certain areas compared to others.
Certain places require a greater minimum expense than others. In general, more densely populated areas are cheaper than less densely populated areas. In the United States certain states are expected to be less expensive than others and certain countries are cheaper to live in than others.
Geoarbitrage For Residents
Residents are bound for the most part to the MATCH process. They interview with certain programs and rank them. Then, wherever they have ranked they have the chance of matching and going to that area.
Residents then may or may not experience geoarbitrage so much by choice, but may experience it by chance and then practice it out of necessity. For example, I lived in an area of the country with relatively cheap rent compared to the rest of the country. Then, I matched to a city with among the most expensive rent in the world. It was jarring to pay so much of my paycheck toward rent.
A Little More About Me
On one hand, I initially was forced into one aspect of geoarbitrage—I matched into an expensive area. An area much more expensive than I ever expected to live during residency. My first apartment consumed a large amount of my paycheck and required that I live very frugally otherwise.
I had certain requirements for an apartment and throughout the first year I found a suitable replacement apartment. Something that met all my requirements and was also much less expensive than my first apartment in the city (but, still far more expensive than I had ever expected to pay for an apartment prior to moving to the city!).
Practical Geoarbitrage for Residents
For residents, the practical geoarbitrage is a local one. Within the area one has matched one can look for less expensive areas that meet all requirements. Regardless where you match there will still be more expensive areas and less expensive areas. Less expensive areas can be safe and reasonable and one can get just as much benefit from staying there than an equivalent area for more money.
The farther one is willing to move from their hospital increases the chance to practice local geoarbitrage, but this has a practical limit. It may not be practical to move far away from an expensive city because the commute could be so stressful as to remove any gains or so expensive with fuel to remove financial gains.
Concluding Thoughs—Residents are Limited to Local Geoarbitrage, Which Can Still Make a Big Difference in Cost of Living
Each neighborhood, each suburb, each borough, each city has different opportunities and cost of living. Regardless which program you match to and where it is located you can search the surrounding areas and compare pricing.
See what areas have what you need within a range from the hospital suitable for you. You may be able to find more reasonable housing than you would expect by comparing a few neighborhoods or nearby communities. And ultimately, this may give you more financial breathing room. One can often find greater value by looking into more markets.
For anyone interested in the idea of geoarbitrage in a more general sense, checkout the following post by GoCurryCracker!
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NOTE: These are just my thoughts and should not be used as financial advice.