The Economics Of Expatriation

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March 23, 2015 by Liberty

I’ve recently returned home from my “exploratory” journey around the world (well… one region.) I’ve been looking for a spot I’d like to settle down and make my new home. I’ve checked a few more possibilities out and I’m starting to narrow down some of those options. During this trip, there is one factor that stuck out like a sore thumb.

I first started looking into expatriation years ago. I was too young (and way too broke,) to put it in the realm of possibility. It wasn’t until the last couple years that it became a reasonable possibility.

I’ve taken a few trips to different parts of the world so far. I’ve also had some conversations with people much more experienced in expatriation than me. I finally feel like I’m starting to learn some of the most important lessons.

Market Equalization

I remember reading the following about the stock market. You can assume that any investment system you’re taught stops working just about the time you’re taught it. As soon as an exploit for the market is found, it’s instantly destroyed by the people taking advantage of it. Suddenly, it’s no longer an exploit.

I was in Asia when I first travelled through a dictatorship. There was a king. There were pictures of this man posted everywhere. Occasionally you’d even see people bowing to the pictures. Randomly in conversation the people would bring the king up and speak positively about it. For someone not exposed to that before, it’s creepy.

What’s my point?

As much as people like to think there is this perfect country that’s cheap, growing, and culturally advanced, it’s just not true. All countries are relatively primitive in certain respects. This is to be expected.

If there was a significantly more advanced lifestyle out there, it would have immigrants competing to be allowed there. Quite frankly, we probably would never get the privilege of being allowed there (unless you happen to be significantly more successful than me.)

Sure, there are some countries out there that rich people tend to go to. That would be a wonderful lesson to learn assuming you’re rich. Statistically speaking though, you’re probably not going to get to move to your low taxation dreamland.

That definitely doesn’t mean expatriation is a bad option though.

Why You Move

You shouldn’t expatriate from your home country to find paradise. You should expatriate from your home country to find your paradise.

Everyone likes low taxation. That means, when you’re looking for your new paradise with low taxation, you’re probably going to have a ton of competition. Prices are going to be higher. You’re definitely going to have to pay the extra price for that privilege of low taxation.

What if, on the other hand, you have a love for cold weather? (Yes. You must be some kind of freaky but lets pretend.) Most people don’t want to live in a cold environment. People are competing for hot weather paradises but there are plenty of places in the world that are dying to get expatriates to their jacket required paradise. Prices are generally lower and often there are interesting options for expatriation.

Your unique preferences can get you significantly farther ahead than looking for the cliched goals of expatriates. From an average person’s perspective, the nicest places in the world, aren’t all that different from each other. Sure, they may speak a different language but they’re probably just as insane as the country you’re leaving behind. Fortunately, you’re not the average person.

You can use your personal preferences to find the place in the world that you prefer dramatically to anywhere else.

(This all being said. This is a ridiculously complex subject. Most countries make citizenship a real challenge. Sometimes you might want to settle for semi-permanent tourist status or another complex arrangement. Many people live in foreign countries just doing regular border crossings for legal reasons.)

The Costs

One former attempted expatriate taught me a rather scary lesson about expatriation.

Most people interested in expatriation underestimate the risks involved.

You can save a fortune by living in another country. There are countries that many people retire in for less than a thousand dollars a month. No, that’s not even a beans for dinner lifestyle. That’s a comfortable condo in a tropical region with good eats daily. The daily costs are cheap but the unexpected costs add up fast.

Expatriation often means you’re thousands of miles from home. Any trip you need to make home is going to be a major hit to your budget. Sure, you can plan for a trip or two home a year but unexpected trips kill your simple low budget lifestyle fast.

Then comes the real risk this attempted expatriate spoke to me about. He was telling me that he was so confident before moving but still, it couldn’t work for him. He ended up spending tens of thousands of dollars moving away and then back home again when he decided it wasn’t worth it. Why did he move back home? He just didn’t like it.

Certainly, one man’s story can’t accurately predict anyone’s future but this story isn’t as uncommon as you might think. If you make a poor decision in your long term planning, it can end up costing you a lot of money. (The logical solution might be to not spend ten’s of thousands of dollars moving. Rent an apartment. Buy cheap stuff. Plan for changing your mind.)

Leaving your home country for a long period of time is a difficult decision to make. You need to be willing to take on a whole lot of risk in the short term for a potentially small gain in the long term. The return on investment is unbelievably slow financially.

That being said, I’ve already had quite the return on investment intellectually and I haven’t even moved yet. A single day in a foreign country taught me more lessons than a week living back home. It forces you into feeling like a child again. You get to feel like you’re the only one that doesn’t know what’s going on. That gave me a compulsive urge to figure stuff out. It was an absolutely amazing feeling.

Even if you don’t go full on down the road to expatriation. At least give yourself the chance to see the world. It’s damn scary at times but that’s the fun part.

Let me guess? You want to live more free without the political boondoggling. That’s what this blog is all about. Check out the archives and follow along. If you support the message then please support the blog through bitcoin.

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