Enjoy Cheaper Vacations By Using Geographic Arbitrage

Vacationing can get very expensive very quickly, so it's obviously wise to do a little due diligence in picking a spot to go to. Unfortunately, some of the really great places to vacation at are also very expensive, such as Hong Kong, Cayman Islands, New York City, Vancouver, etc.

There are ways to save money that we all know about, such as simply comparing rates between airlines, hotels, and car rental services. Any deals you get with these will only go so far though, but there is another concept which can drastically cut down your vacation costs and still provide a great experience while being very affordable. The concept is known as geographic arbitrage. This basically means that you take a look at which nations have the weakest currency in comparison to your home currency and traveling to the place where your currency has the most purchasing power.

Naturally, not every country with a very weak currency will be an appealing spot to go to. Zimbabwe, Venezeula, and Syria all have very weak currencies, but they are also going through so much turmoil and political instability at the moment that it would probably not be safe to spend leisure time there. So don't aim for a war-torn country, but just a notch or so above that, unless you enjoy living on the edge!

An article this year ranked the 12 cheapest countries to vacation in, with Cambodia, Vietnam, India, Bolivia, and Hungary taking the top five positions. These places not be as sexy as Dubai or Paris, but if your goal is to visit a foreign land as cheaply as possible, then you might want to start thinking about going to these places.
Source:
https://www.skyscanner.net/news/10-worlds-cheapest-countries-go-holiday

Cambodia

Vietnam

India

Bolivia

Hungary

This concept of geographic arbitrage can also be used within your home country, especially in the US, which has 50 different states to chose from. This applies to not only vacations, but moving and living in a new state as well. The last few years has seen more and more people and businesses migrating from a high cost/high tax state in California to a very low cost of living area, namely Austin, Texas.

If you are living in Manhattan or San Fransisco and DON'T have a six-figure salary, then it might behoove you to consider moving to a cheaper area. Simply moving from a state with an income tax to a state with no income tax will make a big difference to how much you can save in the long run. The argument could be made that some people just value the lifestyle experience of living in a certain area and the financial aspect doesn't really matter. Well, you don't have to give up the lifestyle you want in order to save more. For example, someone who lives in Los Angeles and loves the California lifestyle could move to Las Vegas, Nevada, which has no income tax. They would only be about a three hour drive to LA, so they could still enjoy being a Californian on part-time basis.

There is usually a way to make an advantageous geographical move and without giving up too much in non-monetary value.