It’s been over four years since I moved to a cheaper area to become debt-free as a single mom of two on a moderate income — and the impact it has had on my finances has been life-changing.
I moved to my current city because the lower cost of living was enticing. I pay $700 in rent, and as a result, I’ve been able to clear out all of my debt, build five figures in savings, and invest for both me and my children’s futures.
The strategy of moving from one place to another for a cheaper cost of living is called “geo arbitrage.” It helps people save money and find financial independence sooner. You don’t have to move permanently. Even a short move for a few years can have a massive impact on your financial life — if you budget accordingly.
This move has required sacrifices though, like giving up square footage and settling for low light due to few windows in my apartment. I’ve also given up nearby access to restaurants and activities, which were what I loved most when I lived in the downtown Little Rock area. Above all, I’ve been intentional about creating a safe environment for my family.
All in all, it’s been worth it for my kids and me. Here’s why I did it, and how you can do the same.
How Geo-Arbitrage Worked for Me
I started my debt-free journey in September 2016, when I was making roughly $32,000 per year. I knew I could leverage my income more if I lowered my housing costs. Newly free of childcare costs, I moved to an apartment $20 cheaper than my previous one, but soon found out I was pregnant again.
With childcare back in the budget, I calculated how much I would need to keep my debt payments the same. I made the decision to move to an even cheaper apartment once my lease was up. Rent was $125 less and came with free water, saving me another $55.
I needed $200 a month to keep chipping away at my debts, and this move was saving me $180, so I knew I only needed a minimum of $20 from side hustles to keep making progress. Using my writing degree, I started freelance writing for individuals and companies during nights and weekends, making up to $400 per month.
Then, in 2019 I launched Money Boss Mama with the intention to represent a missing population in the personal finance community — single women.
My Big Move
One thing that truly helped me maximize an area with a lower cost of living was having a plan. Instead of using the money I was saving in rent on discretionary expenses, I was intentional about rolling it into the areas of my budget that would push my financial journey forward.
When I moved after the birth of my second born, I signed a one-year lease. Using my lease’s end date as the target end date for my goal planning, I worked my numbers to see which debts I could clear out. Having a working budget helped make this part easy because I already knew how much my monthly expenses were costing me in comparison to my income.
As you lower your expenses by moving to a cheaper area, make sure your lifestyle expenses don’t increase. This is called lifestyle inflation and it’s something you don’t want to be a victim of. Keep your expenses relatively the same so you can take advantage of your new lifestyle.
Based on my calculations, I could pay off the remainder of my auto loan and last credit card before my lease was up. This gave me the confidence and motivation to stick to my budget so that I could continue making extra payments.
A month before my lease was up, I became credit card and auto loan debt-free. And this gave me the spending freedom to move to a better apartment across town.
Research Different Locations
When it comes to areas with lower costs of living, it’s very important to do your research. This is especially true when you have children.
Different factors should be considered, such as:
- The cost of living — You want to ensure that the difference in cost is actually going to be worth the move.
- School zones —You want your area to be zoned for high-quality schools.
- Access to health care — You want to know that if anything happens to your children, they will get the health care they need.
- Access to quality foods —Make sure there are grocery stores stocked with healthy foods. It was important for me to ensure that my area was not a food desert.
- Safety — Making sure my kids are safe has always been my #1 concern.
- Distance from your job/business — I kept my commute relatively the same in my move. This helped keep me on track with my gas expenses.
- Nearby activities — I want to make sure my kids have access to after-school activities that are close to home.
Although the area I chose was two cities from my former apartment and job, the savings still made the move completely worthwhile and only added an additional 15 minutes commute to work.
To be sure, there are downsides to my area. My car has been broken into more than once, and the crime rate is higher than I’d like. I often thank God that me and my children have stayed safe all these years. Above savings, safety is the highest priority of mine, so during my apartment hunt I was intentional about renting in an area surrounded by close neighbors and closer to the newer developments in the city. This helped me make great friendships with my neighbors who all help me feel secure.
Keep Your Expenses The Same
When you move to a cheaper area, try to keep your expenses relatively the same. This helps you maximize the lower cost of living as the gap between your income and expenses widens. You don’t want to be a victim of lifestyle creep, which is when you increase your expenses as your income increases. This is especially true when you see more money in your budget.
Since I dealt with lifestyle creep before, I wrote out my goals and created a mock budget using my new income to proactively plan out where my money would be best applied. And this way, I was able to visually see the effect that adding in new expenses would have on my finances.
I would use the majority of my spendable income to help me pay off debt, and as the balances decreased, my spendable income increased even more. Doing this helped my gap after bills grow from $100 to over $1,200 per month.
Then, when I got annual raises or was promoted to a higher-paying position, my pay increase stretched even further as I was intentional about keeping all of my expenses relatively the same.
After my first promotion, I kept the same prepaid phone plan, apartment and continued to drive my old car. This way the “extra money” I was making was literally just extra money.
Today, I now live on 55% of my income. Yes, it’s difficult to stay motivated due to the lack of upkeep and crimes in my area, but I know I would not have been able to do as much as I have with my income had I not made the decision to lower my housing expenses.
So, is it worth it? In my opinion, yes, it is.
It’s an incredible feeling to no longer be down to my last few dollars before payday. I once was not able to properly care for my children financially, but now I invest for them regularly. Being raised by a single mom myself, moving to a cheaper area allowed me to break the cycle of financial insecurity, and that itself is worth the sacrifice.