We talked a little about this strategy in previous chapters, but we wish to expand upon it in this chapter. One way to beat your competitors in countries with a lower cost of living is to relocate to a country with an equal or lower cost of living, while still earning money from a country with a high cost of living. When you think about it, outsourcing has given an enormous advantage to professionals operating out of foreign jurisdictions.
For instance, I have spoken to people living in India who have told me that their monthly mortgage payment costs $250. Prices like these are next to impossible to find in the U.S., and yet, many of these same professionals are making $10 per hour. While $10 per hour is considered to be a below average salary in the United States, for someone living in India, where the Per capita income (PPP), is currently around $2,762, $10 per hour is an enormous salary. By living in India, where the cost of living is low, while earning money from wealthy countries in Europe and North America, where the cost of living is high, many Indians who operate as freelancers are becoming extraordinarily wealthy, and quickly.
Many Indians take things a step further by pooling their money together as a family, and moving to the U.S. in order to start businesses. They may purchase convenience stores or start laundromats. When you also consider the fact that India was once a colony of Great Britain, this means that many Indians speak English, and the language barrier they have is much lower than other countries. Despite the problems that India has, I firmly believe it will become a growing financial power as we move further into this century, perhaps even more powerful than China.
Another advantage that many freelancers living in foreign countries have is that their tax burden is a lot lower than those who live in developed countries. Again, this gives them a huge advantage when it comes to setting prices over the web. It also allows them to keep more of the money they keep, which means they can build wealth at a much faster rate. While simply relocating to a country where the cost of living is lower may seem simple, there are some challenges that you may face. The first of these challenges is language.
If you're like most people, you probably only speak one language. If you're an American, in all likelihood this language is English. However, if you decide to move to a country in Latin America, where the costs tend to be cheaper, you will often be required to know Spanish. If you make the decision to relocate to a country with a lower cost of living, regardless of where you move, learning the local language is highly recommended. Another problem that you may encounter when relocating to a foreign country are differences in culture, and more important, political instability.
In a word, some countries are dangerous, and in general, the lower the cost of living in any given country, the more politically unstable it tends to be. Another thing that I should note is that political instability can even occur in countries that at first glance seem stable. We advise you to do a great deal of research, and even after moving to a new country, you should always be on the look out for political storm clouds on the horizon. In general, living in a foreign country can be a rich cultural experience, and will allow you to expand your mind.
But as a freelancer, your bottom line will also improve by living overseas. If you live in a country where the cost of living is much lower than your country of origin, you can become wealthy very quickly “if you earn your income from a wealthier country.” This is the advantage that people in India and China have, and as more developing nations around the world continue to get Internet access, they will have this advantage as well, so long as their income is generated through the web. By living in an environment where your taxation and cost of living is low, you can then use the money you amass to either invest in cash flow deals in the country you're currently living in, or you can invest in your native country, or you can do a combination of both.
Because the Internet is still growing in many foreign countries, the issue of taxing those who earn their money over the web is often a non-issue. Thats right, there are many freelancers living in foreign countries who earn their money over the Internet while paying virtually no taxes.
For many of us, moving to another country is simply not an option. We may have family in the United States or simply just would rather live in the United States. Within America there are many cities that have a lower cost of living. Additionally, there are suburbs in the areas where there is a high cost of living, where you can drastically reduce this cost. Do your research as there are numerous opportunities.