Living Where You Can Get the Most for Your Dollar

CNN Money has added a cost of living calculator to their website where you can do comparisons of how far your current income would stretch in other US cities. This is a great tool for identifying potential location-based business opportunities (geoarbitrage).  I ran my info through and it looks like I am clearly better off being permanently located where I am in North Carolina, based on cost of living elsewhere in the nation. On average a dollar will stretch 3 times as far in NC as compared to Manhattan (no surprise there).  But it was interesting to find that dollars in NC would go 1.25 times as far as they would in Maine or Oregon.

Hacking Sleep Cycles Part II – Polyphasic Sleep

Last week I wrote about some of my personal experiments with sleep cycles and ways to get more effective sleep. It appears a fellow blogger had similar thoughts and wrote a post on polyphasic sleep patterns. Although the sleep patterns discussed here range from relatively minor changes to the extreme ‘uberman’ it is definitely worth a read if you are interested in finding a way to cut 6 hours out of your normal sleep schedule without suffering from any sleep deprivation symptoms (or at least that’s the claim if done right).

Link to original article

Polyphasic Sleep Patterns

Why You Should Work in London

In many cases the hardest thing about leveraging a geoarbitrage a strategy is finding the actual opportunities. Arbitrage requires that you locate discrepancies between two separate locations or geographies. So naturally your first question should be ‘where do I start looking?’ The answer is look for the extremes or the outliers. If I want to earn the highest amount per job possible I should seek the locations where those jobs are at a premium. A premium may exist if there is a lack of qualified candidates for that role or it could be because there is an overall higher COLA in the location or geography where the job is available. One search indicated that in the US the highest COLAs are in New York and Los Angeles, not surprisingly. If we expand the scope globally we find that Moscow, Tokyo and London rank in the top three most expensive cities to live in. What this tells me is that I should find work in London, get paid in pounds (GBPs) and live in North Carolina where my COLA is 1/3 of London’s.  Why not look for jobs in Moscow or Tokyo? For me, the only real barrier is language but that makes learning a foreign langauge even more valuable and tempting as a way to further leverage geoarbitrage.

So how do you work in London but live in the US?  The two relatively obvious answers are either temporarily relocate for contract basis work or find remote positions. As an accountant I am already familiar with the amount of bookkeeping and tax work being sourced overseas. By positioning myself as a financial accounting expert in both GAAP and IFRS (US and international accounting) I can win business from those London firms who need that specific niche filled. And, if I really want to take this to the extreme then I outsource the work I win to India or other bookkeeping outsource hotspots so that now I get paid in GBPs,  pay my workforce in Rupees and live on US$s.

Hacking Sleep Cycles

When it comes to getting sleep, most of us just don’t get enough or at least as much as we want. I recently welcomed my first child into the world and needless to say my sleeping patterns have been altered. The science of sleeping has been studied and researched intensively and many aspects of our sleep cycles are still a mystery. Even given some of the unknown aspects of sleep, certain patterns are well documented and here are a few things that can help synchronize your sleep pattern with your body’s natural rhythms. When it comes to sleep normally quantity is the main driver, however, there are some factors aside from the number of hours of sleep that play a role in how effective your sleep is. The following is based largely on empirical observations of my own sleep patterns so a lot of potential variability will exist between my own and readers sleep patterns.

Sleep cycles consist of several phases. First you have two alternating sleep states that you cycle through during a night’s sleep; REM and Non-REM sleep. Non-REM sleep consists of a separate set of 4 cycles that can last between 5-15 minutes per cycle. Once a person has progressed through all 4 cycles of Non-REM sleep they will then enter into the REM sleep stage. REM sleep stages can last anywhere from 10 minutes up to an hour. REM is the sleep stage that is associated with intense dreaming.  The key thing to understand regarding the cycles and their impact on how tired you feel after a night’s sleep is that when you are startled awake before completing an entire sleep cycle you typically will find that you are more exhausted than if you complete the entire cycle.

The practical application of this is that if you know you are going to be unable to get a full 6-8 hours of uninterrupted sleep then you should strive to try and set your time to awaken in between complete cycles.  Also once you have woken up you should generally resist the urge to hit the snooze or go back to sleep for a little while if you will not be able to cycle through a complete cycle or two. One exception is that generally the first two phases of the Non-REM stages, each lasting 10-15 minutes won’t leave you feeling overly exhausted. These are the two cycles that correspond ruffly with ‘cat naps’, power naps and caffeine naps (in which you consume a cup of coffee prior to your nap so that in 20-30 minutes you exit stage 2 of the non-REM cycle with a boost of caffeine to increase alertness). From tracking my own sleep patterns I have found that I typically cycle through my sleep stages in increments from around 70 to 90 minutes. I have found it also helps to make it through more than one uninterrupted sleep cycle so the REM stages can continue to build through each cycle. If I get woken up in the middle of the night (say by a crying infant) I typically only try to go back to bed if I have a good solid 3 hours available before I normally wake up so that I can cycle through two full uninterrupted cycles. I have found that in those cases where only an hour or two is available, trying to go back to sleep usually results in me only making it through one cycle and not feeling that much more refreshed or results in me waking up mid-cycle and feeling even more tired.

For interested readers, who want to try to apply this to their sleep habits, the first step is figuring out the length of your own sleep cycles. Since most of us don’t have access to EKGs this will largely have to be based on more subjective personal measurements. Most of us have suffered through exhaustion though enough times to have a basic sense of our sleep patterns. Try keeping a journal, making sure to note details regarding tiredness in cases where you were awoken suddenly or tried going back to sleep for a few hours as these will help pin down relative cycle lengths. Once you have a general idea of your sleep pattern then you can start using the hacks above to start getting better quality sleep.

Introduction to Geoarbitrage

Geoarbitrage is a concept popularized by Tim Ferriss, author of the New York Times bestseller The Four Hour Workweek. Arbitrage is a well understood financial concept where disparities between markets are leveraged to generate or broker a return. While securities in one market might carry a premium they could be obtained at a discount in another market where supply has driven the value down (usually for just a short time). Geoarbitrage builds on this concept and incorporates the notion that labor on an international scale has its own disparities that can be leveraged to increase the return on our time. Geoarbitrage is an art with the single purpose of outsourcing ones personal and business life to markets where labor is at a discount and thus freeing up the time of the busy professional or entrepreneur to focus on the highest and best use of their time, whether that be for personal or business use. A key concept in geoarbitrage is determining your hourly rate and comparing that to what you could pay a virtual assistant overseas to do that same task.
Outsourcing labor overseas is not a new idea. Businesses have been successfully doing this for years as the economy has become global in its reach. What makes the concept of geoarbitrage novel is that the focus is not on just outsourcing manufacturing or similar tasks overseas but rather seeking out other unique outsourcing opportunities. Geoarbitrage can entail something as simple as having virtual overseas assistants do research on an upcoming project or managing the email box of a busy professional. This can easily extend to one’s personal life in that a virtual assistant can act as a personal online shopper on your behalf or hunt down hard to find tickets or gifts. The real trick to successful geoarbitrage seems to be coming up with the types of activities that can be sourced to a virtual assistant and defining the rule sets to deliver to the virtual assistant to get the task accomplished. A real pitfall here could result if the arbitrageur ended spending more time identifying the outsource opportunities and rule sets than it takes to do the task them self.
Geoarbitrage can also extend to other disparities outside of labor costs. Real estate and COLA adjustments in given areas can result in geoarbitrage opportunities for entrepreneurs and employees alike if they can negotiate alternative work arrangements that leverage remote/home office or telepresence. If you can live in an area that has lower costs of real estate but is near a major airport so you can gain access to major cities for occasional meetings then an opportunity to own a home that might not be obtainable in more expensive areas of the nation can become a reality. Because of disparities in COLA adjustments in different parts of the nation it may also be possible to command a wage or contract fees that are 10-20% higher while working remotely from a location with a significantly lower COLA. Imagine living in the Midwest but making the salary or contract fees associated with jobs located in major metropolitan areas and you can begin to connect the dots to how this might work from a practical matter. These types of opportunities abound for those who seek them out and will become even more prevalent as our global economy continues to expand.