Shinga counted out the notes for the hundredth time. She clutched them tight in her fist, sighed, and squared her broad shoulders. Nine months of savings. Was she doing the right thing? There were four other hungry mouths to consider. Four other sets of needs and wants. Perhaps this was selfish. Maybe this was more about her pride, about her need to see a future with hope than it was about Lorraine. Stop it. Stop it. It was decided. They had planned this for years.
She stepped out of the bedroom, walked over to Lorraine and gave her the money. Lorraine counted out the notes and then looked up at her mother. Shinga shook her head. Lorraine nodded, blinked back her tears, and hugged her mother tight. She had enough for four exams. She would go to college. Her mother had made the impossible happen. She tried to ignore the tightening in her chest at the thought of the fifth exam she would not take. Of giving up the subject that she loved because it simply wasn’t practical to spend that hard earned money on a subject like History, with no financial future.
Shinga works at my mother’s house as a maid. Shinga is from Zimbabwe. She has two children of her own and is also supporting three of her sister’s children after her sister died. Shinga works harder than I ever have. My mother was visiting me here in the U.S. recently and she told me the story of how Shinga’s daughter is smart enough to go to college, how proud Shinga is of her, and how she has been saving to pay for the exams her daughter needs to take in order to attend University. The excerpt above is the way the story my mother told me played out in my head.
What was the cost of these exams, I asked? $20 per subject.
Think about this for a minute.
- $80 represented nine months of savings for Shinga. Shinga makes ~$93 a month.
- For $20, Shinga’s daughter would give up studying the subject she loved.
Those of us who seek out the holy grail of financial independence (and possibly early retirement) often talk of geographical arbitrage and how we could use it to hasten our independence, or to stretch out our nest eggs even further.
“Leaving the U.S. and choosing to live abroad (assuming you live in the right place) is the single biggest thing you can do to reduce the amount of money you spend. Period.” Gary Arndt circa 2011 in a guest post on getrichslowly.com.
“Geographic arbitrage, with a beautiful combination of a higher salary and lower cost of living, has worked very well for us.” PoF on geographic arbitrage
“The idea behind geographic arbitrage is that you earn money in a strong currency (like the US Dollar) and then spend money in a weaker currency (like the Thai Baht). “ The Mad Fientest
I’d like to propose another fantastic use of geographic arbitrage: stretch what your dollar can accomplish for someone else.
Americans love to give. In 2014 Americans gave over $350 billion to charity (that is a very impressive number, stop a minute to pat yourself on the back here) and a staggering 72% of that was given by individuals.
Source: Giving USA 2015: The Annual Report on Philanthropy for the Year 2014 (Chicago: Giving USA Foundation, 2015), p. 26.
What if we could make some some percentage of these donations go even further and accomplish even more? Enter geographical arbitrage in giving.
To me, $20 is “I don’t feel like cooking tonight. Let’s get Chipotle instead.” To Lorraine, it is staggeringly more. This, then, is the power of geographical arbitrage in giving. I could spend the $100 instead of Shinga. From a financial perspective, it would not mean that much to me, but the effect on her life and that of her daughters would be enormous.
The effect on me, non-financially, would be enormous too. My $100 would have bought a child a ticket to college! For $100, Shinga’s nest egg of savings remains intact. $100 to feel that good about yourself? Please and thank you. The ROI is simply huge. I can use geographical arbitrage to get all the upside of effecting a big positive change in someone’s life for the small amount of $100. I get to harvest all that good karma (by the way the going rate of karma exchange is just excellent. Last I checked 1 Zimbabwean Karma == 1 U.S. Karma) for doing so little. Using geographical arbitrage for giving feels like cheating. You shouldn’t be able to get so much for giving so little.
Here are other examples of how far $100 can go with geographic arbitrage in play:
- Restore eyesight for 2 people with curable blindness who cannot afford surgery.
- Protect 60 people from malaria for three to four years, on average.
- Provide school meal programs to 2 children for one year.
- Provide 2 patients with high-quality healthcare in rural Nepal
- Deworm 1000 children
For those of us who work hard to optimize our savings and our spending, geographical arbitrage allows us to optimize our giving – it allows us to give in the most efficient way possible. To my engineer brain, this is extremely pleasing.
I am not advocating that one should use the power of geographic arbitrage in giving to replace giving locally to your own community. I am suggesting that it should be one more (powerful) tool in your arsenal for doing good.
They say that charity begins at home. So, to those of us who aspire to make the world our home, this is my message to you this Thanksgiving