FIRE Crossroads 028: Geoarbitraging to Partial FIRE

How much of a difference does your area’s cost of living make to your financial independence?

That’s the question our interviewee, a neurologist in the expensive and tony New Jersey area, is wrestling with — can his wife and he have their cake, in terms of a high income and savings rate, and eat it too by allowing his wife to cut back on her work to spend more time with their children?

Join in as our guest sharpens his pencil and tries to ascertain the math behind living in New Jersey and moving to a state with a lower income and property tax burden.

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Getting to Know You

 

Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?

We are at the halfway point in terms of net worth in our FIRE journey.  Because of our progress, we are seriously considering moving to take advantage of geoarbitrage.

This will allow my wife to cut down on work or stop working entirely and spend more time with the kids, while at the same time maintaining our less than frugal lifestyle.  Initially at the start of our journey, whether we were in New Jersey or a no income tax state, both of us needed full-time work.  Now, it might be possible for my wife to be FIRE if we move away from NJ.

 

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

I am 40 years old and happily married to my wife, age 41 (don’t tell her I publicized her age), who is an anesthesiologist.

We have 2 beautiful children, aged 5 and 6.  We are not supporting anyone outside of the home, thank goodness.  We (unfortunately tax-wise) live in NJ, specifically Upper Saddle River.

 

In what field are you working? How is your career going? What do you like best and least about your chosen profession?

I am an employed neurologist and my career is wonderful!  What I like best about my job is it balances a high income without losing the autonomy of my schedule, all integrated with something I am fascinated by, the science and practice of neurology.

The guys I work with are caring and dedicated neurologists, and through their example, I have only pushed myself harder to be of service to my patients and explain neurological diseases to their families.

It is through the phenomenal balance of job and family where I currently am that I have arrived at an impasse on whether to use geographic arbitrage.  Not only do I love my current job, but my parents still live in the area, as well as wonderful friends of both my wife and me.

This leads me to what I like least about my chosen profession- the job I adore is in a state that taxes me up the (ed note: rear).  Much more deeply, though, staying in NJ does delay FIRE, as opposed to living in a no income tax state, by quite a few years.

 

Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?

Yes, not much for me but for my wife.  She loves her job and thought she would do anesthesia until she turned 65, the traditional retirement age.

My wife is not a stranger to hard work, never complained about call, and enjoys and embraces the challenge of her profession.  But then the kids were born, and ever since she has suffered from the worst mother’s guilt, to the point it seems only FIRE is a solution.

She missed my daughter’s 3rd birthday while on call.  She cried when I sent pictures.  It has led us to seriously consider moving from NJ to Florida. Even Texas, Tennessee, Nevada, or any other no income tax state for that matter are possibilities so we can take advantage of geoarbitrage.

She wants to spend more time with the kids, and the job she loves has now become a barrier, a prison wall, and her kids are on the other side.

Lucky for us, I love my job and am willing to work harder so she can cut down on work, or even stop work fully to be with the family.  Hell, I prefer it!  My son has ADHD and it is incredibly hard to take care of him. I am safer at work.

But seriously, though, we didn’t account for mother’s guilt.  It sucks for our family, and the crossroads is whether to stay in NJ to make money to attain our financial goals, or go to Florida where we could possibly maintain our level of lifestyle just based on my neurology salary and she can be with the kids more, either through part-time anesthesia work or fully retiring.

Let’s look at the numbers.  Currently, we pay $70,000 in NJ state tax per year, based on roughly $900,000 in yearly earnings.

If we moved to Florida, we could make $830,000 and that would be equivalent at least in salary to making $900,000 in New Jersey.  Not to mention that things that we want like a swimming pool might be cheaper in those no-income states as well!

Here in NJ, we were quoted around $100,000 for a swimming pool.  I would bet my taxable account that likely it’s cheaper elsewhere.  And our property tax on a $1.2 million house is $24,000.  Looking at the most expensive areas in Florida, our same house comparable with an equally good public school system is $1 million, has a pool, and a yearly property tax of $18,000.

Between the state income tax savings, buying a house in Florida already with a pool built in so that we don’t need to save $100,000, as well as $6,000 savings in property tax yearly, I would need to make $700,000 as a neurologist if we moved to Florida.

In terms of job opportunities for me, there is a successful private practice in Florida that is offering a partnership in one year where after just one year of $300,000 salary, you become a partner in a “keep what you kill” model after expenses.  These neurologists told me they make anywhere from $400,000 up to $900,000!

 

However, a few caveats:

First, I’m not sure how accurate or stable that partner income is, and it is one year to partner and that first year is $300,000.

Second, I would be much busier as the sole income earner and a partner in a practice where I am now compromising my time with the kids in order to be the sole breadwinner.

Third, we do have incredible friends and our kids have wonderful relationships here. I love my job here in NJ.  Is breaking those ties worth the possibility of financial freedom and time with kids for my wife?

It’s kind of sad to think about, but if we had just started out in Florida or Texas or Tennessee or Nevada and had made the same income we have now, we could have bought a pool (or two!), paid off all our debt, and my wife would by now be spending more time with the children.

Unfortunately, because of not being financially literate until recently, we chose to start our life and careers here. Living in New Jersey forces my wife, despite being half of a dual-doctor couple, to choose between working to afford a swimming pool vs. spending time with her children.  Thanks so much, New Jersey!

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

We are 100% equities, baby!  Our chosen asset allocation (actually, really “my” chosen allocation, as my wife hates finance stuff) is 65% total US, 25 % total international, and 10% small cap value.

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

Primarily in taxable.  Here is the breakdown:

Taxable account at Fidelity: $725,000

My 403(b): $140,000

My Solo 401(k) at Fidelity: $325,000

My Roth Fidelity: $35,000

Wifie Roth Fidelity: $35,000

Wifie 401(k): $260,000

Wifie non-governmental 457: $55,000

 

Do you have investments in an HSA? How about 529 Plans?

We have no HSA.  We do have Virginia 529 plans (NJ does not offer a 529 tax deduction- did I mention I hate this state!) for both kids, $45,000 for one and $30,000 for the other.

 

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What has been your best investment?

A total US stock market index fund.  Since becoming financially literate in early 2019 and putting money into this for the past 3 years, it’s just gone bonkers.  It is not a single index fund due to tax loss harvesting during the Coronabear, but my original fund was FZROX, then VTI, then ITOT.

 

Your worst investment?

Whole life insurance, if you can call this an investment.  Well, it was sold to me as an “investment.”  We lost a total of $50,000 after 7 years between a policy for my wife and me.

I hate Northwestern Mutual, not only because they sell these products inappropriately to mainly doctors, but poison potentially excellent and moral future financial advisors into salesmen.

My high school buddy was my “advisor,” and I know he has a heart of gold, but Northwestern Mutual turned his good nature into a sharp sales instrument.  The whole life policies were incredibly damaging to my family’s financial health.

I was also sold a variable annuity within an IRA!  Not as bad as whole life insurance, but not the best use of my money all the same.

 

Into the FIRE

 

Numerically, what is your FI goal?

$4 million

 

When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?

At our current burn rate with at least $900,000 of income, we will reach financial independence at age 50.  If we move to Florida and I make $700,000, it will still be 50 for me but more immediate for my wife.

 

What are your post-FI plans? How will your life change? What do you look forward to the most?

I will continue to work as a neurologist!  Call me a workaholic, but I love (cliché) helping people.  Also there is a huge need for neurologists, even in NJ where doctors are a dime a dozen.  There are many patients that need neurological care.

As for my wife, she will cut down on work as I mentioned to spend more time with the children.  Hopefully they will want to still hang out with her!

I look forward to the day that my wife no longer has mother’s guilt, and feels that she no longer has to compromise time with her children to achieve financial goals and expensive wants.

 

Have you made any major changes in your lifestyle or investments to accelerate your FI path?

I stopped leasing a Mercedes and I now drive a 2016 used Honda Accord bought used in 2019 with 18,000 miles on it.  My wife is driving a 2017 Toyota Highlander, also bought used in 2019.  We tried to buy used at 3 years when depreciation is maximized.

I do a crapload of surveys and paid phone interviews for 1099 income.  My wife has eliminated the words “Gucci,” “Christian Louis Vuitton,” and “Fendi” from her vocabulary.  I am also a paid speaker for a couple of drugs.

 

Are you facing any unique challenges making FI or RE more difficult?

My wife is not the most frugal person in the world, while I am the tightest tight wad rivaling Mr. Money Mustache (actually, I take that back – I would never be as cheap as that dude!  I like my warm car in the wintery snow and putting my groceries and kids in a backseat!)  Maybe this is not too unusual a situation, but my wife would love to be FI and spend more time with the kids, but at the same time update our house, get the pool, and so on.  She would love to have her cake and eat it too!  But on a deeper level, she challenges the notion that you have to be frugal to get to FI.

I on the other hand once proudly made it through one week of New York City living on $50 while a resident.  Let’s see MMM accomplish that!  I can’t take all the credit, as NYU, where I trained, had tons of executive meetings and events that had left over free food as well as plenty of pharma companies always eager to take residents out for a free meal.  But this is a mindset diametrically opposed to my wife.

Together I believe with our opposite money tendencies we could reach FI and maximize the happiness in every dollar if we blended her spending habits with my frugal tendencies. Not being on the same financial page is a challenge, but I also view it as a potential not just to make money just to reach FI, but have a lot of fun along the way.

 

What advice do you have for others who are seeking financial independence?

Don’t live in New Jersey!

Well, to be more accurate, you should consider the consequences of where you live financially along with the presence of family and friends.  We didn’t and only considered family and friends, and we regret it, because staying in NJ created a monetary distance from our friends and family that overwhelms the geographic distance.

We did not realize the financial damage of living in NJ compromises seeing our family and friends because we have to work that much harder to meet our financial goals.  It doesn’t matter that they are 20 minutes away when you are stuck in the hospital on call to pay for your doctor mansion that is a few hundred thousand more than the same house in Florida.  And that $70,000 NJ state income tax bill!  Trust me, $70,000 is a lot of overnight calls for a neurologist and anesthesiologist.  That is a lot of missed family events. If we had started our career in Florida, those call nights would instead have been a lot of memories with our kids.  As doctors, we are blessed that we don’t have to live in a high income tax state in order to have successful careers.  New Jersey is so expensive because other professionals have to be in this area to make a lucrative living.  Doctors don’t.  We wish we had considered this before settling here.

Also, have a personal reason for reaching FI.  My wife is only taking this journey because she has missed out on so many events for our children.  Jackson’s gymnastic event, Mia’s birthday, a Halloween event at Mia’s preschool – the list goes on and on, and that personal sacrifice is the only reason she curbs spending.  Her spending is taking away her kids and keeping her at work, and that is the reason for wanting FI.  And it kills me as her husband watching her suffer.  FI is a way to get our family time back, but at the same time achieve pretty lofty and expensive financial goals.  Framed this way, the minutia of saving 20% of gross income, maxing out 401k’s, doing backdoor Roth’s, investing in low cost index funds, and so on no longer becomes this boring accounting math equation.  It is the key to seeing your family, buying things that you know now add value, and living your best life.

And finally: DON’T BUY WHOLE LIFE INSURANCE!

 

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

 

I am wondering if there are any dual physician couples who have used geoarbitrage where one spouse can quit medicine and spend 100% time with family while the other makes a neurologist income, and not compromise an inflated lifestyle?  How did this turn out?   Is geoarbitrage powerful enough where moving from NJ to Florida allows a dual physician couple to have their cake and eat it too?  Is NJ so badly expensive that moving to Florida is so much cheaper in taxes that you can live the same lifestyle that you would have in NJ but only on one doctor salary?

My other questions are in regard to neurology income.  As an employed, RVU-based neurologist I make $400,000 per year, which is higher than average.

  • Any other NJ neurologists out there to comment?
  • Also, is it realistic that a partner in a neurology practice in Florida can make $700,000?  I was a partner here in private neurology practice and made the same $400,000 employed compared to when I was a partner–and we were busy in private practice!

From an investing standpoint, I have a small cap value tilt and use the lowest cost index fund I could find, which is FISVX at 5 basis points.

  • Is it worth using more small and “value-y” funds from DFA or Avantis despite their costs being in the 30bps range?  Is there historically a premium investing in these types of companies that outweighs the extra cost, as opposed to sticking to less small cap?
  • Also, is the small and value premium still going to be the same at the same level of risk if you go international?

In terms of bonds, I was going to add bonds starting 5 years before I retire and when I do retire, I intend to be allocated at 60/40.  My bonds were going to be in an intermediate treasury fund, but risk parity folks say the best ballast for equities would be a long term treasury fund giving it has lowest correlation to equities.

  • Is that true in all market environments?  What about in a dual rising rate and bear market environment like in 1973-74?  Didn’t the correlation between equities and long term treasuries become closer to 1 at that time?
  • Do risk parity portfolios in general not make sense given that correlations between asset classes change in different market and interest rate environments?
  • Also, do you really need TIPS if you have equities with a small cap value tilt already acting as an inflation hedge?
  • In terms of TIPS, is it just me but are long term TIPS absolutely worthless, given if inflation is high, interest rates rise at the same time, so the inflation adjustment will be offset by the lower TIPS value?

As for behavioral finance, was the Coronabear a true test of risk tolerance?  I lost $30,000 in my taxable and it didn’t phase me.  I was actually mad it didn’t fall more and longer!  So I tax loss harvested and sold my bonds and bought more stocks.  But will I still have the same risk tolerance as my risk capacity diminishes and I lose larger sums in future bears?  Is there anybody out there who maybe was like me, who maybe went through the dotcom bubble fine at 100% equities but maybe only endured a 5 figure loss, only to later lose face and sold during the Great Financial Crisis after a 6 or 7 figure loss?

Finally, and the most important question: how I do convince my wife I do listen to her?  I honestly hear every word, but she swears I don’t!

 

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I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had in the space below!

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22 thoughts on “FIRE Crossroads 028: Geoarbitraging to Partial FIRE”

  1. Love this conversation…
    About me/us semi-retired cardiologist/OBGYN in our mid 50s
    Two daughters at very expensive private college on the east coast which we are paying full retail for in the tune of with all expenses 80-90k a year. About 2/3 from 529 the rest we pay as we go…..The trips back and forth to the east coast are not cheap..
    Investment portfolio roughly 6.5-7 million depending on the day and a 2.5-3 million dollar house essentially paid off in the most affluent suburb of Portland…
    A few thoughts I have:
    We moved from a low tax state (WA) to high tax state (OR) to be closer to family and friends and that was much more important than the taxes.
    I would suggest you pick where you want to live primarily on what is best for your life.

    Its okay to not want to live like a resident and buy some nice things if that is important to you and your wife. Feeling “poor” and being tied to such a strict budget that makes you or your wife miserable is not going to work in the long term. That has to be your decision and philosophy and do not feel judged if you want to buy two ply toilet paper and new clothes. For some the thrill of living cheap is what they enjoy and for others it is rewarding themselves for all the hard work which you and your wife have clearly done.

    My sense is that you are significantly underestimating your “number” of 4 million in 10 years. That is okay as long as you recognize it. As others have stated that gives you a pretty low income stream and considering inflation, having kids who will likely continue to depend on you financially, and your lifestyle expectations.

    My wife and I are very frugal in many regards but also enjoy a good meal, nice vacation, and want to continue to support our kids and family. It all adds up and you have to be realistic. We drive older but nice cars and have bought cars for our kids in high school which have followed them to college. Again there are many on this site who would say send your kid to public school and let them ride the bus or walk….That does not work for our family which is okay. My wife is an avid backcountry skier and the gear is not cheap. So for us it is less about designer labels and more about gear but it is still expensive.
    So as much as many on this site will be shocked the $20k a month we generate from our portfolio does not feel comfortable to us so we continue to work part time as a buffer. We are crafting a model where we are hopeful to work two weeks back to back and then have 6 weeks off to play..

    Also…What works for my wife and I for risk tolerance is at least a couple times a year we take our net worth spreadsheet and reduce it by 30%. So for us we lop off about 2 million dollars and just sit with the number and the emotion. We kind of role play it so it feels real. What we learned from that exercise it that our risk tolerance is not as great as we thought especially when we think about how hard we had to work for that 2 million and have adjusted our asset allocation modestly to account for that mostly by increasing our cash holdings as a buffer. Not the right thing to do from an intellectual standpoint but it feels better to us and we can live with a little less return for the piece of mind.

    Good luck to you and your family and the good news is regardless of any of these decisions you guys seem to be on a great path!

    Reply
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  3. You LOVE your work. She LOVES her work. You’re near family. You have great friends. You collectively make great money.

    My friend, that is the dream. Most people, in or out of medicine, don’t achieve that combination. Recognize and appreciate that!

    As the saying goes, the grass isn’t necessarily greener on the other side. FL is no doubt a beautiful place. We have had a tremendous runup in home prices. $1 million will get you today what $600k did a year and a half ago. Property taxes are about 2% of the purchase price. Insurance costs have doubled across the board in the past couple of years, and it wasn’t cheap before then.

    But I think your biggest assumption is likely a false one. I’m not a neurologist, but I highly doubt you can make 700K shortly after joining this group in FL. The one/x years to partner riches is a tall tale that many young associates, myself and many friends included, have been screwed on. But that should be a fairly easy number to check. Ignore the sales pitch. What does an average neurologist make in FL?

    I don’t know about geoarbitrage opportunities in other states. But I would recommend finding a balance and staying in NJ. Like others have said, you appear to have a spending problem, not an earning problem. Yes, some of that is from taxes. What does the math look like if your wife works/earns less? Would you have similar net income?

    I agree with the above poster that your investment risk tolerance probably hasn’t been tested to date. A $30k drop when you’re making $900k/year isn’t painful. A 3 comma drop also shouldn’t be painful while you’re earning a top 1% household income, have a solid financial plan and long time horizon, and don’t sell/lock in the loss.

    Good luck!

    Reply
  4. You only lost $30K in your taxable during the Coronabear (ie maybe one paycheck?) and think that you can draw any conclusions about your risk tolerance?
    You need to lose 1-2 years of financial progress in a bear market to really understand your reaction to the big drops.

    Considering all the “wants” others have already commented on, I think you really need to bump up your savings rate if you are serious about this.

    Reply
    • thanks MaKr yes I wonder if I can tolerate more of a loss when looking at absolute numbers and definitely think about your advice. At the time of the Coronabear I was 80/20 and had just been financially literate for about a year, and in total had only about $110k in taxable so that $30k was a 30% drop in my money, so I guess only 4 months of financial progress lost. But when I saw that 30% drop all I kept saying was “please drop more, please drop more!” and I was actually on the fence of using some of my emergency fund money to pump into equities. I was upset I didn’t lose more where I could have TLH’ed and also bought more stocks on sale. I will celebrate the day I lost $1mil in taxable by TLHing, pumping into the market as per my written financial plan, and open a cheap bottle of wine 🙂 Also, maybe this is a nice trick of mental accounting used to my advantage, but I didn’t even bother looking at our retirement accounts so we did lose a 5 figure sum in those accounts as well.

      also there is some friction in seeing up to date retirement account money. My 403b at work is at Transamerica and does not sync automatically with Personal Capital and I have manually do 2-factor verification to get an up to date number. My wife’s Fidelity 401k account offers a Roth as well as a brokerage window, and her hospital also has a Non-Qualified Plan that the hospital contributes to, so on Personal Capital it lists 5 different Fidelity accounts for her one 401k plan, making it kind of opaque if we actually lost money in her 401k or not!

      I agree with you we should bump up our savings rate to more than 20% of gross income though this the max that my wife will tolerate. Previously I did mention to her about bumping it up . . . the couch was comfortable that night . . .

      Reply
  5. you two are diametrically opposites on spending from what you write. Still, you’re doing pretty well. Not what you asked and you may not be comfortable answering but how do you two move along as a team in terms of money goals? It sounds like her spending is too high. Does this upset you? Does she feel you’re constraining her if you say something about it?

    If she goes part time or quits altogether, you say she may spend out of stress from the job. But if she works less will she also have more time to shop? Spending could go up due to more time. She needs to understand the root cause of the spending. Is it the feeling that she deserves to spend because she worked? Or is it unrelated to work, and thus would continue out of habit?

    Reply
    • Yeah dude great ?’s thanks JBME. We do move together rather well in terms of money goals as for me I can be pretty pennywise yet pound foolish. I will buy a house or car of lesser quality because it’s cheap, and the next thing you know I am paying more for repairs. I will buy a cheap suit and make the hospital administration pass me up for another doctor. I will stay home all day and have the kids swirl branches in mud in the backyard for free and not spend $40 to have them learn how to rockclimb at the rockclimb place. So when now we have a doctor mansion needs minimal repairs, I got the doc job that I love because I presented myself with a new clean cut suit, and my kids are learning athletic skills they can’t find in the backyard then it doesn’t upset me too much.

      She does however feel like I constrain her too much, and what’s funny is she is phenomenally intelligent yet does not look at the numbers and thinks as doctors we deserve things. It’s because it’s so emotional that it trumps rationality. She understands the root cause of her spending very well, but only reinforces the YOLO mentality. She grew up poor with a mentally ill mother and sick uncles in one of the richest areas with one of the wealthiest best friends down the Jersey Shore. She was ashamed to have any friends over her home which was a small top floor filled with 4 adults and her. She worked hard to succeed and was driven to do well to give herself and her children everything she didn’t have.

      It’s hard to FIRE when you spend to show your childhood demons that you are not the tiny pion living in a cramped broken home with 4 sick adults surrounded by the richest people in the world. Make no mistake, people living in the Jersey Shore where she grew seem very rich. I point out to her that according to Thomas Stanley, her family might have actually had more wealth than those families borrowing up to their necks to get homes down by the Jersey Shore, but when it comes to research about wealth vs emotionally seeing the Jonses living high on the hog, the latter leaves much more of a human impression.

      Kind of makes sense why she was so driven and became such a great doc, though!

      Reply
  6. Half of a dual doc couple here and I too have struggled with the mom guilt. I am an anesthesiologist, husband is a cardiologist. We have four kids. We do live in a no income tax state (NH) which has been a great career move but it was also an easy choice since we ski, hike, and bike and family is also here in New England.

    I agree with the others to take a closer look at your budget/ spending and how to get from your current situation to where you/ your wife wants to be. She should also think about what it looks like – going from full time to staying home exclusively might not actually be what she wants. I cut back significantly about two years ago and have found such a great balance. However, we had really over saved (is there such a thing?) for the years before that, saved up for a pool, and don’t actually need me to work so it made these decisions easier. My two days a week of work are lovely. And I so enjoy being home the rest of the time. I don’t actually want to quit entirely though.

    Good luck with your decisions!

    Reply
    • congrats man on carving a great life for you and your family, and achieving financial goals with 4 kids!!!! awesome

      my wife would love to go part-time but seems nurse anesthetists have gobbled up most of the desirable part time positions, or hospitals/practices are looking to hire NA’s specifically for part-time openings 🙁 also, many part-time positions might be in surgery centers she says push the envelope of doing surgical cases that should be done in a hospital setting. Not sure if you experienced similar difficulties in search of part-time anesthesia work?

      Reply
  7. Thanks for the very thoughtful post!

    Moved to Florida 5 years ago from the DC area (Maryland – which probably rivals NJ in taxes) with NO REGRETS! We are now FI and living in Florida has certainly helped. Plus, we are just happier here overall due to the sun and lighter mood.

    You should also know that Florida has a stellar college scholarship program! (Called the Florida Bright Futures Program) For getting good grades and a just solid ACT/SAT score you get full tuition and a book stipend for any state school and Florida has a some good state schools. We have a 529 for our daughter but she will probably not even use much of it. She can withdraw penalty free (but not tax free) the scholarship amounts – which ends up being a powerful incentive for her to make sure she gets the scholarship! In addition, pretty much all public high schools here offer a dual enrollment program with the local community colleges where one can get up to 60 credits for free that are guaranteed to transfer to Florida state schools. We have seen several of the kids in our neighborhood get an associates degree (free) at the same time they graduate from high school.

    Good luck to you and your family in your decisions!

    Reply
    • OMG thanks dude because of you I am putting another check mark in the move to Florida column! yes Maryland does rival NJ especially the DC area. I’m sure you don’t miss the Beltway. Wifie actually did a year at the NIH and lived off of UDC-Van Ness before med school.

      did you have significant family/friends ties to DC? do you miss anybody from there? Would you have achieved FI if you had stayed in DC? Does your daughter miss her old friends?

      Reply
  8. A couple years ago we were in a similar situation. My partner and I both working full time. We had to have a full time nanny to help with the kids, 2year old and 4 year old. Even when they went to school we would always need to figure out before school and after school care. Neither one of our jobs would let us go part time. We were living in a very high income tax state, paying 10% state income plus a progressive county and city taxes that tacked on another 2-4% income tax. Property taxes on million dollar home were around 20000$. We were making around $550k/yr between the 2 of us. Partner is a physician and I am a consultant. We had a nice group of friends and had family within an hour.

    Though, we both felt stressed about neither one of us being with the kids as much as we would like and missing out on lots of life events.

    My partner got a great job opportunity at a practice in Texas making twice the money, better schedule and same amount of call. My partners family is within 2hr drive of this locale.

    We agonized over the decision for a while and then realized we would regret not taking the chance.

    Fast forward over a year and we have no regrets about the move. My partner is killing it in the new job, making more than we thought originally. We are saving more, more family time and life feels more relaxed. And of course we have a pool now 😉

    I am working about 10hrs /week doing remote consulting, I do drop off and pick up for the kids, coach sports team, take care of household tasks plus have time to exercise everyday.

    The toughest thing has been leaving the family we had at our last home and our friends, though the family visits frequently enough. And having my partners family here has made it much easier. Making new friends has been slow but is starting to happen in new neighborhood and through kids school and activities.

    Our situation is not entirely the same given my partner didn’t love her last practice as much and we have family in Texas.

    Good luck with your decision. I agree with other posters, curtailing the spending is a must

    Reply
    • dude congrats on making a great decision and being happier seeing the kids more. Have fun playing with them in the pool!

      also nice to be seeing more of your other family in Texas. Unfortunately me and wifie originally stayed her because we grew up here and our friends and family are here.

      damn those family and friends, keeping us down!

      Reply
  9. Respectfully, I don’t think NJ is the problem. Given your relatively high income and relatively
    low assets, may I suggest thinking about increasing the savings rate as opposed to geo-arbitrage. Your FI target will provide for ~140k annually at 3.5%, does that roughly represent your current budget? If it does, you should be able to reach FI quickly as-is. If it doesn’t, then the math won’t work out and there’s something funky with the assumptions.

    Reply
    • yes, no NJ is not the problem, it is a spending problem though amazingly we are still saving 20% of gross income. Our annual spend is 300K currently, but 150k of that is mortgage, disability/life insurance and nanny/child expenses which should be gone in retirement. So we actually are around $150k in today’s dollars yearly for retirement.

      The math in our total expenses: 900k income -300k annual spend= 600k left. We have 375K goes to taxes!!!! but that’s because we are high income and that should come down in retirement. We put 180k toward retirement, so that should be an expense gone in retirement. Finally $20k in student loan paydown and 25k in kids 529’s. Amazing how close to a million dollars can easily go away!

      Reply
  10. mom doctor guilt is not mandatory.
    Consider having her enroll in a physician coaching program like Empowering Women Physicians, or the Alpha Coaching Experience. I can personally vouch for ACE. many women physicians bring up topics like this in that program.
    WCI network is promoting its own program too.

    Reply
      • I’m a coach too and can attest to the power of coaching. We also teach great time management skills and how to shift mindset about time. She should consider it!

        Reply
  11. Have you considered moving to Pennsylvania? You would still be close to family and can keep the higher salaries that NJ offers but because of the tax reciprocity be able to cut your state income tax in half. Not to mention that housing costs are decreased while getting better school systems.

    Reply
    • yes definitely considered! 3% flat state income tax! though if we were going to pick up and move and put in all that effort moving, we figured we should move to a no income tax state. unfortunately we are not close to the NJ/PA border, but are just outside Manhattan. No way we could keep our current high income jobs.

      Also would love to be close to a beach 🙂

      Reply
  12. Thanks for your crossroads interview!

    My reactions to your situation center around your wife’s spending. You write, “my wife would love to be FI and spend more time with the kids, but at the same time update our house, get the pool, and so on. She would love to have her cake and eat it too! But on a deeper level, she challenges the notion that you have to be frugal to get to FI.” You wrote about her feelings of loss when missing family events with the kids, “personal sacrifice is the only reason she curbs spending. Her spending is taking away her kids and keeping her at work…”.

    I worry that geoarbitrage, as you discuss, will not solve your problem. Furthermore, I’m not sure that moving won’t actually make it worse. If you move to Florida, that will be a very significant stressor. I worry that, if your wife ceases work, then her spending problem will actually get worse–especially as the kids go to school! You could very well be left with more spending, but without the large income that she is able to generate to offset that spending.

    Whether you live in New Jersey, or move to Florida, my opinion is that your wife will need to find her own balance between spending and having more time with the kids. Less spending means she can work less hours and spend more time with the kids. More spending means she works more. Link her work time with her spending. I would by no means consider becoming the sole breadwinner in this scenario. Consider therapy re: spending and mother’s guilt?

    By the way, great work as a couple on the automobile choices you have made! Also, a great start as your wife moves away from having to have designer labels. That said, I have to question the viability of your plan.

    I totaled up your current investments and came up with $1.575M. You say that your target for FI is $4M and you expect to hit that at age 50. I’m wondering how you will achieve that target in less than a decade–especially with 2 children approaching college age.

    Also, assuming that you do achieve that $4M target, with a 4% annual withdrawal rate, that $4M would provide a gross annual income of only $160k per year. Would that annual gross income (decreased from your current $900k) actually support the lifestyle you both anticipate in retirement?

    My best advice? Do the hard work and figure out how much your household is currently spending per month and per year. List how much is being spent in each category. I use Personal Capital. Some people use Mint.

    Next, calculate how much would be spent per month and per year in retirement. Be sure to include the cost of healthcare insurance, once that is not being subsidized by employment. From that figure, calculate how much you will need to have in investments (aside from equity in your home) to be able to FIRE. Multiply that figure by 25 (some people advocate 33). That is the number to aim for. If you calculate that you will need $200k gross income annually in retirement, then you would need $5M to $6.6M in investments.

    Good luck as you make progress toward FI and FIRE!

    Reply
    • Yes, Donna, that’s what I came to say as well. I don’t think the math works here, and it highlights how money is really about behavior.

      Unfortunately, OP, your wife spends unsustainably for your goals as a family, and unless you guys get aligned in your mindset, that is unlikely to change. Florida won’t be enough geoarbitrage for you. And $4M won’t be enough retirement for you either. You didn’t give us a budget so I can’t say this for sure, but there’s a good chance your wife could cut down now without moving; she would just have to be willing to change her lifestyle accordingly.

      I’m speaking from experience here, as a few years ago my husband and I took a 40% household pay cut so I could change jobs due to health concerns. It can be done. You just need to make the hard choices to support the priorities you have.

      I think it’s very loving of you to be willing to make all these sacrifices so your wife can be happier. But she needs to make her own choices here and in some way sacrifice her high standard of living for more time with the kids.

      Reply
    • thanks Donna and ZS! I had done some rough math and budgeting using Personal Capital/excel spreadsheet combo and it is as follows:

      We make 900K/yr. Our annual expenses is 300K currently (150k of that is mortgage, disability/life insurance and nanny/child expenses which should be gone in retirement, so we actually are around $150k in today’s dollars yearly currently for me and wifie and add another 10k for medicare and that will be our retirement spending a year). 900k income -300k annual spend= 600k left. We have 375K goes to taxes!!!! but that’s because we are high income and that should come down in retirement. We put 180k toward retirement, so that should be an expense gone in retirement. Finally $20k in student loan paydown and 25k in kids 529’s. Voila- all 900k accounted for.

      As for getting to our FI number of 4 mil:
      current investments are 1.5mil, we our 100% equities so I think an assumed 5% real rate of return is reasonable, saving 180k per year for retirement, so using excel future value: FV(0.05,10,180000,1500000,0)=$4,707,362.60

      so should actually have a $700k extra at least projected! hence we budget to have a pool and still meet our goals, but this is with wifie still working hard.

      Reply

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