Announcement

Collapse
No announcement yet.

Convincing spouse (with evidence) about geographic arbitrage - assistance needed!

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Convincing spouse (with evidence) about geographic arbitrage - assistance needed!

    I live in a HCOL area for which the main attraction has been being near the amenities of a VHCOL city as well as proximity to family (who have now become less available to help/visit). I have discussed geographic arbitrage with my spouse, specifically moving to a state with no income tax (Texas, Florida). I would really like to show her a comparison of what our portfolio would look like in current high income tax state vs no income tax state and then turn that into extra years worked. For example, if we stay where we are you will have to work X extra years versus if we moved now to no income tax state. Most of the calculators I see online though don't take into account the state income tax removed your take home pay but rather instead if you sell your investments. Is there anything you are aware of which combines cost of living, taxes removed from paycheck and such so that I could create a true comparison? Thanks so much.

  • #2
    Just add to the amount contributing every year the amount that would have been taken out in tax, plus the marginal cost of living difference. You can show that you’ll achieve X in Y years faster. Often emotion and not numbers wins thus argument. Throw out some scenarios in which you are unhappy but goals haven’t been met. Or if you or she are sick but goals haven’t been met. It’s a race against time, which brings more potential problems.

    Comment


    • #3
      Where i live in a no tax state we pay less salary (anywhere from 25-30% less than salary tables)...because we can. people want to live here because of weather and no tax....so the market allows us to underpay because people are willing to work for less to be here....so just keep that in mind if you are going to be an employee or working for someone else... The best geographic arbitrage IMO is to move where no one else wants to live. Many specialities will pay you a pretty penny to do so..... Moving to one of the no tax states when you are retired is a different story than while working....

      Comment


      • #4
        Also consider total tax. Some states that have no income tax sneak in higher taxes elsewhere. Texas has much higher property tax than my state for example. Also consider insurance premiums. Coastal no tax states (Texas and Fla) have much higher property insurance rates I believe. You really should factor in the total cost of living and not just state income tax.

        Comment


        • #5
          You're going to have to make that yourself.

          Comment


          • #6
            As noted, depending on how HCOL you are now, simply moving to Houston or Nashville isn't going to necessarily mean you can retire sooner. If you're willing to go to the boonies, another story.

            Comment


            • #7
              Two pronged approach:
              • Cost of Living Comparisons (smartassets, salary, nerdwallet)
              • Retirement Calculator
              https://www.physicianonfire.com/a-ta...-of-lifestyle/

              Alot of this is very dependent on the specific situation. Higher home value lower tax rate can equal same real estate taxes. Do you have an opportunity available in the other location?

              You can put together comparable costs from generalities or as specific as you wish. Each can then be loaded into the spreadsheets POF models for results. Replace estimates with specific calculation as needed . The two sources give you a roadmap where you are trying to go with your analysis.
              Caution: A ton of work is involved and the spouse needs to have an open mind. Start with the generic examples and save yourself a ton of frustration that is based upon desires for "big city life" period. Where one chooses to live has a LARGE emotional component. The spouse may not even want to look more than a scan.

              Comment


              • #8
                this isn’t helpful but comes from personal experience

                if the family you’re moving away from is your spouse’s, no calculator in the world is going to help

                i have found that moving to a moderate col area and more specifically, a better paying region has helped us financially immensely. however it is a decision that both spouses have to be on board with and personally, if either one of us needed to be convinced, i’d rather not move

                Comment


                • #9
                  There is no calculator that's going to convince your wife to move away from her family. If you find one or create a magic app, sell it for millions and then you don't have to worry about $$

                  Comment


                  • #10
                    Everyone has great suggestions so far, and they are also right about headline taxes, etc...that is very misleading. Having just moved from California to Kentucky I can tell you I was shocked at the taxes (while considering it of course) not being a huge difference. The difference is solely cost of living related mainly to property prices, which werent even so bad where I was. However, if you can pair it with a job that pays better and has upside its win-win-win.

                    Texas, as mentioned has horrific property taxes, Florida is well...its Florida j/k. Some total tax calculators can help you and also show you how little a difference it can make sometimes. Again, the big difference is can you make more money while at the same time streamlining and enjoying your life more. Aside from the lack of good ethnic food and food choices in general, the boonies arent so bad in that regard.

                    Comment


                    • #11
                      I'm from Texas but moved away after med school. Property taxes are high but property is less expensive. They also have no income tax and there are significant limits on malpractice claims. I think physician pay is pretty good as well. Downsides are the heat, bugs and my family living there ;-) If your wife is ok with that, it could be a good choice. We could definitely retire sooner if we moved back to Texas but the emotional cost would be too high. Like others mentioned, this is an emotional decision, not logical and everyone's math will look different in that regard.

                      Comment


                      • #12
                        Don't let the tail wag the dog.

                        It's tough to get data on exactly how this would affect you but check this out: https://en.wikipedia.org/wiki/State_income_tax

                        There's a nice graph showing all of the tax added together. The difference between the top (IL = sigh) and the bottom (AK) is 10%.

                        This is a forum full of people for whom tithing 10% of the their income to insanely wealthy, tax-exempt, religious organizations is non-negotiable. So when I hear someone talking about how avoiding state income taxes is a critical key to wealth I would point them towards the tithing threads where said tithers point out (entirely appropriately imho) that if you can't live on 90% you probably can't live on 100% either.

                        Comment


                        • #13
                          Yes I surely agree that convincing a spouse to move away from family can be a non-starter. My spouse is open to this but is a numbers person so I am trying to present numerical evidence. We are both MD's and I work virtually (mostly) for a pharmaceutical company and spouse's practice is portable. So the question from my standpoint is not "can we afford to live here" as we can, but more a question of value and how much more would we have after 20 years in current area versus another. While there are a ton of intangibles in determining value and quality of life, I would like the option to FIRE and am trying to educate my spouse rather than embark on an emotional argument. So thank you all for the helpful comments and suggestions.

                          Comment


                          • #14
                            I

                            Comment


                            • #15
                              I’d hate to live in Texas or Florida. Stand your ground laws? Yikes. Guess it works for some people tho. Better to live in a state w/ lifestyle you prefer close to people you love. If you can do that in the low tax state, that is great. Certain states may be very low tax; some of those same ones were recently cited in a UN report as having raw sewage issues... no thanks.

                              Comment

                              Working...
                              X