And even when I hit financial independence, I plan on working in a part-time capacity for as long as my health will allow (and as long as I enjoy it). Well, I do expect my sources of income to continue to multiply and increase. What about the kids’ college, for example? Or some unexpected event?
Okay, okay, so there are other things to consider besides regular expenses. Indeed, even if I quit medicine altogether, I’d still have an income strong enough to support my family.
This is a direct result of my multiple streams of income. With six digits worth of expenses every year, how am I able to do this and still have a good amount to put towards investments? The answer couldn’t be more simple. I expect to fully hit that point in the near future, and at that point, I could retire from medicine and nurse my investments, passive income sources, and side gigs instead. When you combine all of these large items (plus all the other small things that come with living), it comes out to more than $200,000 per year.Īnd yet, if you look at my income report, we’re fast approaching what I consider Financial Independence – from medicine, anyway. This is important to us, and something we won’t be changing. I don’t really consider this an “expense,” because we give willingly, but at least 10% of our income goes to worthy causes. I’m already paying for it so I’m used to figuring it as an expense. People who are nearing or shooting for financial independence worry about how they will pay their health insurance. Being my own corporation means that I pay it all on my own. We’re extremely lucky though that we were both able to consolidate our loans at very low interest rates (<3%).įifth is health insurance. It’s not overly extravagant, but between my wife and I, we owe six figures in student loan debt (not uncommon for our profession). Yes, that number does sound ridiculous, but believe it or not, we went with one of the cheaper ones in the area.Ĭoming in strong for fourth is student loan payments. Brace yourself it’s over $1,600 per month which works out to nearly $20k a year. Third is the cost of preschool for our children. My wife doesn’t work full-time, but we need help for the times when she does work. Second is the fact that we hire help for childcare. Expenses directly related to housing account for roughly 40% of our total spending. I’m sure Miss Bonnie MD gets me on this one. So I broke our entire budget down to figure out the biggest factors.įirst, there’s the high cost of living in our area. I needed to know why, exactly, these expenses are so large. I had to take a step back and really examine things – are we just being overly extravagant? Money Mustache or Physician on Fire, throw out annual expense numbers like 40k or 60k. I’m not sure how you feel about that number, but for me, it can be quite embarrassing–especially when I see people like Mr. Right to the point, our family expenses currently total up to more than $200,000 a year. I’ve been hesitant to put it all out there, but with this post, the time has finally come.
In all my time writing this blog, I’ve avoided using a lot of concrete numbers when it comes to my own financial situation.
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How to Achieve Financial Independence Spending $200K Per Year This article originally appeared at Passive Income MD. Nevertheless, he and his family have rapidly achieved financial independence in spite of the higher costs. I give from our donor advised fund and don’t count that in the spending tally.
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Most of our flights are practically free using travel rewards cards. I own my home outright and my children are in elementary school. He pays absurd southern CA prices for everything, including a mortgage and childcare. He lives in southern California I live in Minnesota. There are some reasons that PIMD’s numbers are much higher than mine.
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