Notes from a Financial Toxic Wasteland

crispydoc Uncategorized 12 Comments


I’d heard California called many things before. The Golden State.  A nature lover’s paradise.  A youth and beauty parade.  But the White Coat Investor (WCI) was the first to call it out as a Financial Toxic Wasteland.  I describe myself as an unrepentant Californian, owning up to my idiosyncrasies and accepting the faults (and more reluctantly, the fault lines) that come with being a native.  I live within a two hour drive of my parents, take surface streets to an international airport, and have largely lucked into a life with a 20 minute non-freeway commute to work.So why live in a place where state tax rates approach 9% for physician level income brackets?  Where housing is expensive, cost of living is high, and physicians are more likely to be regarded as middle class due to their relatively poor purchasing power vis a vis peers in the tech and finance industries?

For starters, the medico-legal climate may not be as bad as you think.  Thanks to MICRA, a 1975 state law that limits non-economic damage awards to $250,000 in cases of medical malpractice, you are less likely to encounter a monster legal judgment that breaks the bank in California than in WCI’s home state of Utah, where as of 2015 the state supreme court ruled a similar cap to be unconstitutional.  While this is no substitute for patient rapport and good clinical judgment, it offers a measure of consolation.Second, the multitude of medical practice opportunities within driving distance can be regarded as a form of risk diversification for your job.  Sure, practicing medicine in an area with a rock-bottom cost of living may be great for the bottom line, but the flip side is that in a one horse town, your livelihood is entirely dependent on that horse.  As Physician on Fire’s story demonstrates, the financial bankruptcy of the only hospital in town can lead to unexpected stress, temporary family separation, and jobs that were not in the original plan. PoF even built his dream home in that one-horse town. Fortunately, PoF’s story has a happy ending: a bit of flexibility, resilience and frugal financial habits can land you not just firmly on your feet, but in good enough shape to reach financial independence in your early 40s.

A third factor illustrated by PoF’s story was his decision to subsequently relocate closer to family, a move which echoes that of many Californians.  Having family support nearby can make a critical difference that frequently outweighs cost-of-living decisions alone. With the advent of children, family in the area can be a game changer.

Fourth, it’s much easier to make your job into one that doesn’t suck when your physician wellness strategy is a built-in part of your day-to-day life.  When I want to go kayaking, I walk my gear 20 minutes to the nearby cliffs.  When I want to hike in foothills overlooking the Pacific Ocean, I am on the trails in 15 minutes.  When last winter’s double overhead swell arrived, it took me 10 minutes door to sand to be suited up and in the water.  Do I pay dearly for the privilege?  Sure.  But it tilts my work-life balance heavily toward life.  While it will cumulatively cost me more than WCI’s wakeboat, it’s arguably cheaper than therapy.  

A closing thought: I was holed up in Boston over a decade ago, reading my way through gray skies and a storm that dumped 31 inches onto the city during a single winter weekend. I came across an excerpt from a New Yorker review of a photo-realist retrospective of a Californian photographer named Robert Bechtle and promptly taped it to the fridge because it seemed to capture an essential truth about me and my ilk: “To Californians, might being indoors feel tragic in and of itself?”

For many of us, maybe this is reason enough to live in California.

Comments 12

  1. As a recent Cali transplant from the South and a former Bostonian, I agree with your sentiment. The taxes blow but when I applied for the job my boss said you have to pay to play. The surroundings are beautiful. I spent the weekend canning down the russian river and hiking, all within 10 minutes from my home. So while I dream of lower taxes, for now this is the perfect spot for us.

    1. The Mustachian and Early Retirement Extreme crowds would argue that living closer to work makes a great deal of economic sense by reducing transportation costs. I think a similar argument can be made for living close to the places that restores you: proximity to family, reduced weather-related blues, or year-round activities that delight and sustain your health all reduce the psychic costs of high intensity careers in medicine. There’s something magical about finding what you need just 10 minutes from your door – keep enjoying that river!

  2. I’m also a California based physician and absolutely love it here! I grew up here, my wife grew up here, we’re surrounded by tons of babysitters…I mean family.
    Yeah, I agree that financially we take a hit, but quality of life is definitely up there. It may take us a few more years to achieve the financial independence that others have, but at the end of the day we live where others want to vacation.

  3. Hey ASO, thanks for stopping by! I grew up here, too, and call myself an unrepentant Californian. Glad you and your wife were able to stay near family – I never take for granted our good fortune in having careers that allow us to afford this place.
    A friend’s brother, a dermatologist, took his first job out of residency in a no-tax state far from family and support because it had a signing bonus and tremendous earning potential. A couple of years later he had relocated to San Diego. His message to me, a med student when we met, was not to squander precious time in pursuit of money. The money eventually comes with work, financial discipline and frugal habits; the time is lost forever.
    Here’s to reaching FI a little later than our peers, hopefully enjoying the journey that much more for our choice of geography!

    1. For sure, it’s so nice here! I’m actually putting together a post about striving for FI while in a HCOL state and was going to reference WCI, POF(geographic arbitrage) and this post if you’re okay with it?

  4. That dermatologist gave you excellent advice. We spent a couple years in a Zero income tax state. Compared to living in Minnesota, I saved $60,000 on income taxes in those two years, but home is where the heart is (and the grandparents / babysitters 🙂
    By going part time, I will likely drop out of the 9.85% state income tax bracket in 2018. So I’ve got that going for me. Which is nice.

    1. Physicians make lousy soldiers of fortune. By the time we leave residency, we need our support systems far more than a few extra dollars.
      Congrats on your transition to part-time! I think your lifestyle will benefit even more than your tax bracket (but by all means enjoy the latter as icing on the cake). Look forward to hearing what you decide to do with your extra time.
      Thanks for stopping by!

  5. Having family and friends in California, and having spent time there, the desire to live there is certainly strong. The generally good weather, natural beauty, recreational options and diversity only adds to its aura. However, I do recognize that it can come at a cost, and it’s certainly not an easy choice one way or another. Nevertheless it all comes down to personal choice and sacrifices. However, I hate the attitude that some people have (not within this blog post, but personal family and friends) that California is the best place and only place one should live and everyone not living there is jealous or inferior. There are some great places to live in this country and they all have their pros/cons as does California, and it’s all personal choice and there’s no right answer.

    1. Hi JSA,
      You are right that attitude can taint an otherwise reasonable debate about the pros and cons of a high cost of living state. I’ve unwittingly displayed a variant of this hubris, with the accompanying downfall that Greek tragedy would predict. One of my more humbling moments from my medicine sub-internship came when I asked a particularly bright intern on my team where he’d grown up.
      ME: So are you from the East or West coast?
      INTERN (incredulous): You know that vast space in between? That’s where I’m from!
      I’m happy to report that we became friends, and he never missed an opportunity to remind me of the value of his mid-western upbringing.
      Another perspective on this effusive boosterism might be that we are trying too hard to rationalize an illogical choice. As Shakespeare so eloquently worded it, “The lady doth protest too much, methinks.”
      Thanks for your comment, and for keeping the California discourse honest!

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