Author Topic: What state is the best to live in when working towards FIRE?  (Read 1581 times)

STEMorbust

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What state is the best to live in when working towards FIRE?
« on: December 11, 2018, 05:30:39 PM »
I've seen a number of blog/reddit posts about where to live after you've hit FIRE, but where should you live when working towards it?

In my circumstances, I work remotely in tech. GF is a physical therapist and can get a job most places. We're considering moving almost anywhere for 3-5 years while we knock out some monstrous student loans ($230k).

Assuming a monthly budget of $3,000 and an income of $160k (both combined), does it make more sense to live in a state like Washington than a state like Oregon (WA is no state income tax while OR is no state sales tax)?

My math is...

Oregon
Earner 1 - $95k, take home is $63,623 ($31,377 to taxes).
Earner 2 - $65k, take home is $45,828 ($19,172 to taxes).
Total: $109,451 take home and $50,549 to taxes.
Sales tax on $36k in spending is $0.

Washington (Seattle)
Earner 1 - $95k, take home is $70,844 ($24,156 to taxes).
Earner 2 - $65k, take home is $50,639 ($14,361 to taxes).
Total: $121,483 take home and $38,517 to taxes.
Sales tax on $36k in spending is ~$3,600 at 10% rate.

Net difference in take home pay is $12,032. Minus sales tax paid in WA, net is $8,432 in favor of Washington. Any increases in income would net ~8% gain in WA vs. OR provided the monthly budget remained the same. My conclusion thus far is that for frugal, FIRE-minded people, saving on income tax is more worthwhile than saving on sales tax (at least once a certain threshold is reached in income).

Any factors that I'm missing? Where else should be considered that would be more affordable but still have a decent quality of life?
« Last Edit: December 11, 2018, 05:37:00 PM by STEMorbust »

Home Stretch

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Re: What state is the best to live in when working towards FIRE?
« Reply #1 on: December 12, 2018, 11:37:44 AM »
It does indeed sound like WA is a better option for FIRE-seeking, non-materialistic people. Sales tax in somewhere like Seattle is around 10%, which is super high, but you'd need to spend $120k/year on goods and (taxable) services to make up the difference in take home income.

Seems pretty obvious to me, if you're choosing between those two states. You didn't indicate where you're living now though - are you already in the PNW or are you just thinking about moving there?

terran

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Re: What state is the best to live in when working towards FIRE?
« Reply #2 on: December 12, 2018, 11:49:54 AM »
Yes, all other things being equal, for a mustachian during accumulation (high earning and low spending) then being taxed on spending would certainly be preferable to being taxed on earning. Other factors to consider are housing costs (property tax could play a role here either directly or indirectly), income potential in different areas (mostly for your GF since you're remote), whether you can avoid car ownership for one or both of you.

frugaliknowit

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Re: What state is the best to live in when working towards FIRE?
« Reply #3 on: December 12, 2018, 02:12:56 PM »
While state and sales tax are factors, there's also the cost of housing.

I would bet parts of Ohio and Mississippi have lower costs than WA and Oregon...?

STEMorbust

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Re: What state is the best to live in when working towards FIRE?
« Reply #4 on: December 13, 2018, 11:49:04 AM »
Currently in Portland, OR. Great point about Seattle offering tech jobs. For non-remote work, that is certainly a consideration.

The other states on my radar right now are Nevada and Tennessee. Both have no state income tax and seem to be pretty affordable.

The GF is looking around for a gov't job now so we'll see what we find. I'll be interested in hearing about any other locations that FIRE-aspiring people are moving to.

AccidentalMiser

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Re: What state is the best to live in when working towards FIRE?
« Reply #5 on: December 13, 2018, 12:14:42 PM »
Currently in Portland, OR. Great point about Seattle offering tech jobs. For non-remote work, that is certainly a consideration.

The other states on my radar right now are Nevada and Tennessee. Both have no state income tax and seem to be pretty affordable.

The GF is looking around for a gov't job now so we'll see what we find. I'll be interested in hearing about any other locations that FIRE-aspiring people are moving to.

I live in Tennessee.  It is very affordable.  It is very beautiful.  The weather is very good but it still has four seasons.  Having said that, it’s also very conservative and full of pickup trucks and rednecks.  This doesn’t bother me much but it would be a deal breaker for many folks. 

We chose to come here and never intend to leave and we’ve lived in or considered living just about everywhere in the US.

walkwalkwalk

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Re: What state is the best to live in when working towards FIRE?
« Reply #6 on: December 13, 2018, 12:55:16 PM »
If you're deciding between Washington and Oregon and trying to file MFS, Washington is a community property state, so could be less effective for PSLF, since wages are community income. See IRS pub 555
« Last Edit: December 13, 2018, 12:57:42 PM by walkwalkwalk »