That’s easy. If you’re talented enough to have “work from home” prospects elsewhere, or you’ve reached the holy grail of being able to generate a middle-class income by doing a little tax planning and rebalancing a few index funds at year end, you’re not “coming back to the office.”
In about 12 hours, the WSJ comments to this article are going to be hilarious {lol}
intercst
I’ve been working from home since 1990, at times with clients on several continents (Norway, Australia, Kiwiland, Chicago, London). Now only with the stock market.
The Captain
This only applies to vanishingly few Americans. Seems they, for the most part, prefer buying bigger houses, bigger vehicles, and fancy coffee instead.
I’ve always called this: Financial Jiu Jitsu. Do what other people ain’t. And don’t do or pursue what other people seem to not be able to live without. Harness the activity, interests, and desires of all those other people to your advantage. It’s all just lying there to be picked up. Why make it any harder on myself than it needs to be?
I’m still working from home. Commuting was a real pain when I worked on the other side of town, and I would work 7a to 4p just to get around traffic issues. Pandemic hit and I got back 90 minutes a day. I changed jobs and my commute dropped from 25 miles to under 5 but I still work from home. Why? Well, most my co-workers are in CA, not TX. So if I’m in the office I’m around other employees, but not the ones I interact with as part of my duties. Nice to see other humans, sure. But it does little to help or hinder my work performance.
I don’t think it can be over stated how much it costs to work. The commute obviously, but most people underestimate how much it costs to operate a vehicle. Then work wardrobe, and the personal time cost. There are fewer hours in the day to do things like meal planning and prep, so that means more meal out, etc. etc.
Then of course the tax code strongly punishes productive work, so by quitting there is an enormous savings there as well. When you add it all up, working simply doesn’t make sense for a lot of people.
That’s so true. I’ve read stories about people who’ve been early retired for 10 or 15 years, and they find they’re spending half the amount they did while working, yet have a better lifestyle.
I’m 29 years into the “4% rule” and the dollar amount of my spending in 2023 is about equal to my 1994 spending. Inflation has about doubled in the past 30 years, so that means that I cut my spending in half.
Where were the big savings?
Housing. Since I’ve always used a rent vs. buy analysis to inform my real estate decisions, I didn’t buy a home until it was priced low enough to give me the prospect of an S&P 500 like return on the purchase price. That didn’t happen until 2012 when I bought a home for cash at the tail end of home mortgage meltdown when you couldn’t give away a home. Since I don’t have a mortgage and live in a state with low property taxes, my monthly housing costs are comically low – like 20% of monthly rent for the identical home across the street. Also, as we know, most homeowners don’t account for the cost of maintenance and repairs. When my HVAC unit failed two weeks ago, if I was working I would have called a repair tech. But since I’m retired, I had the time to diagnose the problem myself and drive into Portland to get the $7 part at Grainger Supply. It works for the big ticket items, too. Since, I’m living off an investment portfolio and delaying SS to age 70, I have the flexibility to keep my taxable income low enough to get an $8,000 rebate on a new heat pump HVAC system (it’s “free Obamacare” for your home. {lol}) If I was working 40 hours a week, my income would be too high to qualify for the rebate.
Taxes. As I noted in my “Minimzing the Skim” article, a married couple with $100,000 in wage & salary income paid $16,372 in Federal income taxes and FICA in 2021. A neighbor couple living off an investment portfolio who limited their income to $100,000 of qualified dividends and capital gains would pay zero in taxes. Once you’re living off an investment portfolio, you basically have to volunteer to pay any taxes if you pay attention to what you’re doing.
The last 10 years I’ve started to cook all my meals. Since I can watch TV while I’m doing it, food prep isn’t costing me any time. Prior to that, I ate at least 2 meals/day in restaurants. Once you stop working, you have the time to make your day-to-day living more efficient.
Vacations and travel. Prior to COVID, most of my airlines tickets were bought with credit card miles and I had the flexibility to wait until I could get a cruise for a rock bottom fare. The $428 I paid for a 7-day cruise of the Adriatic Sea from Venice was almost cheaper than staying home. You likely can’t schedule the travel bargains if you’re working.
There’s other stuff I could list but those are the big five.
intercst