How to Become Financially Independent Spending More Than $200k a Year



In all my time writing this blog, I’ve avoided using a lot of concrete numbers when it comes to my own financial situation. I’ve been hesitant to put it all out there, but with this post, the time has finally come. Right to the point, our family expenses currently total up to more than $200,000 a year.

(Pause for dramatic effect)

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. Money Mustache or Physician on Fire, throw out annual expense numbers like 40k or 60k. I had to take a step back and really examine things – are we just being overly extravagant?

I needed to know why, exactly, these expenses are so large. So I broke our entire budget down to figure out the biggest factors.

My Big Annual Expenses

First, there's the high cost of living in our area. I'm sure Miss Bonnie MD gets me on this one. Expenses directly related to housing account for roughly 40% of our total spending.

Second is the fact that we hire help for childcare. My wife doesn’t work full-time, but we need help for the times when she does work. That expense can add up.

Third is the cost of preschool for our children. Brace yourself; it’s over $1600 per month which works out to nearly $20k a year. Yes, that number does sound ridiculous, but believe it or not, we went with one of the cheaper ones in the area.

Coming in strong for fourth is student loan payments. It’s not overly extravagant, but between my wife and I, we owe six figures in student loan debt (not uncommon for our profession). We're extremely lucky though that we were both able to consolidate our loans at very low interest rates (<3%).

Fifth is health insurance. Being my own corporation means that I pay it all on my own. People who are nearing or shooting for financial independence worry about how they will pay their health insurance. I'm already paying for it so I'm used to figuring it as an expense.

Sixth and finally, donations to charity. I don’t really consider this an “expense,” because we give willingly, but at least 10% of our income goes to worthy causes. This is important to us, and something we won’t be changing.

Adding It All Up

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.

And yet, if you look at my income report, we’re fast approaching what I consider Financial Independence – from medicine, anyway. 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.

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. My income exceeds my expenses. This is a direct result of my multiple streams of income. Indeed, even if I quit medicine altogether, I’d still have an income strong enough to support my family.

That’s an awesome feeling.

Okay, okay, so there are other things to consider besides regular expenses. What about the kids’ college, for example? Or some unexpected event?

Well, I do expect my sources of income to continue to multiply and increase. 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). I only expect to continue to add to my net worth from that point on.

How I'm Making It Happen  

As I mentioned before, I could be truly financially independent right now (if I move). However, my wife and I are not willing to do that at this point in our lives. We love where we live too much.

So with that in mind, these are some of the things that play a part in my personal journey to being financially independent – even while spending more than $200k a year.

  • I have additional sources of income, preferably passive income sources. Now, “passive” doesn’t necessarily mean you’ll never have to put any work in. It means you put more work in front and reap ongoing benefits into the future. Even with real estate crowdfunding, which is extremely passive, you still need to do a little due diligence on the front side.
  • If necessary, I could reduce my expenses. At this point, I could downsize my house and move a little bit out of the area if needed. I live in a very desirable neighborhood and the price per square foot is on the high side. We also aren't extremely frugal when it comes to eating out or trips. Definitely room for improvement.
  • I've been very aggressive about putting my money to work, even early on in my short career. My initial goal was to put my money into cash flowing investments like real estate investment properties and crowdfunding. This takes time, but I’m starting to see the dividends. I plan to continue to be aggressive by saving quite a bit and just throwing that into investments.
  • It helps to have a high-paying specialty. I can’t discount the benefit I’ve received from working in one of the higher paying specialties in medicine.
  • I have a life partner who works. I’m where I am because of my wife and her ability to bring in enough money to cover around 40% our expenses. She’s doing it in a sustainable way, with a great work-life balance.
  • Lastly, I'm smartly insuring against a huge unexpected event, like a disability, so it isn’t able to derail the whole plan.


The whole point of this post is a simple one – it's not impossible to become financially independent if your expenses are in the six digits. (I'm not an advocate for high spending, I just believe it's sometimes a by-product of where you live.) It's possible to live the way you want to, all while maintaining a good work-life balance. If you have enough streams of income (ideally passive ones, you know me), you can afford to enjoy your life now and in the future.


  1. I love the admission! I don’t think I’ve admitted how much I spend, nor do I actually know. It might be a fun exercise.

    I’ll let you in on a little secret: some of the guys who claim they spend a very little amount actually spend a lot. They just do so to attract more people so they can make more money. It’s a very shrewd business move!


    • Thanks! Not knowing how much you’re exactly spending must mean you’re in a pretty good place. We get by without adhering to a strict budget because we’re relatively reasonable with our spending and thankfully make a good income. Not sure I’d change too much about our spending at this point but it is a good exercise to break it all down.

  2. This is a good, honest post. It’s refreshing to hear how other’s spend in a HCOL area. Like you, I live in arguably the most expensive part of the country- smack middle of Silicon Valley; the home of computer chips and $1 million tear down shacks. Add in children’s expenses and it’s a real struggle to get ahead. As an MD, time is extremely valuable and limited so I am willing to trade money for more time. I outsource a lot of stuff in my life so I can have more time with family and to earn more $ through my moonlighting.

  3. Phew someone else like me! Our direct and indirect housing costs are about 50% and then layer on aux pair, skiing etc then its an embarrassingly huge sum. But my wife works and I earn good money so actually our saving rate is pretty good. So I’m not badly off-course, but need some slight adjustments.

    • We all could use slight adjustments, ha! It’s all about making these micro adjustments keeping the goal in mind. However, I don’t want to be so rigid that I don’t enjoy the journey. Sounds like you’re on a very similar path and I’m sure we’ll both get where we want to be.

  4. That’s a lot of money out the door, but as you know, it’s not all what I would consider spending, particularly mortgage principal payments, and you could also argue against the student loans.

    Will your kids be enrolling in public schools once the absurd cost of pre-school is behind you? I think you paid more in one year than we did enrolling two kids each in three years of pre-school.

    Just imagine how much lower your expenses will be once you are done with student loans, the mortgage, disability insurance, daycare / tuition, etc… The only reason we’re able to spend under six figures is the fact that we’ve eliminated all of those. Helps to have an employer buy our health insurance, too.


    • I pay more for preschool than I did for medical school haha. The plan is for public school for the kids, at least for elementary. We’ll have to figure out what to do after that, but we have some time. I guess it’d be interesting to see what the numbers would look like without those bigger expenses.

  5. Thanks for the honesty!
    As a new physician in a HCOL area (necessary to be near family support), with a high level of school loans, preschool for twins, I read the blogs and sometimes feel bad. The reality is we want to plan wisely, but also provide for our families. Like you, a lot of my expense is mortgage – for a house in the best school district. What I lack is the passive income, so I’m going to start working on that.

    • Yes it’s a tough balance, and if we could move, it would be a lot easier. However, we’re just not willing to do that at this point, so we’ll make the best of what we’ve got. The passive income has been a game changer for us though. Good luck!

  6. What do you think your safe savings amount should be to able to SPEND 200,000 in today’s dollars in retirement? Assume 50% in pre-tax ( Ira,profi sharing etc.) and 50% post tax savings. To keep it simple forget social security. Assume you want to leave at least one half of today’s savings ( inflation adjusted ) for heirs and charities.
    I think 10,000,000 would do it. Three percent draw down and max of 30% in taxes ( much of income would be capital gains). You may need to factor in more as you gave not paid for college and grad school for you two children . Add another million for two children. Maybe add some more if sequence of returns is not great.

  7. Yeah, HCOL puts a strain on your financial trajectory, but guys like Financial Samurai and you prove that you can make it if you hustle. However, it is much harder to do, and you have to be in the right profession too. It does seem like the Bay Area and much of the SoCal HCOL is quite exceeding the cost of the East Coast bigger cities. Most of the physician families working in Manhattan commute in from NJ or Scarsdale area due to cost and space issues.

  8. Thank you for sharing.

    My husband and I just paid off our student loans in order to tack on more debt-having children. Why are childcare and preschools so expensive??

    • I’m still working on school loans and Childcare/preschool is expensive. However, it is soo easy to get sucked into lifestyle creep with our kids. Suddenly the Montessori-Spanish language immersion with Latin and ancient Greek private school (i.e. fancy daycare) for the toddler is a MUST. We spend a lot on our kids, but there is literally no ceiling to what can be spent. I find that we have to continually restrain ourselves.

  9. At last, someone in my neck of the woods. I was feeling the same reading mr money moustache and others go on about frugality. Not that I discount it either. There are some good elements in that lifestyle but my location in a European Capital and one of the most expensive cities in the world doesn’t particularly lend itself to frugality.
    Nevertheless and in spite of my location I should hit FI in 3 years. I hit it a few years ago but upgraded house and location and bought a beach house. Looking for some lifestyle later.
    I was always a bit embarrassed that I would do it with living expenses so high but good to know others are striving for the same thing.
    Love the blog

Comments are closed.