The Cash Isn’t Always Greener

Cash is always greener

“Comparison is the thief of joy” – Theodore Roosevelt

Have you ever felt really good about something in your life only to have your friends or family rain on your parade?  You’re proud you just ran your first 5k until your coworker brags about running their 12th marathon.  You’re excited about a $10,000 raise until your sister tells you about the promotion that doubled her salary.  You love that new Honda you just bought until you park it next to your friend’s shiny Tesla roadster.

tesla roadster
Crushing your spirits with zero carbon emissions.

There are plenty of times in life where you may find yourself comparing your circumstances to those around you.  It’s a natural human behavior.  When it comes to personal finances, chasing the greener grass may sabotage your path to financial independence.

Here are a few examples of how you can shoot yourself in the foot worrying about greener pastures.

Jobs

Many physicians will leave their first job after just a few years.  Sometimes people leave because they don’t like the location or they don’t get along with their coworkers.  Often it boils down to money.  In Emergency Medicine everyone talks about their hourly rate.  Rates vary widely across the country, but focusing solely on the hourly wage is short-sighted.

Docs who go chasing the big bucks may miss out on plenty of tax breaks.  Like I mentioned in How to hide $215,000 from the IRS, my group takes advantage of every last tax break.  It is true that my hourly rate is lower than some of the surrounding hospitals. It is also true that once you factor in profit-sharing, productivity bonuses, cash balance plans and a ton of other fringe benefits I am one of the highest paid emergency physicians in the state.  I’m glad I was able to see the big picture when I was interviewing for jobs and didn’t focus solely on a big number I could brag to my friends about.

Side Hustles

Clearly I am a proponent of side hustling.  When done right it can pave the way for new retirement accounts, self-employed tax breaks and provide the cash that fuels your passive income streams.

There are a million different side hustles you can pursue, but you have to keep in mind the opportunity cost.  You would never take a week off of work so you could pick up shifts working the deep fryer at McDonald’s.  Likewise, you shouldn’t give up your high paying job in the pursuit of lower paying side gigs.  In the interest of this blog I may occasionally pursue activities that pay less than locums work, but in general I will try to focus on activities that pay more than $100/hour.

woman in brown classic trench coat eating mcdo fries during daytime
Sure, I could have made $1000 at the hospital, but this side hustle has unlimited fries!

Performance Chasing

Hopefully you already have “past performance does not guarantee future returns” engrained in your brain.  If you are constantly chasing whatever was last years hottest stock, mutual fund or asset class you will always be lagging behind.  The simplest solution is to own the market through broad-based low-cost index funds.  Set an asset allocation that lets you sleep at night and be done with it.

Alternative Investments

Warren Buffet once said “investing is simple, but not easy”.  When I first learned about index funds, asset allocation and tax strategies at Bogleheads it was new and exciting.  After a while the excitement waned.  I created an investor policy statement and building wealth went on autopilot.

gold round coins
Live below your means, invest the rest and repeat.

There was a time I started to research all sorts of alternative investments – not because I thought the returns would be better, but because I wanted to be excited about learning something new again.  I think that is half the reason seasoned investors begin dabbling in real estate.  I’m not saying there isn’t a role for alternative investments for some people.  You just have to avoid being suckered into investing in something you don’t understand.

Material Possessions

Don’t worry – this isn’t a “live like a monk so you can retire early” speech.  It’s ok to spend money on things if they make you happy.  Just make sure you are fully aware of the hidden costs.  That 30 foot boat needs to be stored somewhere.  Maintenance on that luxury car is expensive.  If you’re like me and buy a big dumb house you will be surprised by the amount of time and money you pour into it.  Don’t let the things you own end up owning you. Forget about keeping up with the Joneses. Chances are the Joneses are superficial show-offs who are up to their eyeballs in debt.

Keep Off the Grass

No one is perfect.  Despite your best efforts there will be plenty of times in your life that you can’t help but look around and compare yourself to others.  Be careful that you don’t let those comparisons sabotage your plans for financial independence.  You might just discover the cash isn’t always greener on the other side.

What do you think?  Have you ever chased greener cash only to regret it later?  Share your thoughts and comments below.

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12 thoughts on “The Cash Isn’t Always Greener

  1. I was like you in terms of choosing a practice that didn’t have the highest salary offer but I took the big picture look instead. I choose the job I have been working for last 12 yrs because of lifestyle (no call and no weekend) and as close to a 830-5p schedule as you can get).

    Chasing dollars only can lead you into a less than ideal situation (the offer may have had to been large to compensate for shortcomings and attract people in the first place)

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    1. It is hard for new grads to see the big picture sometimes. Congrats on finding a M-F 8:30a-5p job! My shift today ends at 3 AM. I’m looking forward to the day I achieve FI and no longer need to see what the ED looks like after midnight.

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  2. I think there is a natural progression as you move through your career. Just coming out of training you have as much fire and energy as you will ever have, and you want to finally get out there and do the job you’ve been training for over the last decade or so. You also have lots of demands on your money. You may be buying a house, starting a family, trying to pay down debt, and trying to get the retirement snowball rolling all at once.

    But as you get a few years in, the need for money becomes less acute and you start to get worn down by the never-ending grind required to earn that extra salary. At that point, you may find that things like lifestyle, and living close to family are more important.

    In general, the older docs I work with would rather work less and make less, and the younger docs I work with would rather work more and make more. Neither choice is wrong, they just reflect a shift in your priorities at different stages in your career.
    -Ray

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    1. There’s nothing wrong with chasing green if you’re willing to work hard and need the money. People just need to make sure that they’re not color blind. I have had several coworkers leave to work for a higher hourly rate only to discover that once they were no longer getting profit sharing, cash balance plans and productivity bonuses they were making a $100,000 mistake. I anticipate that as I get closer to FI I will begin to slow down. First thing to go will be night shifts – there is no green grass to be found there.

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  3. I’m still at my first job straight out of training. I’ve been tempted to look for a higher paying job over the years, but it entails working harder and taking more call. Just not worth it at this stage in my life. I’d rather have more free time to spend with my kids. I have branched out in my investment world to include real estate, and that’s been rewarding. But it’s something that I have an interest in and it doesn’t feel like work.

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    1. I’m also still on my first job. I picked it 100% based on location but was lucky to stumble into a group that values work/life balance and maximizes tax advantaged retirement accounts. Sometimes dumb luck is the best luck.

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  4. Money looks pretty damn green to me lol.

    But i completely get your point and love it. Sometimes we are constantly moving that goal post in life, assuming things will only feel better once we have that thing, or get that job…. but then we get it, and the joy fades. Maybe because someone else got something shinier.

    We have to stay focused on our path, and enjoy our little wins along the way. Cheers!

    Liked by 1 person

  5. I think it depends on your reference point.

    If you made sound decisions then chasing the marginal dollar in work or investments is rarely fruitful. $5 more per hour or 0.01 lower expense ratio not worth the swap BUT if you made the wrong choice in the first place then switching has huge benefit.

    If the young grad didn’t pick the job that looked at the total comp or you went with a financial advisor that layered on the high fees then chasing the green is worth it.

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