Evaluating the Opportunity Cost of Relocating for Financial Goals

Cade M's high income and savings rate allow for a move closer to family, despite potential trade-offs in retirement and other savings.

### Balancing Financial and Life Goals When Deciding to Move
* 💸  Cade M is wondering about the **opportunity cost** of moving after raises and promotions, considering that buying a new home closer to family would prevent him from **saving an additional 15%** and might impact his **retirement savings**.
* 🎯  When making financial decisions like moving, it's essential to consider your **goals and what you want your money to help you achieve**.
* 🏠  While optimization is crucial, it's also about **using money and resources to accomplish non-monetary goals**.
* 💭 " Money is only a tool. It's necessary, but it's not the **center of all decision-making**.
* 👓  To differentiate between a plan and a dream, create three versions of how life might work out: the **dream plan**, the **down-to-earth reality**, and the worst-case "**doooo plan**."
* 🗣️  Ultimately, have conversations with your loved ones, make a choice, and **create a plan to maximize your life without regrets**.

[Music] Okay, Cade M has a question. He says, How do we measure the opportunity cost of moving after raises and promotions? Our mortgage is now 8% of our gross. We save 25% for retirement and an additional 15% for other savings. We want to move closer to family in another state. Remote work enables that for us, but buying a new home would prevent us from saving that additional 15%. It might even eat a little bit into that 25% for retirement. What would you say to Cade M? All right, so his current mortgage is 8%, yeah, right. He said he's got 15% savings for other stuff, but it's not 8% rate, it's 8% of his gross, yeah, instead of 25%. 8%, yeah, and then what was his savings rate? 25%, and then he has 15% to play with to save towards whatever he wants. High income, yeah, this is awesome. Here's the way I

would answer your question Kade. What's the opportunity cost of moving man that's a that's a that's a really um that's a difficult way to phrase that question. Uh here's how here's the question. I think about if I were you or are sitting you know at your uh dining room table. Hey, what are your goals? What are what are the things that you want your money to allow you to do? Uh, one might be hey, we want to be financially independent have this big pot of money be to do all the things that we want to do when we retire but there might be another goal that says hey, we really want to be closer to family. We want to have a better you know lifestyle circumstance in terms of where we live. We want a house that has more room. We want to be able to do this or do that. Our family will be in a different location. There are other things that will become available to us. Those things become very non-monetary and it's more about do we have money and resources.

that can allow us to accomplish those goals without sacrificing other goals. Than strictly optimization. If strictly optimization was the case, then all of us, everyone would go out and buy tiny homes. We'd live in tiny homes forever, and we save as much money as we possibly could. But that is counter to some of the other goals that we have. So I think it certainly sounds like you're in a fantastic financial situation, saving 40% of your income. Your mortgage is only 8%, even though home prices are higher, even though interest rates are higher. It sounds like the home fits into the affordability calculation for you. And so I would think once you've solved the money problem, then you have to kind of think through, okay, what's the why problem? Why do we want to move? Or if we don't move, what would be the compelling reason that we want to stay? And does it align with our ultimate goals? I think cage should know money is only a tool. Um, this is why I say this. I think this is.

why when I wrote millionaire Mission I'm I'm nerdy I love math. I Love Thinking of the order of operations on how you should do money to maximize every opportunity that every dollar has to become. but I've also gotten to the age where I'm super sentimental and I think about big decisions I've had to make in my life that were outside of the money. you know when my dad passed away in my mid 20s I left kind of the corporate life I was living to to go start my first Endeavor. um I didn't that was going to be a great financial decision. it was more of the time I could I wanted to own my time so I could cuz I wasn't spending time with people I loved or in the community because I was working all the time. and I was making great money but I was like I'm going to make a decision because this is good for where I want to be with my life. it was a it was a family and it was a life decision.

I think about the fact that when I found out my youngest daughter was going to need an alternative, you know, education because she, she's on the spectrum and um, public school where my oldest daughter had been and, and wasn't in the area I was living at the time, wasn't going to be able to meet her needs. We didn't, and we threw out the finance part of it and, and looked at it. We, I mean, I shouldn't say we threw it out because we planned for it, but it wasn't the primary D, but we had to make a life decision based upon what was needed in that hard moment of, of making decisions. So, I, I, I always put that out front and center. Money is only a tool. It's not, you know, the now. It's necessary. Don't, don't hear me wrong. That's why it is a tool. It's a necessary tool, but it's not the center of all your decision-making. And this is why, if you want to take a, the difference between a plan and a dream, put on your 3D glasses.

and what I mean by that is, I actually literally when you have a scenario like this, I want you to write out three different versions of how you think life is going to work out. If you do this, I actually put pen and paper, or bring out your Excel spreadsheet, or your Google Sheets, and actually do the math and do the planning. And that's where here's the 3DS. You've got your dream plan. This is man everything worked out exactly like I wanted it to. I'm spending more time with my family. I'm meeting my financial goals. This all worked out beautifully. Then I want you to do the Down to Earth. This is what you actually think will happen. This is the reality. Yes, there's going to be some hiccups, some speed bumps along the way. And then I want you to do the doooo plan. That's the one nobody ever wants to do, the doooo plan, but you got to do it because every now and then it's better if you face this directly instead of just basing it off of the dream.

the Down to Earth but you know go ahead and make sure you address. You know what happens if this thing goes really sideways on you but once you do that type of homework Kade then you have conversations with your loved ones and you have to choose your point and you have to figure out what you're going to do to maximize his life because you only get one. And I want you to do it well but don't dream actually create a plan so that you do this and you don't have regrets later.

How Do We Measure the Opportunity Cost of Moving?

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Managing the Opportunity Cost of Relocating for a Higher Income

Cade M is considering moving closer to family in another state after a raise and promotion, but it would impact their savings rates.

The opportunity cost of moving should be evaluated based on how it aligns with their financial goals, such as retirement savings and lifestyle preferences.

Ultimately, the decision requires balancing the financial impact with the non-monetary benefits of being closer to family and improving their living situation.

Balancing Financial Goals and Life Decisions

It's important to consider multiple goals, not just financial optimization, when making housing decisions.

Saving money is crucial, but it's also essential to consider personal and lifestyle factors.

Money is a tool for opportunity, but life decisions, such as housing choices, should also align with personal values and long-term goals.

When facing the need for alternative education for a child with special needs, the decision-making process goes beyond just financial considerations.

Money is essential but should not be the sole focus when making life-altering choices.

It's important to create a 3D plan, including a dream scenario, a realistic view, and a worst-case plan, to effectively prepare for the future.

Making the Most of Life: Creating a Plan for the Future

It's important to do your homework and have conversations with loved ones to make the most of life.

It's crucial to choose a direction and figure out how to maximize life with a well-thought-out plan, in order to avoid regrets in the future.