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One of the financial no-no’s in the FIRE community, and particularly the physician FIRE community is shelling out large sums of money for your kids to attend private school instead of public school.
It is indeed a very large expense with some private schools in the country costing more to attend than some universities.
Many have rightly pointed out that the public education system gives a child as much a chance to succeed and gain acceptance to high power universities and med schools as one who has been been immersed in the private school culture.
So why do some physicians (and myself) do it?
For me a there were several factors that ultimately made this decision a lot simpler for me.
- Education is important and particularly stressed in Asian/Indian families.
- Within these family dynamics there is a perceived notion that if you pay more for an education it must signify some added benefit that your child may not have otherwise.
- I myself went to a prestigious private school in California for high school.
- I felt that private school not only gave me opportunities I may not have gotten elsewhere, it also raised my chances of getting into Johns Hopkins University.
- Because of this, I felt I had an obligation to pay it forward with my own daughter
- It allowed me to take a large advantage in Geographic Arbitrage and not feel guilty
- The home I live in is located in quite a rural area/farmland.
- Property prices and property taxes were far lower than if I chose to live closer to the city where I work.
- The main disadvantage was that the public schooling system where my daughter would have had to attend was not as well rated as those in the larger, more expensive, cities.
- With a well respected private school in close vicinity it allowed me to take advantage of the property savings (which allowed me to get a much nicer home than I would have been able to) and still feel like I was giving educational advantages to my daughter.
- I can easily see my home costing 3-4x more than I paid for it in a high cost of living area and feel that the considerable savings from just this aspect alone could finance my daughters private 6-12th grade education multiple times over.
- Due to my financial rebirth a few years earlier, I was already considered a high net worth individual by the time I obtained full custody of my daughter and she started her first available year of private school (grade 6)
- Her tuition costs and all associated expenses could be expensed to and completely taken care of by my passive income sources alone.
I agree that I could have turbocharged my wealth accumulation even more by not sending my daughter to private school while maintaining the same geographic arbitrage I have.
But there comes a point where you can not just focus on accumulating wealth.
Although achieving enough wealth to be financially independent is a worthwhile endeavor, it is equally important to realize that wealth for the sake of wealth is not.
Achieving wealth allows you to partake in things that may be deemed a luxury by some but bring you happiness or some perceived utility.
Money is a resource that eventually needs to be spent (lest your goal is to die the richest person in the cemetery).
Depending on your priorities, some endeavors which others may find excessive or extravagant, should still be undertaken if it fits your core fundamentals.
Of course if financial resources are limited, I always advise to be selfish and put your own financial needs (retirement savings) over the perceived financial needs of your children (undergraduate/graduate school funding).
There are far more opportunities for funding educational expenses than there are for retirement/medical expenses:
- Although not ideal, children can always go into debt with student loans in order to receive a higher education.
- Scholarships/grants can be utilized to reduce the educational cost even further.
- With the exception of a reverse home mortgage (which only works if you are a homeowner), there are very limited opportunities for retirees to gain access to money without re-entering the workforce (which is not always a given) if they outlive their nest egg.
- This situation in turn may create an even larger financial burden on their children than any student loan ever could.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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