Cost of Living RD
It’s funny to remember when the idea of how much things cost finally became a reality to me, and then to my kids. I grew up in southern California. When I tell people that they always have some comment about how much it costs to live there. I always respond by saying, “Well, I didn’t have to pay the taxes or pay to live there, so it was a great place to grow up.” How my parents made it work there I’ll never know. The closest I ever came to California prices was living in Colorado from 2012-2019. Housing prices were constantly climbing. Gas was expensive. It felt like we were paying top dollar for everything. When my kids arrived at the driving age we had one stipulation with them, they had to pay to put gas in the car we provided them. At the time of this writing I have had 2 driving teenagers and I have another who will start driving in 4 months. They all have to have a job in order to drive, because I already pay for the car and their insurance, they have to pay to drive their friends around. I can distinctly remember my oldest daughter commenting on the rising gas prices when we were driving home one day. We have a gas station on the corner of where our neighborhood exits to the main road. She was flabbergasted as she noticed the price per gallon had eclipsed $3.50. She was ticked. It made me smile. After a year of school away from home she started to gain even more of an appreciation for how expensive everyday living can be. The kicker was when she was serving a mission for our church in California. The first time we were able to talk to her after spending a couple of days in California her first comment was, “Everything is so expensive here.” Hahahahaha. Welcome to adulthood 19 year old.
I used to not care about how much things cost. It costs what it costs and that’s the long and short of it. You pay it and move on. What I naively failed to understand was that if you are living someplace where the cost of living is less, your money goes farther. I know that sounds super dumbed down and obvious, but it was something that I hadn’t experienced until I moved to a rural setting. Not only did every day items seem to be cheaper, but I noticed that I wasn’t spending as much money as I used to. When you don’t have a lot of entertainment options you tend to spend less money. I say that now, but at the time of this writing we as a country are experiencing record high inflation, so now everything costs more, but when we moved to a rural setting, pre-Covid, there was a marked difference between what things cost in Colorado and what they cost in eastern Kentucky.
Where this really made a huge difference for me was in the amount of money I needed to take home to cover my family “overhead.” Moving from Colorado to Kentucky allowed me to cut my mortgage payment in half, while only sacrificing a few hundred square feet. We are talking thousands of dollars per month difference in a mortgage payment. Another huge benefit I saw was in the amount of driving I didn’t have to do. We now live in an area where we are so close to everything. When we lived in Colorado our oldest daughter was part of a swim team that practiced 30-40 minutes from our house. We would have to drive that multiple times a week, to and from practice. And that was just for one of our five kids who had activities going on. Everything is closer now. My practice is a mile from the house. Our schools are a mile from the house. Our church is a mile from the house. Our grocery store is a mile from the house. We live our lives in a mile radius from the house. I know that sounds claustrophobic to some, but you would be amazed not only in how much time you save living in a smaller community, but how much money you can save on gas when you don’t have to fill up every couple of days.
The same is true with respect to your practice. While you might not save much on supplies or lab bill, your biggest expense, staff salaries, can be greatly impacted by practicing in a rural area. I have some staff that I am paying $10/hour less than colleagues are paying their employees for the same job. Guess what? If it’s cheaper for you to live there it’s also cheaper for your staff to live there. It’s not a matter of underpaying staff. My staff make an hourly rate that is commiserate with what others are making in this area. Other fixed expenses like rent are going to be cheaper in rural areas than in urban areas. You can expect to pay less in a rural area for almost everything than you would in an urban setting.
There is a tremendous peace of mind that comes with knowing that you don’t have to bring home a large sum of money in order to keep the lights on at home. That stress can be very detrimental to your mental and overall health. It can lead you to over treat patients because you “need the production.” When your office and home overhead are low it truly give you freedom. You can feel safe taking time off if you’re a solo practitioner and there isn’t anyone else to produce when you’re gone. I have practiced with partners in the past. It was really great to be able to take time off and know that your partners were there still producing and paying the bills. In my current situation I am practicing solo. It’s more stressful taking time off because I know that my offices are closed down with no production being done. That being said, I can afford to do so because I now live in an area where I don’t have to take home as much money to live.
The point that I’m trying to make here is that there are two ends of the spectrum. One is the situation where you are practicing in a very competitive market, which most likely is a more expensive place to live. Your home overhead is high and your ability to produce is diminished because of heavy competition. The opposite situation is that you are practicing in an area that has little/no competition. It’s also cheaper to live in said area. You don’t have to produce as much to meet your home overhead. You have the option to work more and increase your profits, which allow you to pay down debt and become financially secure. I know that there are exceptions to these extremes, but I can make the case that they aren’t that extreme. The gap in widening and the opportunities between these two extremes are quickly disappearing.