Nota Bene: While this post is about our move to Echols County, Georgia back in 2009, it’s still interesting and relevant to anyone contemplating a geo-arbitrage move. I never got around to putting it on my blog until now…better late than never! Here’s what I wrote back when our net worth was around $450k:
Here are the referral links for the credit cards we currently use:
Our Big Move
In the spring of 2009 my wife and I decided to leave our teaching jobs at LaGrange High School in LaGrange, Georgia for new jobs at Echols County High School in Statenville, Georgia. We knew our lives would change in a number of ways. (Read all about it here.) First, we went from a high school with an enrollment of 1,100 students to one with 180 students. Actually, the Echols County School System only had about 800 students in the entire district—it’s fair to say that it had the feel of a private school. With a smaller enrollment, we also expected to have smaller classes and we were not disappointed. In my case, I went from having 142 students at LHS to 54 students at ECHS during the fall semester; in the spring semester I had only 39 total students. What a pleasant change from my previous class load! There were also three unexpected financial changes that worked in our favor:
1. No Social Security Contributions
Since Echols County Schools did not participate in the Social Security program, employees were not required to make the 6.2% contributions to the federal plan. Right off the bat we experienced a 6.2% raise; a raise that we had not planned for. Overall, not having to make employee contributions to Social Security saved us about $8,000 a year in taxes…not bad!
2. Employer 403b Contributions In Place of Social Security
In place of the Social Security program, the district also made employer contributions to the 403b plan. These employer Social Security contributions were a surprising 5.24%. In total, our employer 403b contributions were a combined $6,500 a year*.
3. A Small Pay Increase
Because ECS was a small district and did not provide a local supplement, we assumed that our salaries would be lower. After all, our salaries were based on the state pay scale with no local funds (unlike our previous jobs in LaGrange). Naturally, we thought that we would take a pay cut at our new jobs…wrong again! Because my wife served as the FBLA sponsor, she received an extended-day salary supplement. Her extra money actually bumped our combined salary about $500 higher than our previous salaries at LaGrange High!Now let’s add it all up:
$8,000 + $6,500 + $500 = $15,000!
A $15k swing in our direction was totally unexpected! (You’d think Mr. Money Prowess here would have anticipated that financial windfall, right? Nope!) Basically, our lateral move to regain our sanity and reduce our stress ended up being a hardcore-savings bonanza.To recap, our $15k financial triple play consisted of 1.) $8k of savings by not having to contribute to Social Security, 2.) an extra $6.5k a year of employer 403b contributions (in lieu of employer Social Security contributions), and 3.) a pay raise of $500 (even though we were expecting a slight pay cut!).
The Bottom Line
Once again, good fortune and dumb luck lead us to a great job with a significant financial upside. When we left our jobs in May of 2012, we departed with many fond memories of Echols County. At the same time, we also grew our net worth from $450k to about $700k. We liked the area so much that we bought a home in Statenville in 2017. Our plan was, and still is, for our son to graduate from Echols County High in 2024!If you ever find yourself contemplating a geo-arbitrage play or a lateral move, take a hard look at the how the move might impact your finances. I certainly recommend that you take a deeper dive than we did…we got lucky! Let me know in the comments if you’ve ever made a lateral move or a geo-arbitrage play that worked out for you.Thanks for reading and enjoy the cooler weather,
Gerry
* When we left this job in May of 2012, our employer 403b contributions in lieu of Social Security were over $21k. When we later rolled these contributions to our Vanguard IRAs, we lost $1k ($500 each) to surrender charges. The end result was an extra $20k of retirement savings that we were not expecting.
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Wow! Great post!
Thanks ElleX! I had that one sitting on ice for years. I’m glad I finally got around to finishing it. G
Teacher in Alaska don’t pay into S.S. either…..and our districts don’t pay into a 403(b) for us…that is a sweet deal you had. About 15 states have teachers that don’t pay into S.S…..look out if you retire there. S.S. Will deduct a huge amount from any S.S. monies you did qualify for. It’s called the Windfall Elimination Provision (WEP). Don’t forget, you need 40 quarter of S.S. paying work to even qualify, so those summer jobs do add up…but not much with WEP.
Hi Alaska49,
It looks like the WEP is going to kick in on our social security in spite of paying into it for most of our lives. S.S. is such a crappy plan IMHO, but it’s what your get when your farm your retirement plan out to a third party. We’re expecting very little from S.S. Thanks for reading, GB