How To Achieve Fire In High Cost Cities

What pros do differently to hit FIRE in pricey zip codes

You want the real playbook for how-to-achieve-fire-in-high-cost-cities? Cool. Pros in San Francisco, NYC, Boston, LA don’t pray for 12% annual returns or a miracle bonus. They run math-first, tax-aware, rules-driven systems that survive Bay Area home prices and New York tax brackets. It’s not sexy. It works.

Quick framing. FIRE, professionally defined, starts with after-tax spending as the target. You price the life you actually want, say $180k after-tax in NYC or $140k in LA, and then you back into: 1) the required portfolio size, 2) the withdrawal rate (many of us model 3.0%-3.5% for sequence risk, not the old 4% headline; see Big ERN’s work from 2017 updated through 2023), and 3) the mix of accounts (taxable, Roth, pre-tax) to hit that after-tax number with the least drag. You’ll notice I didn’t say “cut lattes.” We’ll get there, by not getting there.

Because in HCOL zip codes, there are two boss fights: housing and taxes. Everything else is mop-up. Taxes are measurable and, to a point, malleable. In 2025, top federal long-term capital gains is still 20% plus the 3.8% NIIT for high earners. State and local can sting: California up to 13.3% on ordinary income (as of 2024), New York State up to 10.9% (2021 schedule still in effect), NYC adds up to 3.876% on top, and Massachusetts is 5% flat with a 4% surtax over $1M (in place since 2023). Those aren’t trivia; they determine where every incremental dollar should live and how/when you sell company equity. Housing is the other lever: with 30-year fixed rates hovering in the mid-6%s earlier this year, owning vs. renting math can flip block-to-block depending on property tax add-ons, HOA, and whether your rent is below-market. Pros run the buy-versus-rent annually, not once.

The system piece is where people either make it or…don’t. Pros write rules. Literally written. A few standards I’ve seen (and used) that hold up in 2025:

• Savings-rate floors: e.g., 35% of gross in SF, 40%+ in NYC dual-income. If comp drops, lifestyle drops before the percentage does.
• Automatic raises-to-investing: 75%-100% of any comp increase or RSU refresh routes to taxable brokerage, not lifestyle creep.
• Equity-comp liquidation plan: pre-scheduled RSU/ISO/NSO sales tied to price bands and tax lots, balancing AMT and capital gains brackets, no vibes.

And they track KPIs like they run a business, because they do. Not feelings, not “I think we’re on track.”

KPIs to monitor quarterly: savings rate (% of gross), time-to-FI (months to hit target at current glidepath), effective tax rate (federal + state + local; including NIIT), and net worth delta ($ change per quarter). Miss a target? You change a lever.

What you’ll get here: a no-magic 2025 playbook that prioritizes tax brackets, housing math, and cash-flow automation over coffee lectures. We’ll translate those tax rates and mortgage realities into actual moves you can pull this quarter, not someday. And yeah, I’ll share the exact rules I’ve used with founders and PMs who retired in their 40s in Manhattan and didn’t have to move to Omaha. No shade to Omaha, I just like a decent bagel nearby.

Pin down your HCOL FI number (yes, with your city’s rent)

Start where your bank account actually lives: current annual spend. Pull the last 12 months of transactions and separate non‑negotiables from flex. Non‑negotiables in a high-cost-of-living city usually mean housing, childcare, healthcare, and taxes. Flex is dining out, travel, subscriptions, the triathlon bike you swear will change your life. I’ve done this for years and, honest moment, the “misc” line item is always bigger than I expect. It’s fine. We clean it up now.

Step 1: Split the budget

• Housing: Use your actual rent or a full buy cost. Buying means PITI + HOA + 1% of home value/year for maintenance (rule of thumb) + insurance + expected upgrades + commuting costs. With 30‑year mortgage rates still hovering near ~7% this fall (2025), the carrying cost gap vs rent is real in many zip codes.
• Childcare: Use market rates, not hope. In 2023, the average annual cost of center-based infant care in the U.S. was about $11,582 (Child Care Aware of America). In DC it’s around the mid‑$20k’s; Massachusetts is north of $21k. If you’ve got two kids under five in a city, you know the math hurts.
• Healthcare: Include premiums and out‑of‑pocket. For employer plans in 2024, average total premiums were $8,435 for single coverage and $24,991 for family coverage (KFF). If you’ll be on an ACA plan post‑FI, add the deductible and realistic OOP, don’t just assume subsidies will be perfect every year.
• Taxes: State and local matter. California’s top marginal rate is 13.3% (as of 2025). NYC residents add up to 3.876% city tax on top of New York State brackets. Your FI number has to be after paying these.

Now total non‑negotiables. That’s the floor. Flex is everything else you can dial down in a pinch.

Step 2: Build two targets

• Lean‑FI: Non‑negotiables + a minimal flex buffer. Think: rent or realistic mortgage carry, basic childcare coverage, ACA or COBRA premiums + expected OOP, and modest lifestyle. Translate to a portfolio target by dividing by a conservative withdrawal rate (more on that in a second).
• Comfortable‑FI: Add travel, dining, activities, and a “Murphy” line (stuff breaks). If lean is $110k/yr and comfortable is $170k/yr in your city, write both down. Clarity beats vibes.

Step 3: Model rent vs. buy honestly

• Buy case: Principal/interest + property tax + HOA + insurance + maintenance (1%/yr) + average capex + commuting costs (time and money). If you’re moving farther out, price your time at your after‑tax hourly rate. That 90‑minute round‑trip, 230 workdays a year, is ~345 hours. That’s a lot of podcasts.
• Rent case: Rent + renter’s insurance + annual rent increases + the opportunity cost (investable cash not tied up in down payment and closing).

Quick reality check here: owning can still be great, but with high rates and higher HOAs in many new builds, the monthly all‑in often beats the Zillow listing by 20-40%. I keep seeing that miss trip people up.

Step 4: Pick a withdrawal rate for 2025, not 1998

The “4% rule” came out of late‑1990s Trinity Study work showing ~95% success over 30‑year periods using U.S. historical data. Useful history, yes. But we have to respect sequence risk and today’s valuation/rate mix. I calibrate with a band: stress test at 3.25-3.5% withdrawal with poor first‑decade returns and higher inflation, and a base case near ~3.75-4.0% if you plan to work part‑time or can cut flex in a downturn. That means:

• Lean‑FI portfolio ≈ Lean annual spend / 3.25-3.5%
• Comfortable‑FI portfolio ≈ Comfortable annual spend / 3.5-4.0%

Circle back to healthcare for a second: include premiums plus a realistic OOP. For ACA Bronze/Silver, I earmark at least one full deductible each year in the plan’s currency; if you hit the OOP max two years in a row you’ll be glad you planned it.

Step 5: Use a glidepath

• Coast‑FI first: Reach the point where current retirement accounts can grow to cover Lean‑FI at traditional retirement ages without more contributions. Earlier this year a client in Brooklyn hit Coast‑FI at 38; that let her cut 401(k) deferrals and redirect cash to childcare and a jumbo refi reserve.
• Top up to full FI: As comp peaks, shovel the surplus into taxable accounts targeting the Comfortable‑FI number. Smart Roth conversions in lower‑income years, HSAs for tax‑efficient medical, and I‑bonds/treasuries for ballast while rates are still decent.

Stress‑test your plan with lower first‑decade returns, a 2-3 year bear market early on (think 2000-2002 or 2008 patterns), and 1-2 surprise expenses a year. If the plan survives those, you’re probably okay. Not perfect, nothing is, but okay. And you won’t freeze waiting for a perfect rate or perfect market that never shows up.

Income stacking in expensive cities: make the zip code pay you back

HCOL doesn’t have to mean hand-to-mouth. It can be an income machine if you squeeze every comp lever with a plan and a calendar. And yes, it’s a bit of a spreadsheet rodeo. Worth it.

• Have a written equity plan. Treat RSUs and ISOs like an inventory you manage, not a lottery ticket. For RSUs, set a standing sale schedule, e.g., auto-sell on vest day or within 30 days, and redirect proceeds to a diversified taxable portfolio. No heroics. If you want upside exposure, cap it. I usually see folks limit single-stock to 10% of liquid net worth. Your call, but write it down.
• ISOs: manage exercises around AMT. The bargain element hits AMT income the year you exercise. For 2024, the AMT exemption was $85,700 (single) and $133,300 (MFJ) per IRS Rev. Proc. 2023-34. That’s last year’s figure, but it anchors the idea: do partial exercises in late Q4 after you see year-to-date income, and be ready to stop if your Form 6251 estimate spikes. I keep a “green zone” amount for clients, x shares per quarter that won’t tip AMT, then adjust if the stock rips or comp surprises.
• Negotiate comp when the budget window is open. Q4-Q1 is when teams lock next year’s numbers. Ask for RSU refreshers (annual or promotion-linked) in addition to cash. A lot of tech and fintech roles still run refreshers sized off level and performance. Anecdotally, 15-30% of initial grant per year isn’t weird at mid-senior levels. Cash is great; compounding equity with a sell discipline is better.
• Monetize niche skills, short-cycle. 2025’s hybrid market still pays premiums for scarce, outcome-tied work. Keep it 1099-friendly: 2-6 week projects, clear deliverables, pre-paid milestones. Target 60-70% utilization so you have time to sell and upskill. Pair with a Solo 401(k) to shelter profits, total limit was $69,000 in 2024 (IRS 415(c), excluding catch-up), which gives you real tax drag reduction. Teaching live cohorts, licensing a small piece of IP (templates, data sets), or retainers for “fractional” roles can fill gaps between bonus and refresh seasons.
• Use employer benefits unlocked by SECURE 2.0. The student-loan match provision became available starting in 2024 plan years. If your plan turned it on, your employer can match your qualifying student-loan payments into the 401(k). That’s free retirement money on debt you were repaying anyway. HR doesn’t always advertise this well, ask specifically about “student loan match under SECURE 2.0.”
• Track opportunity cost like a hawk. Hybrid isn’t free. WFH Research reported in 2024 that roughly 28% of paid days were worked from home in the U.S., which is sticky in 2025. Great, use it. Every extra office day is time and energy you can’t bill or upskill. The 2023 Census ACS put NYC’s mean one-way commute near ~41 minutes; that’s ~1.3 hours a day. Price it in. Seriously, put a dollar value on it.

A couple real-world notes from this year: bonus timing still clusters Jan-March, equity refresh cycles hit spring/summer, and performance cycles are back to “strong” normal in a lot of firms after the 2022-2023 whipsaw. But it’s messy. I won’t pretend I can predict your firm’s comp committee mood, nobody can. What you can do: set the asks in Q4, document the plan, and have the sell tickets ready.

A quick framework:

1. Write a 1-page comp playbook: RSU sale cadence, ISO exercise caps, refresh ask, bonus target, 1099 rate card.
2. Quarterly: run a Form 6251 AMT check with updated ISO math. If it’s close, pause exercises and revisit in January.
3. 1099 profitability: quote day rates that back into your target after self-employment tax, platform fees, and 30-40% non-billable time.
4. Benefits sweep: confirm SECURE 2.0 student-loan match, mega backdoor access, ESPP discount, HSA investment options.

Bottom line: the city can pay you a premium. Only if you operate like a small business, calendar-driven, tax-aware, and slightly relentless. It’s complex, yeah. But the math, done consistently, tends to win.

Housing is the boss level: win it or FIRE drifts by years

HCOL markets don’t break most budgets with avocado toast, they do it with rent and mortgages. Shelter is roughly one-third of the CPI basket (BLS weightings put it near 34% in 2025), and it behaves like a subscription you can’t cancel. Nationally, ATTOM’s Q2 2025 affordability read showed typical homeownership costs eating about 35% of the average worker’s wages. Add NYC, SF, Boston layers and you’re north pretty fast. And yes, half of U.S. renters were cost-burdened in 2023 (ACS says ~49% spent 30%+ of income on rent), so you’re not imagining it.

There are levers, though. Some are boring calendar moves; some are surgical real estate math. All are cheaper than “cope and overspend.”

• Time the lease: Q4 and early Q1 tend to see more vacancy and concessions in many big-city submarkets, holiday lull, slower move cycles, inventory that missed summer. That’s when you ask. If you expect to stay 6-12 months, months-free can beat a lower face rent because the effective rate drops without embedding a permanent price (and if you move at renewal, you captured the discount). If you’ll stay 2-3 years, push for a lower face rent; it compounds across renewals.
• Room-mate math is not beneath you: A $3,600 one-bed vs. a $5,000 two-bed in the same building? Split two ways, your cost drops from $3,600 to $2,500 and you usually gain a den/office. I know, not glamorous, neither is delaying financial independence by 4 years.
• Micro-commute arbitrage: Check one transit stop farther or a 12-18 minute longer ride. In a lot of NYC and Bay Area corridors, that’s 10-20% off with basically the same lifestyle (same coffee, same gym; you just cross one neighborhood line). It’s weird how often that one stop is the price cliff.
• House hack where zoning allows: Rentable rooms, ADUs, or small multis (duplex/triplex). Run numbers, not vibes. Cap rate = NOI / price. DSCR = NOI / annual P&I. Minimum DSCR 1.2x keeps you from white-knuckling every plumbing leak; 1.3x is nicer. Reality check: if you model maintenance at zero to make it “work,” it doesn’t work.
• If buying, underwrite a 7-10 year hold: Rate paths are noisy, and transaction costs are sticky. A decade horizon gives you time to refi out of a 2025 mortgage if rates ease later this year or in 2026, and to amortize closing costs. Resist FOMO, your IRR hates round-trips.
• Maintenance reserves are non-negotiable: Baseline 1-2% of home value per year, more for older or complex systems (flat roofs, elevators, pools). If 1% blows up your plan, renting is the better financial decision right now.

Quick anecdote: earlier this year I moved a client in Seattle one light-rail stop south, same line, same friends, 14 extra minutes door-to-door. Effective rent cut 15% after a one-month-free concession. They kept their gym; their dog still hates scooters; their savings rate jumped 7 points. Not fancy, just timing and a map.

On negotiations: be specific. Ask for 6-8 weeks free on a 14-16 month term in Q4, or a permanent $150-$250/mo haircut if you plan to renew. Landlords model to occupancy; you model to effective cost, different goals. And keep a renewal calendar reminder for next September; don’t get trapped rolling into peak-season pricing by accident.

If you’re running a house hack pro forma, write these down like you’re a lender, not a dreamer:

1. Gross Rents minus 5% vacancy minus operating costs (taxes, insurance, utilities you cover, repairs).
2. Set reserves: 1-2% of value + capital expenditure line (roof/HVAC amortized).
3. Calculate NOI. Then DSCR = NOI / annual debt service. Target ≥1.2x.
4. Stress test +10% property tax and +50 bps rate at refi; if it still cash-flows, you can sleep.

Bottom line: You don’t need a miracle. You need a calendar, a spreadsheet, and a willingness to move one stop, share a kitchen, maybe add a door to a bonus room. Small frictions, big runway.

Taxes that actually move the needle in HCOL states

Okay, this is where boring paperwork buys you years of runway. In high-tax states, tax alpha isn’t abstract, it’s rent money. Quick framing: state and local top brackets today are real. A NYC high-earner can face roughly ~14.8% combined state/city at the top end (NY State 10.9% + NYC 3.876%); California’s still max ~13.3%; Oregon 9.9%. When you stack that on federal, your marginal decisions matter, a lot.

SALT cap strategy (now through 2025)
Under the 2017 TCJA, the state and local tax deduction cap is $10,000 through 2025. That’s still the law right now. If Congress doesn’t act, we shift to 2026 rules, likely no SALT cap but potentially higher federal rates and a lower standard deduction. Net effect could help or hurt depending on your income, filing status, and state rates. Two practical moves:

• Time deductions, if you’re itemizing, prepay property taxes only if deductible and actually helpful under the cap. Many of you in CA/NJ/NY hit $10k without trying; don’t throw good cash after a capped deduction.
• Bunch charitable gifts into a donor-advised fund (DAF) in high-income years to clear the standard deduction hurdle. Pair bunching with big RSU vests or a business sale.

Pass-through Entity Tax (PTET)
Since 2021-2023, over 30 states have enacted PTET regimes that let partnerships and S-corps pay state tax at the entity level, creating a federal business deduction and easing the SALT cap pain. Mechanics vary (rates, credits, deadlines). If you run an S-corp consulting shop in NJ or a partnership in CA/NY, model the PTET election. I’ve seen six-figure earners save mid-four figures when PTET is structured right. Key check: owner mixes, allocation rules, and whether nonresident owners get full credits.

Mega backdoor Roth (only when your plan allows it)
This one’s wonky, I said mega backdoor and half the room glazed over. Translation: if your 401(k) plan allows after-tax contributions and in-plan Roth conversions (check the SPD, the summary plan description), you can stuff savings above your regular deferral. For 2025, the employee deferral limit is $23,500, catch-up $7,500 if 50+, and the total 415(c) limit is $71,000 (employee + employer + after-tax). The spread between your match and $71k is your mega backdoor room. In HCOL cities with high comp, that Roth space compounds nicely and hedges future tax rate risk.

HSAs: triple tax-advantaged, treat it like stealth FIRE
If you can cashflow healthcare now, invest the HSA and let it grow. For 2025, HSA contribution limits are $4,300 self-only and $8,550 family (catch-up $1,000 at 55+). HDHP minimum deductibles are $1,650/$3,300; out-of-pocket max $8,300/$16,600 (IRS 2025 figures). You get the deduction up front, tax-deferred growth, and tax-free withdrawals for qualified medical later, that’s three wins. I scan my receipts and keep a running log; reimburse in a future year if needed. Slightly nerdy, but it works.

529-to-Roth IRA rollover (SECURE 2.0)
Started in 2024: you can roll leftover 529 money into a Roth IRA for the beneficiary, lifetime cap $35,000, subject to annual IRA limits and the beneficiary’s earned income. The 529 must be open 15+ years, and recent contributions (last 5 years) can’t be rolled. If your kid’s scholarship blew up your 529 plan math, clean it up now, not in 2027.

Equity comp: AMT/ISO, QSBS
ISOs are great, until AMT bites. Basic playbook: track bargain element at exercise, run an AMT projection before year-end, and consider partial exercises across multiple tax years to manage AMT. If you do trigger AMT, remember the AMT credit can be recovered in future years. And if you hold qualifying C‑corp shares, review QSBS (IRC §1202): potential 100% exclusion after a 5-year hold for stock issued after Sept. 27, 2010, up to the greater of $10 million or 10x basis, with a bunch of rules (original issuance, active business, assets under $50M at issuance). Yes, I’m oversimplifying, QSBS diligence is a sport. Worth it if you’re in startups in SF/NYC.

DAF bunching
When you have a lumpy income year, IPO lockup end, secondary sale, or a monster RSU vest, front-load several years of giving into a donor-advised fund. You take the deduction now (subject to AGI limits) and grant over time. In HCOL states where you’re capped on SALT, the charitable line is one of the few levers left.

Action list before December 31

1. Run a PTET model for your pass-through, elect if the federal deduction beats the admin pain.
2. Confirm your 401(k) SPD for after-tax + in-plan Roth; target the 2025 $71,000 total limit if cashflow allows.
3. Max the HSA (2025 limits above) and invest it, don’t let it sit in cash by default.
4. Harvest a DAF contribution to bunch deductions in your high-income year.
5. Map ISO exercises against AMT. If you’re QSBS-eligible, paper the files now, not during exit.
6. If you’ve got stranded 529 money, start the 529→Roth pipeline; the lifetime $35k cap doesn’t move itself.

Bottom line: In HCOL states, tax planning is not cute optimization, it’s the difference between hitting FIRE at 45 vs. 52. The tactics are on the table now, and some could shift after 2025. Use Q4 to lock in what you can while the rules are what they are.

Cash-flow systems that survive HCOL life (and holiday creep)

You need a setup that works when Q4 goes off the rails, school auctions, travel, year-end tips, gifts, property tax drafts. The trick in high-cost cities isn’t a prettier spreadsheet; it’s a system that keeps saving predictable and lets spending flex only after saving is locked. That’s the inversion most people miss.

1) Set a base savings rate and let spending flex (not the other way around). In peak comp months (bonus, RSU vest, partner draw), pre-commit 35-50% to savings/investments before cash hits your everyday account. That could be taxable brokerage, backdoor Roth contributions, 529s, or just building the war chest for a down payment. The math is boring but brutal: a consistent 40-50% overall savings rate trims time-to-FI dramatically (simple FIRE math: near-50% saving can get you into the ~15-17 year window depending on real returns and your target spend). I’ve watched plenty of high earners in NYC and the Bay Area who “meant to save” end up with a 12% rate after the holidays. The base-rate guardrail fixes that.

2) Automate “raise-to-invest” the day comp changes hit payroll. When comp steps up, promotion, refreshed RSUs, or just the annual merit bump, set a same-day increase to automated transfers into investing accounts. No gap, no negotiation. I literally lift the new net paycheck delta and route 80-100% of that into brokerage for three pay cycles. Lifestyle creep is sneaky; if you don’t trap the raise on day one, it gets eaten by convenience spending (and yes, I’ve lost that battle before; Postmates remembers).

3) Bucket the lumpy stuff monthly. Childcare co-pays, travel, insurance premia, property taxes, these nuke cash flow when you treat them as surprises. Open sub-accounts and fund them monthly: “Property Tax,” “Travel,” “Childcare,” “Insurance,” and “Gifts/Events.” If property tax is $12,000, move $1,000/month automatically. When the bill hits, you pay from the bucket, not from your sanity. My spouse calls this “anti-drama money,” which is about right.

4) Separate checking for fixed bills, and a weekly-capped variable account. Pay rent/mortgage, daycare, insurance, utilities, transit passes from a bills-only checking account. Then move a weekly allowance to a different card for groceries, dining, Ubers, random Amazon behavior. Pick a hard cap that matches your plan (e.g., $500-$800/week for a couple depending on city and kids). When it’s gone, it’s gone. This is the easiest behavioral hack I know for HCOL living without doing mental gymnastics every night.

5) Annual price audit, small wins compound in HCOL. Every Q4, renegotiate what’s renegotiable: rent (ask for term tradeoffs), auto/home/umbrella insurance, mobile, internet. It’s not thrilling work, but the savings stack. Swapping carriers or deductibles can save hundreds a year; finding an internet promo knocks another $20-$40/month. It feels tiny against a Manhattan rent, but $150/month saved reinvested at, say, a 5% long-run nominal return is ~$1,950 in five years and keeps compounding (yes, small, but it all layers).

Real talk for a minute: the holidays will test this. There’s school stuff, family pressure, and those end-of-year flash sales. If your variable-spend account runs dry by December 20th, don’t backdoor more cash from the bills account, that’s how January gets ugly. Instead, pull from the “Gifts/Events” bucket you funded all year, or shift next week’s allowance forward and accept a quieter first week of January. Not fun, but adulting rarely is.

Practical wiring (quick checklist):

• Direct deposit splits: 1) Bills checking, 2) Variable-spend checking (weekly auto-transfer), 3) Brokerage/IRA/529, 4) Sinking-fund sub-accounts.
• Calendar items: comp-change paydays set to increase auto-invest the same day; annual vendor renegotiation in early November; property tax funding check-in mid-year.
• Rules: raises and RSU net cash auto-allocate first; no lifestyle upgrades unless the base savings rate still clears the target after the change.

If this is starting to sound overly complex, fair. The goal isn’t a Rube Goldberg machine, it’s to make good decisions happen by default. Two accounts for spending, buckets for the big rocks, and a base savings rate that never negotiates with your December self. In high-cost cities, consistency beats intensity, especially when Q4 turns into a financial obstacle course.

Make the city your ally: your FIRE timeline from here

The city is expensive, sure. But it’s also opportunity-dense. Your plan needs to point at your date, not just vibe at it. Here’s a clean 24-month runbook I’ve used with clients (and yeah, a version of it sits in my own Notes app):

1. Housing decision (next 90 days): Pick a lane for two years. If renting, lock a 2-year lease or negotiate renewal terms early to cap surprises. If buying, decide now whether the down payment steals oxygen from your savings-rate floor. No fuzzy middle. The city will always sell you “maybe later”, don’t buy it.
2. Tax elections (this quarter): Clean up your W-4 to avoid big refunds. If you have equity comp, set standing instructions for ISOs vs. NSOs exercises and same-day sells. Remember: the 3.8% Net Investment Income Tax applies over $200k MAGI single/$250k MFJ (in place since 2013), so mind your bunching and charitable timing.
3. Equity-sales cadence (quarterly): Default to quarterly, rules-based sales on RSU vests and option exercises. Aim to de-risk concentrations as they cross 10-20% of net worth. Boring beats heroic here.
4. Savings-rate floor (now): Set a non-negotiable minimum that still works in December. Practical floor for high-cost cities: 25-35% of gross if you’re in your prime earning years. If that made your stomach flip, start at 20% and stair-step +2% every quarter until you hit the target.
5. Build optionality (months 1-12): Accumulate a 12-month cash runway before a big career pivot. That’s your anti-forced-selling shield when markets wobble. I’ve watched too many smart people sell RSUs at the worst possible tick because they had two months of cash. Don’t be that case study.
6. Investing system (ongoing): One core brokerage, one retirement stack, auto-buys twice a month. No hobby accounts. You’re playing the professional game now, one clean system, one city, and a handful of comp and tax levers.

Track only three numbers monthly (seriously, just these):

• Savings rate (% of gross). Did you hit the floor?
• Net worth delta (month-over-month). Up, down, or flat, market moves don’t count as moral judgments.
• Effective tax rate (total tax / total income). If it drifts up, fix the inputs: deferrals, timing, location of income.

Adjust levers; don’t judge yourself. If your savings rate dips one month because your landlord found “market” again, fine, offset next month by trimming the variable bucket or timing an equity sale. And if this feels like a lot, that’s normal. We’re compressing CFO work into a couple hours a month.

Mantra: I change the inputs, not the goal.

Make hay while the sun still shines (timing matters): Key individual provisions from the Tax Cuts and Jobs Act are scheduled to sunset after 2025, things like the $10,000 state and local tax (SALT) cap and the current ordinary rate structure. Plan assuming change, then update once 2026 law is clear. If you’re harvesting gains or bunching deductions, the window is this year and early next.

A few hard numbers to anchor decisions:

• The SALT deduction cap is $10,000 through 2025 under current law (TCJA).
• Long-term capital gains rates remain at 0%/15%/20%. For 2024, the 0% bracket’s top threshold was $47,025 (single) and $94,050 (MFJ); 2025 thresholds are inflation-adjusted, but you can use those 2024 figures for planning ranges and then check the IRS release before year-end.
• The 3.8% NIIT applies above $200,000 MAGI (single) / $250,000 (MFJ), unchanged since its introduction.

City reality check: High-cost cities improving standards, but they also spike earnings power and deal flow. My take, purely a take, is that it’s worth it if you use the city like a machine: front-load career capital, keep fixed costs stable, and harvest equity methodically. Earlier this year I watched a client cut commute time by 40 minutes and pick up two coffee chats a week; six months later, they had a 30% comp bump. Opportunity density pays rent if you keep showing up.

Quarter-by-quarter cadence (first year):

• Q4 2025: Lock tax elections, set equity auto-sells, confirm year-end deductions. Don’t wait for December chaos.
• Q1 2026: Refresh brackets, update withholding, raise auto-invest by your raise amount. Revisit savings-rate floor.
• Q2 2026: Mid-year tax check; calibrate NIIT exposure; charity bunching if applicable.
• Q3 2026: Career option check, if pivoting in 2027, your 12-month cash runway should be 60-70% funded by now.

Yes, this can feel a bit… spreadsheety. But the work is front-loaded. After that, it’s maintenance: three metrics, quarterly equity trims, and one big tax tune-up. You’re closer than it feels. Keep the system clean, protect the runway, and let the city do what it does best, create chances for people who are ready.

Frequently Asked Questions

Q: How do I set my after-tax target and figure out the portfolio size for FIRE in a high-cost city?

A: Price the life you actually want after tax first. If you want $180k after-tax in NYC, assume a safer 3.0%-3.5% withdrawal rate (pros use it to tame sequence risk; see Big ERN’s series from 2017 through 2023). That implies roughly $5.1M-$6.0M in invested assets. Then design account mix (taxable/Roth/pre-tax) so withdrawals clear your local taxes with minimal drag. I literally write a one-page rule sheet and sanity-check it every quarter. Not sexy. It works.

Q: What’s the difference between using pre-tax, Roth, and taxable accounts for FIRE taxes in places like NYC, SF, or Boston?

A: Think spend-order and tax-rate arbitrage. Pre-tax (401k/IRA) lowers today’s ordinary income, gold in CA (up to 13.3% state) or NYC (NYS up to 10.9% + NYC to 3.876%). In retirement, you can bracket-manage withdrawals. Roth gives tax-free qualified withdrawals later, use it when you expect equal/higher future rates or to avoid state taxes entirely. Taxable is for flexibility: long-term gains at 0%/15%/20% federally (plus 3.8% NIIT for high earners) and preferential basis step-up. In practice, pros automate: max pre-tax, fill Roth (backdoor/mega-backdoor where available), then shovel excess to taxable and harvest gains/losses annually. The sequence lets you hit an after-tax target with fewer dollars needed.

Q: Is it better to buy or rent in 2025 if I’m aiming for FIRE in a high-cost city?

A: It depends on the math this year, not a mantra. With 30-year fixed rates hanging in the mid-6%s earlier this year, the rent-vs-buy breakeven flips block-to-block once you add property tax, HOA, insurance, maintenance (1%-2% of value per year is a decent plug), and the opportunity cost of the down payment. Run a 5-10 year model: include realistic rent growth, expected home appreciation (not fantasy), and your alternative return on invested cash. Don’t forget taxes: the federal SALT deduction cap still bites in 2025, limiting property tax deductibility, while mortgage interest remains itemizable only if you exceed the standard deduction. If your rent is materially below market (longtime tenant, roommate arbitrage), renting often wins and speeds savings. If you can buy a modest place near your target lifestyle with stable costs and plan to hold 7+ years, buying can hedge against rent inflation and give you forced savings. My rule-of-thumb: if the annual “owning cost” (net of tax benefits and principal paydown) is within ~5%-10% of renting, I lean buy; if owning is 20%+ higher, I keep renting and invest the spread. Re-run the model every year, pros do, because prices, rates, and your income risk change. And please include selling costs (5%-6%) in your exit assumptions; I learned that one the hard way in 2012.

Q: Should I worry about cutting small expenses like coffee in NYC, or is that noise?

A: It’s noise. In HCOL cities the boss fights are taxes and housing. A $6 latte won’t derail you; a sloppy tax plan or an overpriced condo might. Channel your energy into maxing pre-tax space, improve equity comp timing, and a yearly buy-vs-rent check. Automate savings, negotiate the big rocks (rent, insurance), and let the small stuff be small. I drink my cappuccino, guilt-free.

@article{how-to-achieve-fire-in-high-cost-cities,
    title   = {How To Achieve Fire In High Cost Cities},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/fire-in-high-cost-cities/}
}