Should we move to high COL?

[maptome]

Right now we live in Austin, Texas, average COL.  DH makes about 100K.  We are very comfortable financially here and have quite a bit of wiggle room.  For his career, he wants to move to Silicon Valley (Do people even call it that anymore?).   I did a COL calculator for Palo Alto, and it said that we need to make $300,000.  Yeah......the job that he is interviewing with pays maybe 110k-120k.  So, we would basically be taking a huge financial hit AND lifestyle downgrade.  Like moving from a 3/2 home to a 2/1 apt or DH having an hour commute each way.  We currently live 3 miles from DH's workplace, which is so wonderful.  I'm a SAHM, and we both want to continue that.

He really wants to further his career, and I'm in support of that.  Also, my brother is in grad school at Berkeley right now, and I would love to live near him.  He only has a couple more years to go, though.

We're frugal and I'm sure we would be "fine," but it seems like life will be so much harder.

Can y'all share your experiences of moving to a very high COL area?

[Guinevere]

Your concerns are quite valid. DH and I started married life on the central coast of Cali, and ended up moving out of state when our first dc was a few months old b/c we realized we could either afford to have a baby or buy a house in that area, but not both. COL is very high, as you've already seen, and the state of CA in general is doing very poorly financially, so things are not likely to improve anytime soon.

Is it really essential for your DH's career advancement to move to Silicon Valley? I worked in that industry prior to becoming a SAHM, and while there were a ton of companies in my field that were all located there, there were also quite a few that weren't. Also, I commuted over an hour each way every day, and that significantly impacted my quality of life (and that was BEFORE I had kids.) What sort of commute does your DH have at the moment?

If he deems it absolutely necessary to move there for his career, then I would have a solid plan for how long you plan on staying out there. That plan would also determine my housing choices, i.e. rent vs. buy, and where I would plan to live. How old are your kiddos? Unless you homeschool, you will need to really look at schools in these communities, as well: unsurprisingly, the better schools are in the more expensive zip codes. Do you plan on adding to your family while living there? Could you afford to do so if you moved there? All things to consider...

Guin

[crunchy_mommy]

I already live in a pretty high COL area... it's not horrible, we can certainly survive, even on our low-average salaries, but we cannot afford any 'extras' like eating dinner out, going to events that aren't free, buying things anywhere other than the thrift store, etc. We don't mind, it fits OK with our lifestyle, but it makes it hard to ever really get ahead. For us, moving to a lower COL area would have meant living far from family (who are pretty much permanently settled here) so we decided to stay here & make it work so our kids can be near their grandparents and other family. It's a worthwhile trade-off, but I will admit I wish I could afford to build that deck in our backyard, or join my friends when they go out somewhere that costs more than $3, quit my WAH job, stuff like that... And it will likely be 10 or 20 years minimum before we are able to feel really financially secure here.

What are your financial goals as a family? Own a certain size house? Yearly vacations or international trips? Ability to make purchases without accounting for every cent? Send the kids to private school? etc. I'm sure you & your DH have (possibly unspoken) goals for your family that may or may not require more extensive financial resources. The downside of living in a high COL is that it will make it much harder (and take much longer) to reach those goals. If your goals are pretty modest, then obviously this is less of an issue.

One option you could consider is saving up $XXXXX before relocating, so you'll already be ahead a bit. He could also hold out for a higher paying job, and focus on improving his marketability (taking classes, getting certifications, networking, whatever will ultimately help him garner a great salary)... Might take a little longer for him to reach his career goals, but less time as a family to meet your family financial goals. I have no idea what the job market is like there but around here, waiting a few years would likely mean MUCH higher salaries, since there just aren't many jobs right now. I think the initial salary he accepts could be critical, because it tends to be very hard to get a company to give you a substantial raise once they've hired you at a lower rate.

[GearGirl]

Yes, you can do it.  Your living space won't be nearly as nice, but that is true for many people around here.  Even around silicon valley you can find some really nice but not as expensive towns, for instance if you choose Mountain View over Los Altos or Palo Alto you aren't sacrificing much (if anything!) but it will cost much less.  If your dh has future goals and plans to really get ahead in that industry I think silicon Valley is a great place to be.  Sure, you can do it other places as well, but the opportunities can be really great here.  It's also a nice place to live.  There are lots of family activities and fairs, tons of things to do that don't cost $ (and tons that do), and the weather is really enjoyable.  

[JesKace]

I don't know anything about moving to a high COL area, since we've always lived in the same area in MA since Dh and I were both kids...  But if I were in your situation I don't know how I'd feel about such a big downgrade in lifestyle.  From living comfortably in a 3/2 home to renting a 2/1 apartment unless it was going to be for a very short time with the potential for a major upgrade in salary or being able to get a better paying job in a lower cost of living area once he's worked in the field.  Is that a possibility?  Do you currently own your home, and you'll be looking at renting?  Or are you just renting the home you're in now?  If you own your home, would you be able to sell at this time?  You said right now you're a SAHM and you want to continue that, what would happen if you had to go to work because the COL ended up being too high for you to be able to live on only your DH's salary?  Are you guys currently saving money for retirement and other things that you need?  Will you be able to continue on doing that if you move to the other area?

I understand wanting him to further his career, everyone should be happy at what they do!  But it seems like you'll be taking a big loss financially.  Will it make him happier to be there doing that job, or will this just be a stepping stone to another position where you won't be at such a loss financially?

[colemom]

We live on the peninsula and survive on about 80k/year (I'm a sahm and dh works two jobs: teacher and we own a small business).  I'll be honest, it's tough.  We have family nearby and the schools are great and we love being by the ocean, so we stay.  However, we rent a house, do not own, just can't swing the mortgage while I am not working.  We live very, very simply, drive older cars (10+ years old) and paying for 3 mornings a week of preschool has been a major labor of love by dh. We love it here and it can be done, most folks have no idea how little we live on since we do it well, but it's a challenge.  This area is amazing and diverse, and offers so much when raising kids, they have exposure to everything.  But, you will take a hit with housing prices and size, gas prices ($4.19 in SF today!) and food costs are crazy (even when making most foods from scratch, it's hard to go below $500/month, with a preschooler and a toddler).  I grew up in the Bay Area, so I don't know any different, but it will be a definite financial shock moving here from a lower COL area. (I actually have a friend that moved to the Austin area last year and they are loving it, she has an amazing house!)  Sometimes I wish that we didn't have family here, so we could easily move out of state without missing them :(

Edited by colemom - 3/7/11 at 8:16am

[34me]

Do you have live there? I know several people that work as software engineers for CA companies but live in N. Colorado

[TiredX2]

Are you sure that he needs to move to Palo Alto (or that area)?  Have you looked into Seattle instead?

[TiredX2]

Oh, I also wanted to add.  Are you planning on moving to Palo Alto long term?  When we were running the numbers it seemed like you could live equivalent lifestyles IF you rented and did not buy.  Has your DH gotten an offer yet?  When we compared Seattle to Palo Alto numbers, we could have rented a fine place but never bought.

[lalaland42]

I moved from Dallas to Zurich and our "standard of living" went down on paper but I'd say that our lifestyle has improved in a lot of ways. Our apartment is less than 1/2 the size of our house in Dallas and more expensive but I no longer have to drive. Besides, we don't have a car.  The big thing for us is no more takeout and no cleaning person. 

What I am saying is that it really depends on what is important in your lifestyle as to whether it is worth it to you. And how big of an improvement is possible in your DH's career. If 110k is the high end, I probably would say it isn't worth it unless it is a huge improvement in what he is doing from day to day. 

[ilovemygirl]

As someone who lives in an area with a cost of living way above our income earning potential I would strongly recommend staying put where you are as long as you think your dh will continue to have work there. You are talking about living on a 1/3 of what is recommended for the new area and while that may sound doable, sometimes it's just not possible no matter how frugal you are. I would really crunch the actual numbers of everything you would have to spend living there. It's very possible that 110k will not even cover your basic expenses in such an expensive area. Silicon Valley is known for being one of the most expensive areas in the US. 

If you think his income will go up significantly after just a little bit it might be worth it but if you see it remaining the same for quite a while it could be awfully hard for you, especially since you'll be downgrading so much. It's a huge change to go back to a small apartment after living in a house and then adding to it that you will not be able to afford to go out or have anything extra. 

My dh makes half of what the average is for our area. It's insanely hard and not because we can't afford "nice" things. We don't mind being frugal at all but I mean it's hard just to stay above water with how high the rent, taxes, food, etc. cost. Just to live in an area of town that isn't frightening is over 40% of his income. I am certainly at the point that we would move to a LCOL area in a heartbeat if he could find stable and reliable work somewhere else. It's exhausting living like this. A day doesn't go by that we aren't reminded of how much we don't have and while that part of it doesn't bother me the most, I can't say honestly that it doesn't bother me at all. 

[ItsBasilThyme]

I just moved from an average COL area to the SF peninsula, so I remembe how hard that decision is. I think our income percentage increase was similar - around 20%.

First a few little things when you're considering how tight your new budget will be: don't forget income tax differences. Ca is nearly 10%, so if you have low/no taxes in TX, that's a huge chunk of the "raise" right there. Secondly, when you're scoping out Palo Alto home prices, make sure you're not also looking at East Palo Alto prices. EPA is shockingly cheap, so you may think "hey! This is do-able!" Its also a very dangerous area, which I still don't understand since its right next to one ofthe safest/wealthiest areas. I think it's probably almost impossible to live (even renting a small apt) in Palo Alto if you make 120k/ year, so you'll prob want to look at other areas - south like mountain view, north like redwood city. The east bay (Hayward, etc) prices are tempting, but it's a $5 bridge toll to get to the peninsula, plus tons of traffic. Let me know if you want more general budget information like utilities and stuff. 120k will put you solidly in the middle class here, and the middle class here can't afford big houses or new SUVs like the middle class in an average COL city. It will probably be kind of a shock to be so low on the totem pole when you're used to being "upper-middle."

That being said, I love it here and would recommend doing it in a heartbeat. The parks, the mountains, the activities in SF, the weather... You can't buy that in Austin no matter how much you make.

[VisionaryMom]

We also looked at Silicon Valley for DH's career but decided against it for many of the concerns that you have. Besides our personal standard of living, California as a whole just seems...unstable to me. SIL works as an engineer for NASA at Dryden (north of LA), and she cannot afford to buy a house and has concerns about the viability of having children. The state just seems always to be teetering on the brink. Though that's an outsider's view, and I'm not sure it feels that way if you're living there, it falls under "why borrow trouble" for me.

We are instead going to move to the Research Triangle Park area of NC (Raleigh/Durham/Chapel Hill). It has the 2nd largest concentration of high-tech firms and also has a wonderful crunchy community, lots of affordable educational opportunities, great job opportunities for me as well, local food galore, 3 hours from the beach, closer to the mountains, high quality of life. Plus we can buy the same size home there for what we have now, so we wouldn't have to feel we were scraping by on a 6-figure salary.

I've seen a couple of posters mention N Colorado. I don't want the climate of that area, but it came up a lot in our searching as well as a good place for cutting-edge technology. If you'd like that area, I'd consider that as well. 

[EFmom]

I did it once and would never do it again.  It took us five years to get back to a place with a reasonable COL.  It was an awful experience.

[Ellien C]

I would think long and hard about that particular move!

PP bring up some good points - once he has an initial salary - say 120K he can expect MAYBE 3-5% raises. He should negotiate as much as he can in the beginning. His employer likely knows he's coming from a Low COLA and is counting on his naivete in accepting $110-120K.

Job satisfaction and family life are important. Is his increased job satisfaction going to off-set the negatives - huge commute, huge expenses, smaller house? Same for you in living in that area? Can you deal with seeing him less, commutes, traffic, etc in exchange for weather, views, like-minded community? There's no right answer here. I'm not trying to minimize anything. Weather, views, recreation and community are HUGE! But so is how you live.

(more to come - I've got to go)

[maptome]

OP, here.  Thanks for all the responses.  You've all given me something to think about.

A bit more about us.  We have lived in southern Orange County on $60k/year and we were quite happy.  This was in a 1/1 before DD (discounted on-campus graduated housing).  We were poor relative to the local population.  We decided to move to Texas so that we could buy a house.  Now, we don't think home ownership is that great (although, if we were to rent, I can see us flip-flopping back.)

More about DP's career.  We don't "need" to move there for his career.  But...He's currently not in an elite area of his field.  He has the experience for this Palo Alto job, and he feels like it would be an avenue into a higher echelon of jobs within his field.  As far as salary goes, from our research, he would be paid slightly higher than average for the area for his level of experience.  Here, he is paid well above average.  Factoring in the varying competency levels of the job forces, we feel like this is a fair offer.

More about plans/finances: Our tentative plan would be to rent a 1/1 near DP's job.  (We would get a storage space.)  This should be similar to our current housing costs.  After a year, we would then decide what we want to do about housing.   Bigger place, longer commute, another baby?!,   Other major financial differences other than housing that we can see are: state income tax (We currently have none), gasoline, ....what else?  We have no debt.  Just paid cash for two new cars last year.  I'm SAHM, no childcare needed.  DD is only 1.5 so we don't need to worry about public schools yet.  Just need a safe place for her.

We figure, we can just move back.  DP is pretty sure his current company would hire him back if no other jobs will have him.

So, keep the advice coming.  I particularly love to hear from people who have lived in the area.

[Chamomile Girl]

Living in Palo Alto specifically does not seem necessary...especially since it is the absolute most expensive city in the area. With two brand new cars you can live further away and commute. You are right that the income he makes is not going to allow you to buy a house there. I think another thing to consider is if you are going to eventually feel resentful being surrounded by very wealthy people while you have given up lots to be in the area. For the same price (or less) I think I would move to San Francisco for the quality of life, and make DH take the train to work.

On the plus side Palo Alto has great schools.

I currently live in Santa Clara and we make it on about 70K a year. But that is because we have university subsidized housing and we've deferred all our student loan debt! There are lots of great things about living in the area though that make being a bit poor totally worth it. The down side is that I get really bored because you can only go to the park so many times. If you live in the City you have access to lots of great (free!) cultural opportunities that the burbs lack.

[ItsBasilThyme]

 

More about plans/finances: Our tentative plan would be to rent a 1/1 near DP's job.  (We would get a storage space.)  This should be similar to our current housing costs.  After a year, we would then decide what we want to do about housing.   Bigger place, longer commute, another baby?!,   Other major financial differences other than housing that we can see are: state income tax (We currently have none), gasoline, ....what else?  We have no debt.  Just paid cash for two new cars last year.  I'm SAHM, no childcare needed.  DD is only 1.5 so we don't need to worry about public schools yet.  Just need a safe place for her.

We figure, we can just move back.  DP is pretty sure his current company would hire him back if no other jobs will have him.

I personally think that if you're willing to make the lifestyle downgrades (house, socioeconomic standing, tighter budget, etc) then it's totally worth it. The following is an utterly random assortment of things I'm really glad I knew, or wish I had known, prior to moving here. Some of them are probably pretty minor, but I'm just typing everything I can think of.

I would spend some time looking at all the tax info for california and texas and compare. I didn't really bother looking at things like disability or unemployment taxes because I figured they were kinda small potatoes. I believe there is also a slightly higher income tax for bonuses (10.3% or something?). I don't remember where all the discrepancies are, but I know that our income after taxes seems pretty wimpy when I consider how much of a raise that includes! You may also want to run the federal numbers through turbotax or something just in case. Depending on how many deductions you have, your increased income combined with the state income tax deduction may mean you have to pay AMT. I think at only 120k you should be fine, but it would be a good thing to check.

You mentioned that you have two new cars - are these "new to you" or actually "new?" I just ask because they smog test here, so that's something to keep in mind before you have both cars shipped out here. CA also has higher compliance standards for emissions, which MANY cars sold outside of CA do not comply with. You can see if your cars comply by looking under the hood at the emissions sticker. Some cars will just say they comply with US/Federal Emissions Regs. Some will say something like "Complies with CA Emissions Regs" or "50-State Compliant." It's not a huge deal if it's not 50-state compliant. You just have to prove that you lived in TX when you bought it, and pay an environmental impact fee or something when you register. The main reason I mention it is that you can't *sell* it in CA, unless you sell it to a dealer willing to sell it out of state. This means that non-compliant cars sell for well below their value here, so you should probably be willing to drive those cars into the ground.

Speaking of cars, if you have stick shifts, that will suck. It's fine for the peninsula, but if you want to do anything fun like driving through SF and Sausalito, taking weekend trips in the mountains, etc, it will really, truly suck. I would plan to rent a car for weekend outings.

Garbage on the peninsula is crazy expensive - I think it's around $100/month? This may not affect you if you live in an apartment. Other utilities (water, electricity, cable, internet, etc) do not seem higher to me.

Knowing what area to live in on the peninsula is tricky. I have heard that the general rule of thumb is that east of 101 is dangerous, El Camino Real to 101 is sketchy, West of El Camino is okay, West of Alameda is very very safe.  I have personally found that several areas east of 101 are not sketchy, and several areas east of El Camino are not sketchy. However, when looking at potential apartment/home prices, I would recommend sticking to the "West of El Camino Real" rule, since you won't know which areas truly are bad and which ones aren't. Some sites try to break it down by crime rate (neighborhoodscout is one), but I haven't found it to be too accurate. I think if you budget $2,000 for a 1/1 in the Palo Alto/Redwood City/San Mateo area, you'll be able to find a safe apartment that you like. Keep in mind that if you do ever want to have another kid, you may need to wait for higher income. I've heard from several people that apartments won't (or can't?) rent a 1/1 if 2 adults/2 kids will be living in it. I think you'd be fine with only one kid, though.

I personally think you need more "reserves" here than in lower COL areas. One thing I didn't consider is that so many safety nets are based on federal poverty levels - not state ones. Even the state-based safety nets don't really help that much! For example, if DH lost his job (and silicon valley is nothing if not volatile!), he would probably get about $1800/month in unemployment. That's a rent payment on a small apartment. If you lived in a lower COL state, you may only get $1000/month in unemployment, but you can get a 1/1 for $650, yanno? If you take an income hit for some reason, and want income based repayment for student loans, you probably won't qualify. If you ever need food stamps, you probably won't qualify until after you're homeless (obviously, you would move off the peninsula before that happened, but I'm just saying) because if you can afford to pay rent on a 1/1 then you're probably well above the federal poverty level (times 1.3 in CA). I assume that the same applies to other safety nets like WIC. 

You mentioned that you've been in the situation of being poorer than your surrounding community before, but I just wanted to stress that there really is a lot of conspicuous wealth here. I think it's different when you're in college/grad school and you're "supposed" to be struggling. It's harder when the people you see every day (colleagues, neighborhood moms, etc) are "making it" with a 3/2 in the hills while you're in a 1/1 near the train station. It's hard when all of your kid's peers get to do the expensive activities/camps and your kid doesn't. I'm not trying to sound like "Woe are the kids whose parents only make $120k!" but it is on the low-end for families here, and you probably will feel it, especially in Palo Alto. There's also a lot of temptations here that Austin probably doesn't have (or has cheaper versions of). It can be hard to say no when *everyone* has mentioned the two-star michelin restaurant, or going up to Napa for the weekend, or seeing this play or that exhibit or going to Tahoe or... or...

I hope all that didn't scare you off! If you want I can also make a list of all the reasons you *should* move here anyway :) But this stuff seemed more important/practical.

[crunchy_mommy]

Originally Posted by ItsBasilThyme 

I personally think you need more "reserves" here than in lower COL areas. One thing I didn't consider is that so many safety nets are based on federal poverty levels - not state ones. Even the state-based safety nets don't really help that much! For example, if DH lost his job (and silicon valley is nothing if not volatile!), he would probably get about $1800/month in unemployment. That's a rent payment on a small apartment. If you lived in a lower COL state, you may only get $1000/month in unemployment, but you can get a 1/1 for $650, yanno? If you take an income hit for some reason, and want income based repayment for student loans, you probably won't qualify. If you ever need food stamps, you probably won't qualify until after you're homeless (obviously, you would move off the peninsula before that happened, but I'm just saying) because if you can afford to pay rent on a 1/1 then you're probably well above the federal poverty level (times 1.3 in CA). I assume that the same applies to other safety nets like WIC. 

This is a really good point. My DH was laid off & because we're in a HCOL area, he is getting barely enough unemployment... we do not qualify for WIC, foodstamps, etc. due to the federal guidelines, and despite being VERY VERY frugal, we are really tapping into our savings to get through this... If he was getting the same amount of unemployment in a LCOL area, we wouldn't have to touch our savings...

[maptome]

OP, here. How much reserve?  Without dipping into investments, we have enough emergency cash for 2 years.  That should be enough, right?  That reminds me, we do get some income from investments in addition to DP's salary, but I'm not adding it in because of market volatility.

It looks like we can get a 1/1 for like $1300/month in Sunnyvale.  That's less than our mortgage now...We're leaning towards a move unless DP's current employer will give him a hefty raise.  Stressful!
 

Originally Posted by crunchy_mommy 

Originally Posted by ItsBasilThyme 

I personally think you need more "reserves" here than in lower COL areas. One thing I didn't consider is that so many safety nets are based on federal poverty levels - not state ones. Even the state-based safety nets don't really help that much! For example, if DH lost his job (and silicon valley is nothing if not volatile!), he would probably get about $1800/month in unemployment. That's a rent payment on a small apartment. If you lived in a lower COL state, you may only get $1000/month in unemployment, but you can get a 1/1 for $650, yanno? If you take an income hit for some reason, and want income based repayment for student loans, you probably won't qualify. If you ever need food stamps, you probably won't qualify until after you're homeless (obviously, you would move off the peninsula before that happened, but I'm just saying) because if you can afford to pay rent on a 1/1 then you're probably well above the federal poverty level (times 1.3 in CA). I assume that the same applies to other safety nets like WIC. 

This is a really good point. My DH was laid off & because we're in a HCOL area, he is getting barely enough unemployment... we do not qualify for WIC, foodstamps, etc. due to the federal guidelines, and despite being VERY VERY frugal, we are really tapping into our savings to get through this... If he was getting the same amount of unemployment in a LCOL area, we wouldn't have to touch our savings...