[mightymoo]

We live in a very high cost of living / high income area. Looking at some of the medium income charts someone posted to another thread, my state is #4 in the country in medium income and my county is one of the highest in the state, costs and taxes are proportional too however. I've always felt that in general I prefer living in a high COL area because our income is higher, and if I can work and save say 10% of our income, if I live in a high COL that's a lot more money total than if I saved up 10% of our income in a low COL area. I feel its an advantage because once we've saved money for retirement, we can choose to retire anywhere, whereas I feel if I lived in a low COL area I couldn't afford to move anywhere that isn't low COL.

I'm curious what other thoughts on this are though. I imagine that the formula doesn't really hold true for everyone - if you can make the same money no matter whre you live, you could save more money living somewhere with low COL. Or if your profession is underpaid in high COL areas and not really in proportion to the cost of living, (as I've heard of professions like teachers in LA, etc) you'd end up not being able to save anything.

Curious what others think - do you feel you save more total by living in a high COL or low COL area?

 

[PajamaMama]

We did an analysis of this very question this spring, as it pertains to us, anyway. We had the choice of going to Orlando FL, Reston VA, or Kansas City. The salary for dh would have been the same in each location, so we are going to Kansas City, where overall housing and other costs of living are the lowest. We will be able to save enough for retirement without having to sell our residence in KC. We could have retired a couple of years later in Orlando, or many years later in VA. Since we don't have any personal reasons for living in any of those places over any other we decided to go with the lowest cost of living area.

 

[Herausgeber]

I have chosen a high COL area with good pay. It would not be possible for me to pay off my student loans, save for retirement and help my family financially if I lived in a low COL area where I had dimmer career/pay prospects.

This way, when I sell my super-expensive house here, I will be able to buy a home outright if I retire back home.

 

[mightymoo]

Quote:

Originally Posted by PajamaMama We did an analysis of this very question this spring, as it pertains to us, anyway. We had the choice of going to Orlando FL, Reston VA, or Kansas City. The salary for dh would have been the same in each location, so we are going to Kansas City, where overall housing and other costs of living are the lowest. We will be able to save enough for retirement without having to sell our residence in KC. We could have retired a couple of years later in Orlando, or many years later in VA. Since we don't have any personal reasons for living in any of those places over any other we decided to go with the lowest cost of living area.

This makes sense, I'm just surprised anyone could make the same money in all those places. If you don't mind sharing, I'm interested to know what field your DH is in? Just curious

 

[msjd123]

I've run some numbers on this, too, and unless we moved to an area with a very low COL, we still come out ahead out here, in a high COL area. We wouldn't make the money that we do anywhere else excpet possibly NYC or Connecticut, and those areas are even more expensive than here.

Funny you should mention teachers in LA, though, because I feel like we're well-compensated, and DH and I both teach for LAUSD. We both have less than 10 years' experience, but between the two of us, we make 6 figures. We bought a house in early 2002 when prices were still (IMHO) reasonable, and we do fine. One of the perks of being a teacher is that we have an awesome pension, so while we're putting a lot into our 403b accounts, that won't be our primary source fo retirement income; even though we can't afford to max them out, I'm not worried. In fact, if it weren't for the cost of preschool, I feel like we'd be quite well off. That said, we do live frugally and we both drive 12-year old cars. We haven't taken a vacation since we bought our house, but we're OK with that, and we're planning on traveling more when DD is a little older.

Anyways, given that DH and I are both teachers, I've looked at teaching salaries vs. home prices in place like North Carolina and Oregon, and there's just no way. Sure, we'd be able to sell our house here and use the profit to pay cash for a house in one of those places, but we'd both still need to work because the salaries are sooooooo much lower that I don't think we'd be able to make it on one. Besides, there are perks to living in an area with a high COL because it's those perks that make it expensive in the first place. We have a pretty good climate, we're close to the beach and to the mountains, we have so great cultural attractions, we appreciate the liberal attitudes CA folks generally have about things, and of course, we're close to our families, which counts for a lot.

ETA: Here are our salary tables: http://www.teachinla.com/whyteach/salary.html I'd love to know if anyone knows of a lower COL area that pays as well as LAUSD!

 

[mightymoo]

Quote:

Originally Posted by msjd123 Funny you should mention teachers in LA, though, because I feel like we're well-compensated, and DH and I both teach for LAUSD. We both have less than 10 years' experience, but between the two of us, we make 6 figures. We bought a house in early 2002 when prices were still (IMHO) reasonable, and we do fine.

I just remembered someone on here saying a teacher couldn't afford a home in their school district in LA now or at least that a starting teacher couldn't, I thought it was in references to home prices being run up so high recently. So it just came to mind when I wrote the post. Maybe it was you that said it!

I'm fascinated now - sounds like the decision really depends on the salary range for your profession. I think I'll jump onto monster and use their salary tool to see what the salary ranges in various parts of the country for DH's job are. I was looking at it the other day and he is smack in the middle of the curve for his job title.

 

[MorganRiley]

we have the best of both worlds at the moment

we live in a high cost of living area now (LA) but we are renting from my inlaws and they are charging us like HALF what they could be

dh makes a good salary here

we have used this opportunity to get out of debt

now we are saving up for a house downpayment but will have to move out of the state to find something affordable

we will NEVER be able to afford to buy a house in this area on dh's current salary...he would literally need to triple his salary and he is already making good money

 

[Leylla]

Another best of both worlds...

Until recently, DH and I worked in a "big city" and live about 70 miles out in the country. Our house in the country was 87K...I the city? EASILY 180K, and thats leaving out the 12 acres and pond. So we were making big city money and living in small town COLA.

However even when we were "on top" we couldn't have afforded to be homeless in LA or NYC. B/c even the big city here PALES in comparrison to metro areas.

Steph

 

[koofie]

I live in a high COL area and am a teacher, and there is no way I could afford a house. I am paid ~50K, and an average house is 550k. At the lower end I might find a house in my school's county for $450. I am now living 45 miles away(1.5 hours inc traffic and dropping off the kids) and have decided that my time is worth more than money. I am hoping to not take more than a 4-5k pay cut, but it could be much more. The thing is, houses are not significantly cheaper up here unless you live in Balt city, where the school system is in bad shape and I don't want DD to go to K there (~1 year away).

The thing is, DH and I can easily get a loan for the house of our choice, but with 2 kids in daycare, we can't afford the house payments!

 

[grisandole]

My dh is a teacher and we are doing better here in pricey SoCal than we did in our very low col area in rural AZ. Though our housing expenses have gone WAY up, all of our other expenses (groceries, insurance, utilites, etc) are the same or less than in AZ, and his salary has more than doubled.

 

[wifeandmom]

We're in an odd situation here in Texas. It is one of the higher paying states for what DH does, but COL is pretty low overall.

We have one year left in the military, and he's been doing some early negotiations with several places for when he gets out. The numbers being tossed around now are *easily* double what he'd make in the northeast and at least 1.5 times what he'd make in the midwest.

But housing here is SUPER cheap. Brand new construction with pretty much all the features you'd normally expect to see across the country runs well under $100/sq ft. Our house was more like $75-80/sq ft.

One job offer he got from upstate NY was for less than half of what the local offers here have been, and I dare say we wouldn't be able to replace our house now (brand new, over 3000 sq ft, gated neighborhood) for what we paid for it (less than $250K last fall). Even offers in the Carolinas/Virginia area aren't what they've been here, and housing is a good deal more.

Add in the fact that we don't pay state taxes, though our property taxes aren't pretty, and for some reason gas seems to always be cheaper here...we definitely come out ahead where we are now.

 

[oneKnight]

We are trying as hard ad we can to scoot our booties OUT of a high COL area. Every.Single.House for sale here has 3, 4, 5 bedrooms! Whatever happened to those old 2-bedrooms that are plenty huge for the childless (even though we are TTC)?? Simple, they are OLD, no longer being built, at least not around here. We're buying a 60 year old house for $80/100sq ft.

I like 4 walls and a roof, but I don't see why it should cost so much.

 

[Mallory]

Dh has a job that pays similar most places- Railroad Conductor. If you work for one of the huge class one railroads, I don't think it matters whether you spend your day switching cars in downtown Los Angeles or you spend everyday on a 200 mile trip in Wyoming.

I'll admit that I have looked closest at midwest prices, but he could work in Kansas City or Denver and spend his whole day working hard in the yard in the worst part of those citys (cause thats where the trains tracks are), or we could live in the middle of nowhere, or in a middle sized town and make a very similar wage, and have a job where he gets actually ride on the train somewhere (he likes that better) and has a lower cost of living.

In our case any slight difference in wages would not be covered by even the difference in the cost of living between western Kansas and Kansas City, and we hate big cities. So for us it is a no brainer.

I even looked up a link Pretty similar- a difference of Atlanta $20.12 to New York $25.65. I would bet on the last graph, if they only looked at class one or shortline railroads the differences would be less.

My first husband was a carpenter. He made cabinets and then pipe organs in Kansas at less then $10 and hour. We moved to Anapolis, MD and he builds boats for more than twice that. So maybe it was better for us to move east, but living in Annapolis was so expenisve. And I am glad to be back in the midwest.

 

[Belleweather]

We pretty much need to live where the money is -- while some elements of our budget (rent, groceries, maybe daycare/school) can change if we move to a lower cost of living area, the single biggest item in our budget is paying off our Student Loans. The loans are always the same amount in dollars no matter where we're living... but the $1000/month payments are a lot worse on our budget when we have a combined income of $45k/year than they are if we have a combined income of $75k year.

We'll definately look at moving to a lower cost of living area when the loans are paid down, but until then we really need to focus on maximizing our salaries and aggressively getting out of debt.

 

[CarrieMF]

If you are making more $ but spending more because everything costs more are you really saving more?

Right now we live in a high cost area. Dh has applied for a new job & if he gets it he'll be making more than he does now & after a year we're moving to a low cost area. This job is up north, DH would be gone for 2 weeks & home for 2 weeks.

 

[mightymoo]

Quote:

Originally Posted by CarrieMF If you are making more $ but spending more because everything costs more are you really saving more?

Well in theory yes, if everything follows the same percentage increase. For simplicity, lets say NYC is twice as expensive as living in rural Indiana. So, if you are making $5000/mo in NYC or $2500/mo in IN. Housing in NYC costs $2000, but only $1000 in IN. Other expenses cost $2000 in NYC but only $1000 in indiana. So, in NYC you make $5000/mo, but spend $4000/mo, saving 20% of your salary. In IN you make $2500/mo and spend $2000/mo saving 20% of your salary. But after living a year in IN you have $6000, whereas in NYC you have $12,000.

Obviously from everyone's statements this doesn't really hold up for everyone, as some professions do make just as much in low COL areas, but that's the theory behind it. But if your income and expenses all increase or decrease relatively the same amount between areas, then I would think a higher COL area would mean a higher amount saved in the end.

There are a lot of factors involved, so its very specific to each persons situation, but I'm fascinated by everyone's different experiences with this!

 

[Amys1st]

We live in the suburbs about 20 miles west of Chicago. We just sold our 3 bedroom splitlevel style home for a larger home. We sold for a bit over 300K and bought this one for 330K. It needs all new everything and we plan to do it. It was for sale for 2 plus years and we bid way way low on it to give you an idea of housing costs.

 

[CarrieMF]

Quote:

Originally Posted by mightymoo Well in theory yes, if everything follows the same percentage increase. For simplicity, lets say NYC is twice as expensive as living in rural Indiana. So, if you are making $5000/mo in NYC or $2500/mo in IN. Housing in NYC costs $2000, but only $1000 in IN. Other expenses cost $2000 in NYC but only $1000 in indiana. So, in NYC you make $5000/mo, but spend $4000/mo, saving 20% of your salary. In IN you make $2500/mo and spend $2000/mo saving 20% of your salary. But after living a year in IN you have $6000, whereas in NYC you have $12,000. Obviously from everyone's statements this doesn't really hold up for everyone, as some professions do make just as much in low COL areas, but that's the theory behind it. But if your income and expenses all increase or decrease relatively the same amount between areas, then I would think a higher COL area would mean a higher amount saved in the end. There are a lot of factors involved, so its very specific to each persons situation, but I'm fascinated by everyone's different experiences with this!

see when I think Low COL areas I think of my hometown where if you make $13/hour you're one of the luckier people, BUT you can buy a house for $1200(no typing mistake it's Twelve Hundred). It's not the greatest house, but still. When my parents sold my grandparents house it was on 3 lots, about 1200sq ft, 1 1/2bath, 3 bedroom, double garage, not a run down older house, all landscaped. $30,000.

 

[Mamm2]

My ex-dh and my salary stayed the same even though we went to a lower COL.

Right now I get paid the same as my co-workers in higher COL...I guess it depends on the proffession.

So for me being in a lower COL works out great!

 

[KariM]

When DH was in his last job search we found that the high COL areas we found did not offer high enough increases in salary for us to live there.

(we were looking in the Seattle/Portland areas)

He works in Higher Ed Admin and there just isn't enough of an increase in income for us to live in a high COL area, so we stayed in the Midwest where the COL is low and we can afford to live.