Basically you are saying that LCOL areas create lifestyle inflation:) Instead of being happy living in a 1200 sq ft house you buy some 2500 sq ft mcmansion because it is cheaper:) And since you aren't spending money on housing, you can join that fancy country club:)goodenyou wrote:The disparity in taxes between states for a high income earner can be as powerful as the lower cost of living. Additionally, the temptation to spend more in a HCOL area to create the lifestyle that is afforded in a LCOL can be anathema to wealth building (ie belonging to a fancy country club or buying an expensive house). I would not spend the kind of money needed to "create" the lifestyle I have in a LCOL in a HCOL area because I would be not be able to save at the same rate.
Surveys have consistently shown that HCOL create more wealth (combo of house appreciation and higher pay) on average. You are not an average though. The person who wants to live in a huge house in a HCOL will find it very expensive. The person who underhouses might find out they are coming out better than expected.
In the end where you live is a pretty personal choice. Some people like big cities, some like rural locations, and some like stuff in the middle. If you live in the city and hate it, move. Or vice versa. Moving though is rarely a pure financial move. People want to live near family, where they can do their hobbies (i.e. the skiing in FL isn't great, neither is the golf in alaska), and they can get employment/afford. You need figure out what trade offs you want to make.