Career Decision - HCOL area vs. LCOL area

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mstone3
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Joined: Thu Sep 22, 2016 7:12 pm

Career Decision - HCOL area vs. LCOL area

Post by mstone3 » Fri Aug 11, 2017 7:23 pm

I work for a federal government headquarters office in the DC area. I'm often troubled by the high cost of living in the DC metro area (not to mention traffic/commuting) and have often considered leaving for a low cost of living area. In bringing the issue up casually with my supervisor, I learned there is a good possibility that my office would allow me to work out of a regional office that is near my family in my desired LCOL area.

At first consideration, this would seem to be an easy decision, however I have some concerns that this would have a negative affect on my career. I feel that I would become disconnected/isolated from the rest of my office and would probably face limited new career opportunities and chances for advancement into a higher grade level.

It is a strong push/pull situation. On the one hand, in the LCOL area I could save/invest much more, have more affordable housing, and generally "live a simple life in a quiet town." On the other hand, staying in the DC metro area would allow better networking, more access to training/development opportunities, and generally the chance for more interesting/challenging work. I've been sitting on the fence for a while (I'm 50/50 on what to do) and want to get this decision done and over so I can move forward.

Would love to hear the wisdom of the bogleheads! Do the financial benefits of living in a LCOL area outweigh the potential career restraints?

rebellovw
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Re: Career Decision - HCOL area vs. LCOL area

Post by rebellovw » Fri Aug 11, 2017 7:36 pm

My first question would be how old are you? Are you at the start or towards the end of your career?

I left the HCOL area and moved to LCOL area. I did this in 2012 - when I was about 48 - my job gave me the ability to work from home and I've done it ever since. I left the Bay Area in CA - very expensive - and we wrote a check for the house we are in now - no debt and saving like crazy - no more over 10K property taxes, mortgage, high insurance etc. We were living check to check when I look back on it (two car payments, wife student loan, crazy taxes, mortgage etc)

I'm in high tech - and that is a sacrifice as leaving the bay area is a big deal - but I'd rather be free - free as a bird man - corny central!

It is lonely though working from home and you do miss out - but I feel I could survive here which I couldn't in the Bay Area if things went really bad.

Good luck - just some initial thoughts....

delamer
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Re: Career Decision - HCOL area vs. LCOL area

Post by delamer » Fri Aug 11, 2017 7:48 pm

Is the LCOL area in the same locality pay area as DC? If not, you need to understand how that will affect your salary even without a promotion.

Would you be moving a family or are you single to the LCOL area? If a family, how are the schools and other amenities? If single, how would your social life be impacted?

Seems that you've identified the financial tradeoffs pretty well, and there may not be a clear winner. If so, then it is a quality of life issue which is subjective.

mstone3
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Re: Career Decision - HCOL area vs. LCOL area

Post by mstone3 » Fri Aug 11, 2017 8:35 pm

Thank you for the replies so far - just to add some clarifying information:

I'm still what I would consider the early part of my career (age 34 / Single). I did forget to mention that because of the locality pay adjustments, the move to the LCOL area would reduce my total pay by about 7%, however this doesn't concern me that much - the pay reduction would be offset by the benefits of LCOL and would be partially recovered over time through within-grade-increases.

rebellovw
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Re: Career Decision - HCOL area vs. LCOL area

Post by rebellovw » Fri Aug 11, 2017 8:47 pm

You are too young in my opinion and being single I would think D.C. would be more fun.

delamer
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Re: Career Decision - HCOL area vs. LCOL area

Post by delamer » Fri Aug 11, 2017 9:25 pm

mstone3 wrote:Thank you for the replies so far - just to add some clarifying information:

I'm still what I would consider the early part of my career (age 34 / Single). I did forget to mention that because of the locality pay adjustments, the move to the LCOL area would reduce my total pay by about 7%, however this doesn't concern me that much - the pay reduction would be offset by the benefits of LCOL and would be partially recovered over time through within-grade-increases.
Why not come up with a budget for both scenarios -- rent, food, medical, transportation, savings, taxes. etc. -- based on current expenses and then expenses if you move? Then project that out 5 years (for example), assuming you've bought a home in each area (mortgage, home insurance, property taxes). You may find some surprises, both good and bad, for short run and longer run.

lynneny
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Re: Career Decision - HCOL area vs. LCOL area

Post by lynneny » Fri Aug 11, 2017 9:30 pm

This sounds like a good late-career move, when you no longer expect to advance much more.

At your age/stage, I think this move would be a real career killer.

Finance-MD
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Re: Career Decision - HCOL area vs. LCOL area

Post by Finance-MD » Sat Aug 12, 2017 12:46 am

Is there a way you can leverage being in a HCOL area for your financial benefit?

For example - if you are in DC, would you be willing to run an airbnb out of your place? You could get a townhouse and rent out the bottom floor room and have a locked entrance to the upper floors?

If you got a place quite centrally located, you may be able to use the metro only, skip out on having a car, insurance, etc. and get premium rent from airbnb.

Just throwing this out there. This definitely is not for everyone.
But with some work, you can readily offset the cost differential and in fact even save more. (I could imagine a good airbnb of a single bedroom covering all of your housing costs for an entire townhouse).

JBTX
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Re: Career Decision - HCOL area vs. LCOL area

Post by JBTX » Sat Aug 12, 2017 1:23 am

rebellovw wrote:You are too young in my opinion and being single I would think D.C. would be more fun.
From what I've heard D.C. Area is good area to be young and single. But it's always easy for older married farts like me to say such things.

hale2
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Re: Career Decision - HCOL area vs. LCOL area

Post by hale2 » Sat Aug 12, 2017 12:59 pm

In the vast majority of agencies, you have very limited promotion potential or assignment variety if you are outside of DC. That said, if you are okay with that you will be much better off financially to leave DC for a LCOL location. Your locality pay will drop but it won't be reduced enough to lower your standard of living. Most people I know only leave DC (or avoid it entirely) if they are happy enough in their current location that they are okay with the professional downsides. And as someone said earlier, it tends to be a later career decision to leave DC.

Mike Scott
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Re: Career Decision - HCOL area vs. LCOL area

Post by Mike Scott » Sat Aug 12, 2017 1:23 pm

Being in one of those LCOL areas, I know a lot of young federal career types whose greatest fear is getting sucked into a DC job and losing what is valuable to them. The question goes both ways. I worked in DC long enough to know it was not for me. This is more of a personal lifestyle and career question. The financial balance will favor the LCOL area.

harrychan
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Re: Career Decision - HCOL area vs. LCOL area

Post by harrychan » Sat Aug 12, 2017 1:29 pm

As you have identified, this is not as simple as a HCOL vs LCOL decision. I live in a HCOL area and live a quality life with little to no debt because we budget. I have a friend that constantly brag about how life is in his MN ranch. I can outright buy out his ranch with the equity I have in my home. So I think it is all perspective. I also think your salary increases will level off with your gov't job in comparison with being in DC. Something to consider.
This is not legal or certified financial advice but you know that already.

NicB
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Re: Career Decision - HCOL area vs. LCOL area

Post by NicB » Tue Aug 15, 2017 9:11 am

We moved from a HCOL -> M/LCOL living about 14 years ago (housing was much cheaper, everything else was about the same). Overall it was a great move personally and financially. The job that originally brought me to the new area paid well, significantly over the local market average. In additional to that, I've been able to move to other jobs that also paid above the local market. There were definitely some bumps and adjustments along the way -- particularly adjusting to another part of the country, going from a large metropolitan area to a much smaller area, and adjusting to the different/slower pace of life. Schools, services, etc. all either stayed about the same or got better -- so, in going from single to 2 kids, there were definitely some positives and some changes in terms of what was most important. Nightlife, endless restaurants, and the like -- no longer so important.

The one thing I think about sometimes (but not too often) is that living in a much smaller area I've kind of slowed down my career options to a degree. But overall I'm pretty happy with my career path and trajectory, balanced with a great quality of life. A bigger paycheck isn't necessarily worth more stress, a longer commute, and anything else that would come with it. I could probably move to NYC/SF or similar and significantly increase my salary, but overall my COL/QOL would go down. Plus I have extra money to visit and enjoy cities/beaches/wherever from time-to-time.

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Watty
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Re: Career Decision - HCOL area vs. LCOL area

Post by Watty » Tue Aug 15, 2017 10:10 am

mstone3 wrote:
Fri Aug 11, 2017 8:35 pm
I'm still what I would consider the early part of my career (age 34 / Single). I did forget to mention that because of the locality pay adjustments, the move to the LCOL area would reduce my total pay by about 7%
It would be good to do dummy tax returns to see what the after tax impact will be, especially since the state taxes may be much different.

I was a bit younger than you when I moved from a very high cost of living area to a medium cost of living area and I found that my after tax, after housing disposable income went up dramatically. Not only were the housing costs much lower but almost every else was less expensive too. My quality of life was a lot better too since the only house I could have afforded in the high cost area would have been a dump but I was able to easily afford a nice house in the new location

Socially it was hard at first since I literally knew no one at the new location but it got me out of my comfort zone and forced me to go out and do things and meet new people. Within 18 months I was married, and we are still together almost 30 years later. :D

A big question would be what your job prospects will be in your field in the new location if you ever want or need to change jobs. With your DC experience you could be a "big fish in a small pond" if there is a position in the private sector where your background would make you highly desirable to some employer in the new area. It may be a bit different with a government job but few people that are 34 will retire without changing employers.

As long as you could find other reasonable work in the area if you have to I see this as lifestyle choice than a career choice with no one right or wrong answer.

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