Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

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fennewaldaj
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Sun Nov 04, 2018 12:05 am

HomerJ wrote:
Sat Nov 03, 2018 11:53 pm
Starfish wrote:
Sat Nov 03, 2018 11:31 pm
Oh comm'on, you are trying to deny simple market principles here.
If our town is so great, how come is LCOL? Every nice place with opportunities is discovered and flooded by people, becoming quickly HCOL.
There's more room in the Midwest.

Part of the reason San Fran is so expensive is that housing is scarce. That's also market principles.

In KC, they just keep building more subdivisions. Instead of existing housing going up up up in price, they just build more. Traffic isn't as bad as other cities, so going out another mile isn't the end of the world.
The magazine the economist likes to hammer on the point that zoning restrictions are a large part of why many HCOL areas are so expensive. Like in theory with how expensive land is in San Francisco there should be mostly high rises but that is not how the city looks. I think midwestern cities have somewhat less zoning restrictions overall. In addition due to not being on the coast and not being near mountains they can expand in all directions (though the midwest does have lakeside cities). Atlanta is still pretty cheap and it has been a pretty economically successful city for a decent while show that prices don't have to rise just because a city is popular/growing.

fennewaldaj
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Sun Nov 04, 2018 12:07 am

Starfish wrote:
Sun Nov 04, 2018 12:01 am
T
HomerJ wrote:
Sat Nov 03, 2018 11:53 pm
Starfish wrote:
Sat Nov 03, 2018 11:31 pm
Oh comm'on, you are trying to deny simple market principles here.
If our town is so great, how come is LCOL? Every nice place with opportunities is discovered and flooded by people, becoming quickly HCOL.
There's more room in the Midwest.

Part of the reason San Fran is so expensive is that housing is scarce. That's also market principles.

In KC, they just keep building more subdivisions. Instead of existing housing going up up up in price, they just build more. Traffic isn't as bad as other cities, so going out another mile isn't the end of the world.
There are plenty of tight cheap places.
SF is expensive because is the only nice american cities near very well paid employment opportunities and great universities and near great nature. From surfing to skiing you have it all.
What do you have in Midwest? Nasty winters without skiing?
The infinite suburbia expansion does not work, look at Austin. The commute can become very long.
I think Austins problem is that it grew so rapidly that the road system didn't even close to keep up.

A-Commoner
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by A-Commoner » Sun Nov 04, 2018 1:02 am

Coastal cities are HCOL partly because the coast poses a limit to expansion; you can’t build homes on the ocean. The lack of buildable land beyond the coastline makes real estate expensive in these places. But another reason coastal cities are HCOL is that the coasts are where ports are located - major points of entry and exit for travel and trade. Ports are economic engines, they create hundreds of thousands of jobs that can’t be replicated in land-locked states in flyover country. These jobs attract people to live in these states, increasing demand for homes and raising the cost of living. The ports of Los Angeles and Long Beach are the largest and busiest trading ports in North America with the bulk of traffic coming from Asia, which is the engine of global growth. These ports are permanent geographic features that are unique to coastal states which places like Kansas or Missouri will never have.

grokzilla
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by grokzilla » Sun Nov 04, 2018 2:30 am

stoptothink wrote:
Sat Nov 03, 2018 2:49 pm

You're making massive generalizations. I live in a city with a population of 38k...in Utah. I work for the world's largest company in my industry (my office door is a 7min walk from my home front door), the global headquarters of the 2nd and 3rd largest are <10 miles away. My wife is in tech (sales), she works for a ~500 data security firm and there are hundreds and hundreds of companies that she could work for within a 15 mile radius of our home (with names I'm sure you've probably heard off...Adobe, Ebay, Qualitrics, Domo, Pluralsight, Lucid, BambooHR, etc). There are also a handful of major hospitals within bike riding distance of my home. There is even a 50,000+ sq. ft medical facility on the global campus of my employer. It isn't a "world-class medical facility", but my family has never had a medical concern which could not be handled there.

The earlier statement that those who have spent most of their lives on the coast tend to have no clue what life is like in "fly-over country" is 100% true. I spent the first nearly 30yrs of my life in Los Angeles, Houston and Phoenix; without a doubt there are more opportunities for jobs in the industries my wife and I work in within a 15min drive of my home in po-dunk Utah, then there were in those major metro areas. And "culture"; to each their own, you only have so much time. There are more restaurants, museums, parks, libraries, etc. within bike riding distance of my home then I'll ever have time to visit.

Having lived the majority of my life in major metro areas, I can not stand them now that I have seen alternatives. I can understand the appeal, but the idea that all of these "smaller towns" have no opportunity or culture or access to good healthcare is nonsense. You can't generalize topics like this, the answer is different for everybody.
That is itself a massive generalization. :happy We're all going to have plenty of anecdotes, but I couldn't disagree with this one more -- though I'm probably more hair splitting than anything here.

I'm from a major HCOL area, I've lived in many places on both coasts, in the South, the Pacific NW and the Midwest. One thing I can guarantee, as a cohort, the folks in "flyover country" are notably less versed in HCOL areas -- particularly the coasts. The issue is simple -- our major HCOL areas are not primarily composed of native-born sons and daughters. In many cases more than 50% of the population are transplants. Hence the total mashup of culture that is so prevalent in our HCOL metros. There is no shortage of people fresh off the farm in NY or Los Angeles. I mean, it's not like the central valley or upstate NY are far away...

Conversely, those in flyover country with the wanderlust leave. Those without it stay. As a result, the vast majority of the population remains native as there is very little churn. The cohort's collective understanding of our other states is then quite naturally repressed. The strangest questions and ideas have ALWAYS come from my friends, family and neighbors in flyover country. Oh boy, the Baywatch years... bless their hearts! :D

And, don't get me wrong, we absolutely love these areas -- it's where we live now. But, we do call many of these locales "The Lands That Time Forgot" for good reason.

fennewaldaj
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Sun Nov 04, 2018 5:12 am

Here is a relevant marketwatch article

https://www.marketwatch.com/story/the-b ... 2018-10-29

Pittsburgh is the winner

SQRT
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by SQRT » Sun Nov 04, 2018 9:38 am

golfCaddy wrote:
Sat Nov 03, 2018 10:07 pm
SQRT wrote:
Sat Nov 03, 2018 5:08 pm
Certainly agree that sweeping generalizations aren’t very useful in a discussion like this. But unfortunately that seems to be what the internet tends to encourage, no? Even the OP admited his question was impossible to answer, yet on and on we go.
Assuming the OP has the skills to get a high paying career, there is an objective answer, from the standpoint of being able to FIRE as soon as possible. Go to where the high paying jobs are, which for tech might be NYC, SV, Seattle, and Boston, and keep your housing costs under control, ex. commute instead of living in Manhattan, or get roommates, or if you have a SO, split the cost of a 1bdr with them. Then, once you get close to hitting your number, you can move to Kansas City and buy your 5000sqft McMansion next to HomerJ.
Reasonable post and more useful than most in this thread. Your first sentence is the “rub” though. Big assumption for most people.

mffl
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by mffl » Sun Nov 04, 2018 10:46 pm

I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above. 4000 sq ft house, $400k or less. Don't want a McMansion? Great, then it's even less. It's not devoid of culture, but is obviously no match for NYC. That's fine. Flights to NYC are regularly $300 or better from our airport that is the 4th busiest in the world and is larger than the island of Manhattan. For the difference in rent we're talking about, I could fly to NYC every weekend if I needed to. Traffic is manageable, and leagues better than Austin, which was mentioned earlier. DFW is an example proving that infinite exurbia can in fact work, and keep costs down because there's no limits in any direction, not because nobody wants to be there. Sure, summer is hot, but that just means both Spring and Fall are basically what other people consider a pleasant, mild summer, so we get twice as much of that as everybody else.

Now, if you live in NYC and like it, that doesn't mean the above reasons need to be sufficient for you to consider it worth it. It just means you're paying an awfully high premium to live down the street from those Broadway shows on all the days you're not going to Broadway shows. And you think McMansions are ridiculous. Great! You live in the right place. But it's reasonable to point out that someone whose primary goal is to build wealth has options in the LCOL areas, especially if expensive restaurants and Broadway *every weekend* isn't their thing. Depending on what you value (space, quiet, etc. vs culture, excitement, etc.), there's a reasonable argument to be made that the overall standard of living can paradoxically be higher in the LCOL areas, all things considered, which is the point people are trying to make about the income in HCOL not increasing in proportion to the costs. If your solution is to live in a bad area with a bunch of roommates, well, you could do that to save money here too, but you don't have to, and that's sort of the point.

As for the $1m shack appreciating to $2m as a retirement plan, there's nothing stopping you from living in a LCOL and putting most of your money in an investment property in California, not that that would probably be recommended by most people here if the decision were made in a vacuum.

And yes, we have pho.

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Watty
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Watty » Mon Nov 05, 2018 1:14 am

When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.

JackoC
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by JackoC » Mon Nov 05, 2018 10:17 am

golfCaddy wrote:
Sat Nov 03, 2018 10:07 pm
Assuming the OP has the skills to get a high paying career, there is an objective answer, from the standpoint of being able to FIRE as soon as possible. Go to where the high paying jobs are, which for tech might be NYC, SV, Seattle, and Boston, and keep your housing costs under control, ex. commute instead of living in Manhattan, or get roommates, or if you have a SO, split the cost of a 1bdr with them. Then, once you get close to hitting your number, you can move to Kansas City and buy your 5000sqft McMansion next to HomerJ.
I agree, making the *big* assumption in the first sentence, the answer is to seek a high six figure+ job, and by and large those jobs are at the HCOL centers of high paying industries. It's very hard to beat the number of absolute $'s you can save making that kind of money and living modestly in HCOL area by making the same %-tile income and living modestly in a LCOL. IOW the underlying statistic is more outlier incomes on the upside in NY, SF etc. The comparison of living costs to income for median income people might be more favorable in KC than NY, but for 99-tile people it's probably a lot more favorable in NY, especially with the added condition of saving like crazy, not taking all the opportunities to spend money in NY.

However one other potential hole in that idea (besides again the obvious one that most people won't make high six+ income anywhere, I realize that) is living in NY, say, you might get attached to NY. Then when you walk away, from work, you stay in NY and don't buy a cheap McMansion in KC. But again if you do well enough on the income side, the cost side ceases to matter much, either when you're working or after.

All again with the big 'if' that income like that is at all likely for you, anywhere. I would guess from general reading of this forum that that path to financial independence, save a lot of $'s per year from a very high income living in a HCOL area, is realistic for a much higher % of this forum's readership than the general population. But it's still probably a distinct minority. I don't guess there are a lot of semi-skilled blue collar workers here, but in that case the income prospects might even be better in some LCOL areas than in NY (say, relatively high paid factory work) even before considering living costs. And every other variation of career prospect. As was said, no way to generalize that's very meaningful to each individual, especially people already well along a path in life. If it's young people though who haven't made those decisions yet but could have prospects in high paying careers, then no IMO, the low cost of LCOL areas doesn't beat the greater possibility of hitting it big income-wise in a HCOL.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by stoptothink » Mon Nov 05, 2018 10:56 am

grokzilla wrote:
Sun Nov 04, 2018 2:30 am
stoptothink wrote:
Sat Nov 03, 2018 2:49 pm

You're making massive generalizations. I live in a city with a population of 38k...in Utah. I work for the world's largest company in my industry (my office door is a 7min walk from my home front door), the global headquarters of the 2nd and 3rd largest are <10 miles away. My wife is in tech (sales), she works for a ~500 data security firm and there are hundreds and hundreds of companies that she could work for within a 15 mile radius of our home (with names I'm sure you've probably heard off...Adobe, Ebay, Qualitrics, Domo, Pluralsight, Lucid, BambooHR, etc). There are also a handful of major hospitals within bike riding distance of my home. There is even a 50,000+ sq. ft medical facility on the global campus of my employer. It isn't a "world-class medical facility", but my family has never had a medical concern which could not be handled there.

The earlier statement that those who have spent most of their lives on the coast tend to have no clue what life is like in "fly-over country" is 100% true. I spent the first nearly 30yrs of my life in Los Angeles, Houston and Phoenix; without a doubt there are more opportunities for jobs in the industries my wife and I work in within a 15min drive of my home in po-dunk Utah, then there were in those major metro areas. And "culture"; to each their own, you only have so much time. There are more restaurants, museums, parks, libraries, etc. within bike riding distance of my home then I'll ever have time to visit.

Having lived the majority of my life in major metro areas, I can not stand them now that I have seen alternatives. I can understand the appeal, but the idea that all of these "smaller towns" have no opportunity or culture or access to good healthcare is nonsense. You can't generalize topics like this, the answer is different for everybody.
That is itself a massive generalization. :happy We're all going to have plenty of anecdotes, but I couldn't disagree with this one more -- though I'm probably more hair splitting than anything here.

I'm from a major HCOL area, I've lived in many places on both coasts, in the South, the Pacific NW and the Midwest. One thing I can guarantee, as a cohort, the folks in "flyover country" are notably less versed in HCOL areas -- particularly the coasts. The issue is simple -- our major HCOL areas are not primarily composed of native-born sons and daughters. In many cases more than 50% of the population are transplants. Hence the total mashup of culture that is so prevalent in our HCOL metros. There is no shortage of people fresh off the farm in NY or Los Angeles. I mean, it's not like the central valley or upstate NY are far away...

Conversely, those in flyover country with the wanderlust leave. Those without it stay. As a result, the vast majority of the population remains native as there is very little churn. The cohort's collective understanding of our other states is then quite naturally repressed. The strangest questions and ideas have ALWAYS come from my friends, family and neighbors in flyover country. Oh boy, the Baywatch years... bless their hearts! :D

And, don't get me wrong, we absolutely love these areas -- it's where we live now. But, we do call many of these locales "The Lands That Time Forgot" for good reason.
I'm confused as to what you are actually disagreeing with. There has been quite a leap of assumptions about areas not on the coast in this thread; that there are no job opportunities, no "culture", a lack of accessibility to good healthcare...I thought the same thing for most of my life, until I actually left California.

There is no objective answer to this question, it is completely dependent on the individual and more specifically the industry that they work in. If you are in tech, the answer is probably HCOL (Bay Area, Seattle). Finance? Probably NYC. If you are in my industry, the answer is without a doubt the MCOL area I live in as 5 of the 6 largest companies are in Utah. If you are in medicine, it is highly likely to be a LCOL/MCOL areas as well.

stoptothink
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by stoptothink » Mon Nov 05, 2018 10:58 am

mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above. 4000 sq ft house, $400k or less. Don't want a McMansion? Great, then it's even less. It's not devoid of culture, but is obviously no match for NYC. That's fine. Flights to NYC are regularly $300 or better from our airport that is the 4th busiest in the world and is larger than the island of Manhattan. For the difference in rent we're talking about, I could fly to NYC every weekend if I needed to. Traffic is manageable, and leagues better than Austin, which was mentioned earlier. DFW is an example proving that infinite exurbia can in fact work, and keep costs down because there's no limits in any direction, not because nobody wants to be there. Sure, summer is hot, but that just means both Spring and Fall are basically what other people consider a pleasant, mild summer, so we get twice as much of that as everybody else.

Now, if you live in NYC and like it, that doesn't mean the above reasons need to be sufficient for you to consider it worth it. It just means you're paying an awfully high premium to live down the street from those Broadway shows on all the days you're not going to Broadway shows. And you think McMansions are ridiculous. Great! You live in the right place. But it's reasonable to point out that someone whose primary goal is to build wealth has options in the LCOL areas, especially if expensive restaurants and Broadway *every weekend* isn't their thing. Depending on what you value (space, quiet, etc. vs culture, excitement, etc.), there's a reasonable argument to be made that the overall standard of living can paradoxically be higher in the LCOL areas, all things considered, which is the point people are trying to make about the income in HCOL not increasing in proportion to the costs. If your solution is to live in a bad area with a bunch of roommates, well, you could do that to save money here too, but you don't have to, and that's sort of the point.

As for the $1m shack appreciating to $2m as a retirement plan, there's nothing stopping you from living in a LCOL and putting most of your money in an investment property in California, not that that would probably be recommended by most people here if the decision were made in a vacuum.

And yes, we have pho.
Exactly

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greg24
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by greg24 » Mon Nov 05, 2018 11:07 am

This thread reiterates that a college town in flyover country is the best place to live.

:sharebeer

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by SGM » Mon Nov 05, 2018 1:08 pm

The key for me to become financially independent was to increase my skills and invest in my human capital as well as in the stock market. For my father he became financially independent by working in an up and coming industry and leaving a dying industry. I don't think being in a HCOL or LCOL had that much to do with it for me.

For my father the industry he left was in what became the rust belt and house values remained very low over many years.

We were both fortunate by owning homes in HCOL areas. The real estate market values fluctuate quite a bit in HCOL areas and there is a bit of luck as to when you buy and sell. My father lived in his house for over 60 years. I lived in a house for five years when I took a substantial profit.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by golfCaddy » Mon Nov 05, 2018 9:17 pm

mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above.
I think you're the one who is moving the goal post. There's a big difference between the Dallas-Fort Worth-Arlington metro, population 7 million, and the 300k-500k cities that have been mentioned previously. Of course, focusing on Manhattan makes the difference look as large as possible. You could live in one of the other boroughs or NJ, and have a commute on par with what many people deal with in Dallas suburbia.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by sawhorse » Tue Nov 06, 2018 12:19 am

greg24 wrote:
Mon Nov 05, 2018 11:07 am
This thread reiterates that a college town in flyover country is the best place to live.

:sharebeer
Very much so if you can get a job. The problem is that in college towns (as opposed to cities that happen to have a major college), employment is very much dependent on the university. There aren't many employment options outside the university.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Tue Nov 06, 2018 2:15 am

golfCaddy wrote:
Mon Nov 05, 2018 9:17 pm
mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above.
I think you're the one who is moving the goal post. There's a big difference between the Dallas-Fort Worth-Arlington metro, population 7 million, and the 300k-500k cities that have been mentioned previously. Of course, focusing on Manhattan makes the difference look as large as possible. You could live in one of the other boroughs or NJ, and have a commute on par with what many people deal with in Dallas suburbia.
There has been a lot of focus on Kansas City (since HomerJ lives there) which has a metro of 2 millionish. There is are a bunch of midwestern cities with metros of 2-3 million or so (Kansas City, St. Louis, Minneapolis, Milwaukee, Indianapolis, Cincinnati, Columbus, Cleveland) as well as a few that are bigger (Detroit and Chicago). A big portion of the residents of the midwest live in these biggish cities so its more the norm than the exception in these areas. I have noticed that when you plug NYC into cost of living calculator it doesn't look all that expensive. For me I would need 30% more income to have the same purchasing power. The bay area on the other hand I would need double the income.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by JackoC » Tue Nov 06, 2018 9:58 am

fennewaldaj wrote:
Tue Nov 06, 2018 2:15 am
golfCaddy wrote:
Mon Nov 05, 2018 9:17 pm
mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above.
I think you're the one who is moving the goal post. There's a big difference between the Dallas-Fort Worth-Arlington metro, population 7 million, and the 300k-500k cities that have been mentioned previously. Of course, focusing on Manhattan makes the difference look as large as possible. You could live in one of the other boroughs or NJ, and have a commute on par with what many people deal with in Dallas suburbia.
There has been a lot of focus on Kansas City (since HomerJ lives there) which has a metro of 2 millionish. There is are a bunch of midwestern cities with metros of 2-3 million or so (Kansas City, St. Louis, Minneapolis, Milwaukee, Indianapolis, Cincinnati, Columbus, Cleveland) as well as a few that are bigger (Detroit and Chicago). A big portion of the residents of the midwest live in these biggish cities so its more the norm than the exception in these areas. I have noticed that when you plug NYC into cost of living calculator it doesn't look all that expensive. For me I would need 30% more income to have the same purchasing power. The bay area on the other hand I would need double the income.
The whole exchange of views on 'LCOL' metro areas v 'VLOC' remoter areas v NY etc just underlines how people can be coming at this question with an almost innumerable variety of assumptions.

If a young person, not already years along in another career, is focused on finance and has the pedigree (it's a credentialist world, Wall Street) and skills, NY is the place. Whether the cost would be 30% more or twice is basically irrelevant. And it would anyway depend a lot, like anywhere else or more so, what kind of lifestyle. A full blown upscale family life in Manhattan? That's mega expensive, only feasible *after* you've made it pretty big (or inherited it pretty big, I guess). But a single person with roommates in various parts of Brooklyn, Queens, Hoboken etc., close commute to work, work, work, and gain your footing in the industry: living cost in that case isn't *that* high*, but it's also pretty irrelevant in that case how NY stacks up to elsewhere. Those jobs just don't exist in those numbers in KC, Dallas or almost anywhere else in the US. Chicago is a partial exception, though less than Chicagoans tend to think.

And there are some other industries where NY is one of *the* places. It has its share of start up tech too. But otherwise the population of the City is slowly growing from people in general coming from other countries, and people from the US trying to make it big in those few industries, slightly outnumbering a steady stream of people born in the area, but not in the running for the brass ring, or retired, moving out. Other than that there are some 'long term tourist' type younger people attracted to live in the City for some years for what it is as a place to live, unique in the world not only the US. But if the discussion is about why people already with families and careers not in high upside NY industries would move to NY to further their financial position, the answer is they rarely would. It's probably too unusual a case to focus much attention on.

*assuming they can't get a rent stabilized or public housing apt in the City, in which case housing cost mightn't be high at all, but those are hard for a newcomer to land.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by ArmchairArchitect » Tue Nov 06, 2018 6:46 pm

MCOL area is the way to go. Strong job market but costs still reasonable.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by random_walker_77 » Tue Nov 06, 2018 10:33 pm

So much of this depends on the specific person, industry, and locations. For tier-1 computer hardware engineers, Austin pays surprisingly well compared to San Jose. From what I've seen, it appears to be 90+% of silicon valley in terms of base salary, which is a wash when you factor in state income taxes. Equity grants are probably lower, but I've known some who have gotten annual 6-figure grants. I think careers advance slower here in Austin, but financially, it's more advantageous to be here if you value quality of life. On the other hand, if you're a workaholic, you can get farther and get more equity in Silicon Valley.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by getthatmarshmallow » Wed Nov 07, 2018 12:38 am

stoptothink wrote:
Mon Nov 05, 2018 10:58 am
mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above. 4000 sq ft house, $400k or less. Don't want a McMansion? Great, then it's even less. It's not devoid of culture, but is obviously no match for NYC. That's fine. Flights to NYC are regularly $300 or better from our airport that is the 4th busiest in the world and is larger than the island of Manhattan. For the difference in rent we're talking about, I could fly to NYC every weekend if I needed to. Traffic is manageable, and leagues better than Austin, which was mentioned earlier. DFW is an example proving that infinite exurbia can in fact work, and keep costs down because there's no limits in any direction, not because nobody wants to be there. Sure, summer is hot, but that just means both Spring and Fall are basically what other people consider a pleasant, mild summer, so we get twice as much of that as everybody else.

Now, if you live in NYC and like it, that doesn't mean the above reasons need to be sufficient for you to consider it worth it. It just means you're paying an awfully high premium to live down the street from those Broadway shows on all the days you're not going to Broadway shows. And you think McMansions are ridiculous. Great! You live in the right place. But it's reasonable to point out that someone whose primary goal is to build wealth has options in the LCOL areas, especially if expensive restaurants and Broadway *every weekend* isn't their thing. Depending on what you value (space, quiet, etc. vs culture, excitement, etc.), there's a reasonable argument to be made that the overall standard of living can paradoxically be higher in the LCOL areas, all things considered, which is the point people are trying to make about the income in HCOL not increasing in proportion to the costs. If your solution is to live in a bad area with a bunch of roommates, well, you could do that to save money here too, but you don't have to, and that's sort of the point.

As for the $1m shack appreciating to $2m as a retirement plan, there's nothing stopping you from living in a LCOL and putting most of your money in an investment property in California, not that that would probably be recommended by most people here if the decision were made in a vacuum.

And yes, we have pho.
Exactly
To be fair, though, you're in a metropolitan area of over a million with a tech hub. Real podunk looks different. I agree, however, with your general point. Sure, there are people from the land who time forgot. There are also people in NYC who with all their cosmopolitan worldliness can't figure out that there are things going on in flyover, and you can afford them, too, instead of *not* going to things because the rent is too high but feeling smug because you're near them.

On the topic of the thread: eh. If your industry and skillset is such that you can command a premium in HCOL areas, you're better off there with the very high wages. But if your field is such that wage increase doesn't balance the cost of living, you're better off with the lower salary in the LCOL. I'm an academic and my friends in my field in big cities make more than I do. However, none of us are particularly high earners because outside of the superstars no one gets rich in my field, and my dollars go a lot further than theirs. Lower cost of childcare alone swamps their salary increase. I suspect I save a higher percentage, and my podunk town manages to have two pho joints.

Starfish
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Starfish » Wed Nov 07, 2018 2:33 am

Watty wrote:
Mon Nov 05, 2018 1:14 am
When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.
You mean like a smallish dental office? Do those farms employ financial annalists or speech recognition specialists?

I find surprising that somebody asks about jobs location only from the point of view of money. And the fact that nobody objects to that is even worse. What would be the answers if somebody asked about selecting a wife based on money? You mainly have to like the place you live in, money are a secondary consideration.

The argument of getting a 4000sqft house for 400k reminds me of the joke where the first price of the hot dog eating contest is 100 hot dogs. The maximum pile of cardboard I need is say 2000sqft. Why would I want more, even if it's free? It comes with expenses and cleaning efforts.

fennewaldaj
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Wed Nov 07, 2018 3:11 am

Starfish wrote:
Wed Nov 07, 2018 2:33 am
Watty wrote:
Mon Nov 05, 2018 1:14 am
When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.
You mean like a smallish dental office? Do those farms employ financial annalists or speech recognition specialists?
I grew up on a "small" farm. A successful farmer has to essentially be there own financial analyst among many other things. Its a pretty complicated job. What on earth does speech recognition specialist have to do with anything. The point he was making was even the rural areas are not economic wastelands they simply have different economic drivers. Also our agricultural sector is still very important even though the employment out of it is fairly small.

sawhorse
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by sawhorse » Wed Nov 07, 2018 3:18 am

fennewaldaj wrote:
Wed Nov 07, 2018 3:11 am
Starfish wrote:
Wed Nov 07, 2018 2:33 am
Watty wrote:
Mon Nov 05, 2018 1:14 am
When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.
You mean like a smallish dental office? Do those farms employ financial annalists or speech recognition specialists?
I grew up on a "small" farm. A successful farmer has to essentially be there own financial analyst among many other things. Its a pretty complicated job. What on earth does speech recognition specialist have to do with anything. The point he was making was even the rural areas are not economic wastelands they simply have different economic drivers. Also our agricultural sector is still very important even though the employment out of it is fairly small.
I read that comment - this is only my reading and not necessarily how it was intended - as pointing out that there are fewer employment opportunities for certain fields in rural places. If someone is trained as a financial analyst or speech recognition specialist, there are more job openings in high cost urban areas than in low cost rural areas.

fennewaldaj
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by fennewaldaj » Wed Nov 07, 2018 3:24 am

sawhorse wrote:
Wed Nov 07, 2018 3:18 am
fennewaldaj wrote:
Wed Nov 07, 2018 3:11 am
Starfish wrote:
Wed Nov 07, 2018 2:33 am
Watty wrote:
Mon Nov 05, 2018 1:14 am
When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.
You mean like a smallish dental office? Do those farms employ financial annalists or speech recognition specialists?
I grew up on a "small" farm. A successful farmer has to essentially be there own financial analyst among many other things. Its a pretty complicated job. What on earth does speech recognition specialist have to do with anything. The point he was making was even the rural areas are not economic wastelands they simply have different economic drivers. Also our agricultural sector is still very important even though the employment out of it is fairly small.
I read that comment - this is only my reading and not necessarily how it was intended - as pointing out that there are fewer employment opportunities for certain fields in rural places. If someone is trained as a financial analyst or speech recognition specialist, there are more job openings in high cost urban areas than in low cost rural areas.
Yeah I probably misinterpreted it now that you mention it.

Sam1
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Sam1 » Wed Nov 07, 2018 7:17 am

mffl wrote:
Sun Nov 04, 2018 10:46 pm
I think a lot of the anti-LCOL arguments here are actually straw man arguments against VLCOL, i.e. remote rural areas, which have their own plusses and minuses. I don't think that's the type of area that *most* people are considering when they're thinking about building wealth in a LCOL area.

The Dallas area, as an example, is the 4th largest metropolitan area in the country. It has plenty of well paid jobs, quality restaurants, top notch medical facilities, top quality sports facilities, and is solidly LCOL -- way less than half of the COL of Manhattan according to the link above. 4000 sq ft house, $400k or less. Don't want a McMansion? Great, then it's even less. It's not devoid of culture, but is obviously no match for NYC. That's fine. Flights to NYC are regularly $300 or better from our airport that is the 4th busiest in the world and is larger than the island of Manhattan. For the difference in rent we're talking about, I could fly to NYC every weekend if I needed to. Traffic is manageable, and leagues better than Austin, which was mentioned earlier. DFW is an example proving that infinite exurbia can in fact work, and keep costs down because there's no limits in any direction, not because nobody wants to be there. Sure, summer is hot, but that just means both Spring and Fall are basically what other people consider a pleasant, mild summer, so we get twice as much of that as everybody else.

Now, if you live in NYC and like it, that doesn't mean the above reasons need to be sufficient for you to consider it worth it. It just means you're paying an awfully high premium to live down the street from those Broadway shows on all the days you're not going to Broadway shows. And you think McMansions are ridiculous. Great! You live in the right place. But it's reasonable to point out that someone whose primary goal is to build wealth has options in the LCOL areas, especially if expensive restaurants and Broadway *every weekend* isn't their thing. Depending on what you value (space, quiet, etc. vs culture, excitement, etc.), there's a reasonable argument to be made that the overall standard of living can paradoxically be higher in the LCOL areas, all things considered, which is the point people are trying to make about the income in HCOL not increasing in proportion to the costs. If your solution is to live in a bad area with a bunch of roommates, well, you could do that to save money here too, but you don't have to, and that's sort of the point.

As for the $1m shack appreciating to $2m as a retirement plan, there's nothing stopping you from living in a LCOL and putting most of your money in an investment property in California, not that that would probably be recommended by most people here if the decision were made in a vacuum.

And yes, we have pho.
I don’t see how many people live in LCOL areas could afford to invest in properties in California. Which is the catch. The higher earnings in a HCOL area allow you greater leverage in the real estate market that someone in a LCOL area could most likely never obtain. Similar to the 401k matching and my pension at 10 percent of salary ending up being a decent amount of money each year.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Jags4186 » Wed Nov 07, 2018 7:43 am

It’s more advantageous to live where you can save more absolute dollars as long as the incremental spend is solely due to living in the HCOL area and you are willing to leave that HCOL area.

If your expenses are $100k a year in HCOL and you’re able to save $50k a year that is better than living in a LCOL area where your expenses are $40,000/yr and you only save $40,000/yr. You just have to be willing to leave the HCOL area in order to reap the benefits.

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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by KlangFool » Wed Nov 07, 2018 8:51 am

Sam1 wrote:
Wed Nov 07, 2018 7:17 am


I don’t see how many people live in LCOL areas could afford to invest in properties in California. Which is the catch. The higher earnings in a HCOL area allow you greater leverage in the real estate market that someone in a LCOL area could most likely never obtain. Similar to the 401k matching and my pension at 10 percent of salary ending up being a decent amount of money each year.
Sam1,

<<The higher earnings in a HCOL area>>

Those assumptions may not be correct depending on the individual circumstances.

A) A person will earn more in an HCOL area.

B) A person's earning is high enough to exceed the additional cost in the HCOL area versus LCOL area.

In my specific job, my peers could live anywhere in the USA with a big airport. My peer in Cleveland, Ohio makes the same amount as I do in the Northern Virginia area. Ditto for my peer in Dallas, Texas.

https://insight.ieeeusa.org/articles/20 ... y-results/

<<Geographic Salary Differences
Another ongoing topic of interest in the survey is how an engineer’s geographic location affects earnings. The 2017 study reports median incomes based on both the six U.S. IEEE regions and the nine U.S. Census Bureau divisions. As in recent past years, those members in Region 6 (West) fare substantially better than those in Region 4 (Central) or Region 3 (Southeast), with gaps of more than $28,000 in median primary income. Census divisions show a similar pattern, with those in the Pacific (Alaska, Hawaii, Washington, Oregon and California) earning some $40,050 a year more than those in the East North Central (Wisconsin, Illinois, Michigan, Indiana and Ohio).

The report also cautions that living costs in the West are significantly higher than elsewhere, and that readers must interpret geographic analyses carefully, because differences in engineering salaries from one area to another may be the result of variations in each region’s industrial composition.>>

KlangFool

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Watty
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Watty » Wed Nov 07, 2018 9:20 am

Starfish wrote:
Wed Nov 07, 2018 2:33 am
Watty wrote:
Mon Nov 05, 2018 1:14 am
When talking about "flyover country" one thing to keep in mind is that even a smallish farm is a million dollar business so it is a lot more complex than thinking of it as some sort of economic wilderness.
You mean like a smallish dental office? Do those farms employ financial annalists or speech recognition specialists?
If you had instead asked about things like things like drones to inspect fields, robotic milking machines, GPS controlled tractors, satellite imaging, genetic engineering, commodity futures, or RFID and GPS tracking of livestock then I would have said yes they often do.

They way the farm operations are financed is likely a lot more complex than a dentist office too. Of course they also have dentist offices in flyover country.

That isn't to say that they don't still sometimes use a shovel to move manure too but a lot of agribusiness is pretty high tech now.

The high tech is also the one of reasons that many small rural towns are dying. 50 years ago running a farm would require that they hire a lot labor. With large high tech equipment the labor needs are a lot less so there are fewer jobs in some rural areas. Migrant labor is still used to harvest some crops but there is a lot of work being done to figure out how to use robots to harvest things like strawberries and robotics will eventually eliminate the need for migrant labor too.

I would suspect that self driving tractors will be in widespread use long before self driving cars are common.

As another poster said it is just a lot different and it may be different in ways that you don't expect.

Starfish
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by Starfish » Wed Nov 07, 2018 1:05 pm

You are trying to fight the obvious here: high cost areas exists there are a lot jobs making a lot of money. For example all of the people I know with 10-20 years of work (in engineering, software, medical field) in bay area have a 1 to 5 million NW.
Now, should you become a waiter in Bay Area? No, definitely not. But if you are a competitive software engineer that is the best place.
So it depends on individual. There is no generic answer.

quantAndHold
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by quantAndHold » Wed Nov 07, 2018 2:14 pm

Watty wrote:
Wed Nov 07, 2018 9:20 am

The high tech is also the one of reasons that many small rural towns are dying. 50 years ago running a farm would require that they hire a lot labor. With large high tech equipment the labor needs are a lot less so there are fewer jobs in some rural areas. Migrant labor is still used to harvest some crops but there is a lot of work being done to figure out how to use robots to harvest things like strawberries and robotics will eventually eliminate the need for migrant labor too.
So very true. My 82 year old uncle farms 2000 acres. By himself. And still manages to spend six months a year fishing in Texas.

It was certainly not like that when my mom and uncle were growing up. It was all hands on deck pretty much all the time.

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ray.james
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Re: Is it more advantageous to live in HCOL or LCOL area in terms of financial independence?

Post by ray.james » Wed Nov 07, 2018 3:10 pm

Jags4186 wrote:
Wed Nov 07, 2018 7:43 am
It’s more advantageous to live where you can save more absolute dollars as long as the incremental spend is solely due to living in the HCOL area and you are willing to leave that HCOL area.

If your expenses are $100k a year in HCOL and you’re able to save $50k a year that is better than living in a LCOL area where your expenses are $40,000/yr and you only save $40,000/yr. You just have to be willing to leave the HCOL area in order to reap the benefits.
I think many underestimate this effect. Especially a dual income family with 401k, there is a higher chance this tilts to HCOL.. Granted change can be hard latter in life.
A better choice is to begin working at a HCOL and moving to LCOL by the time kids start elementary/middle school. This is the best of both worlds IMO. This will boost ones career, early savings to act as a good tailwind, lower taxes during higher consumption years and retirement.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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