Should I move to a high cost of living area?

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boglefan123
Posts: 7
Joined: Thu Feb 28, 2019 11:07 am

Should I move to a high cost of living area?

Post by boglefan123 »

I currently live in a moderate cost of living area of the country but have a job offer to move to a suburb of the Bay Area in Marin County. Various cost-of-living "calculators" estimate a 50% increase in expenses overall. The major expense is housing; equivalent real estate is approximately double the cost.

I am currently a dutiful boglehead and save approximately 50% of my net salary. In the new job I will expect only a 20% pay raise.

While quality of life and job stability may improve, I'm concerned about my plans to retire early. I would greatly appreciate a checkup and the boglehead opinion about my potential options.

Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.

Current portfolio:
1.7M, in boglehead-style index heavy portfolio, approximately 60% stocks, 40% bonds, 35% tax deferred, 15% Roth, rest in taxable.
250K emergency fund/cash available for car purchase and home repair.

Thanks in advance for all your help! Long-time lurker, first time poster.
bloom2708
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Re: Should I move to a high cost of living area?

Post by bloom2708 »

What is the commute with your $1.4 million house to the new job? Do you want to move?

You can certainly absorb more expenses with your new salary. How safe is that level of income?

Taxes will be much higher with CA state tax. Everything else will be more expensive.

My worry would be you now have a 1 to 1.5 hour commute each way and your quality of life drops dramatically.

I would spend more on rent and be within a 15-20 minute commute or even a walk/bike commute. That type of change can dramatically improve your daily routine. Go without a car possibly? I would not buy a house for a while. You might find that budget is a fixer upper or total re-build type house.

No idea if you are married, kids, leaving family, those type of questions. No help, but maybe some things to think about.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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simplesimon
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Re: Should I move to a high cost of living area?

Post by simplesimon »

You say you're concerned about your plans to retire early. Have you done the math? How much later do you think you'll have to retire if you moved?
Jack FFR1846
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Re: Should I move to a high cost of living area?

Post by Jack FFR1846 »

Be careful that you don't stack compromises on top of compromises to come up with a cost that seems reasonable. I was asked at one time to move from the Boston Suburbs to the Bay area. I did an apples vs apples comparison as best I could and found that to buy a similar sized house (on a much smaller lot) within a reasonable commuting time (30 minutes), I would have to buy a house 6 times what I could sell my house for.

20% isn't even close. I would start at double.
Bogle: Smart Beta is stupid
FoolMeOnce
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Re: Should I move to a high cost of living area?

Post by FoolMeOnce »

With a $700k income, you should have no trouble moving there and still retiring early. You might need to change some spending to prioritize early retirement.

But your numbers seem off to me. You say you spend $125k/yr and save 50% of net, so you save $125k/yr also. How do you only net $250k out of $600k gross income? A 58% effective tax rate!?

Another consideration: if you are willing to move somewhere lower cost in your early retirement, you'll be able to pull some housing equity back out at that point.
ohai
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Re: Should I move to a high cost of living area?

Post by ohai »

If your quality of life while working improves, then your desired retirement age should also increase...
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ryuns
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Re: Should I move to a high cost of living area?

Post by ryuns »

If this is definitely a quality of life improvement, then I would say do it. Marin is beautiful, and the Bay Area, for all its myriad issues, can still be a very nice place to live if you make enough money. Since the work is in Marin, if you can afford to live there/nearby, you can avoid the dreaded Bay Area commutes. You'll also be on the "edge" of the megalopolis, making it an easy trip to get out of the city and to some of the most beautiful places in the country.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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warowits
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Re: Should I move to a high cost of living area?

Post by warowits »

Your income is high enough you should really just decide where you prefer living.

That being said I have done the math and My income would have to triple for a move to the Bay Area to make any kind of sense(lcol—>hcol). 20% pay increase would be a very dramatic drop in quality of life for me.
KlangFool
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Re: Should I move to a high cost of living area?

Post by KlangFool »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
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beyou
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Re: Should I move to a high cost of living area?

Post by beyou »

I am in a HCOL and I would want DOUBLE to move to the bay area, based on housing prices alone.

Now if there was some upside such as company stock that could take off and be a game changer, sure it might be worth it to rent until you win that lottery. But your comp is already pretty good and if it's allowing you to save for your goals and you don't mind continuing to do your current job, you don't need to take this. If there was some very exciting aspect to the work, maybe, but what I learned as my career went on is that money in the proverbial bank is all that matters as you approach college age for your kids and retirement for you, not the sexy name of an employer on your resume.
Barsoom
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Re: Should I move to a high cost of living area?

Post by Barsoom »

Is your work going to also be in Marin or will you be commuting into San Francisco or beyond?

I lived in the Bay Area for 30 years (left in 2014), and I can tell you that while it's beautiful the commute is horrible. Natural terrain limits where the roads can go. Marin only has Hwy 101 over the Golden Gate Bridge into San Francisco, or the Richmond-San Rafael Bridge over to the East Bay. For north-south, the peninsula only has Hwy 101 along the bay coastline, and I-280 inland down to San Jose and Silicon Valley. The East Bay only has north-south I-880 along the bay coastline, and I-680 running inland down to San Jose. There are very few cross-over points. One or two bad accidents and the entire region gridlocks.

I left because 1) the politics was becoming unbearable, 2) I didn't want my ultimate retirement income to be subject to California taxation, and 3) I didn't want my entire retirement income tied up in a mortgage.

On the other hand, Marin is an excusive area where much of what is undesirable in California is non-existent in Marin. It sounds like you will be do fine over there, and have to assets to withstand California's assault on them.

-B
quantAndHold
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Re: Should I move to a high cost of living area?

Post by quantAndHold »

$750k to work and live in Marin County.

Of course you can afford it. Keep in mind that you can always sell that $1.4M house later if you don’t want to live there.

Pick the place with the best quality of life for you, however you define quality of life. The numbers will work either way.
Yes, I’m really that pedantic.
EddyB
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Re: Should I move to a high cost of living area?

Post by EddyB »

KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
Topic Author
boglefan123
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

FoolMeOnce wrote: Thu Feb 28, 2019 1:56 pm With a $700k income, you should have no trouble moving there and still retiring early. You might need to change some spending to prioritize early retirement.

But your numbers seem off to me. You say you spend $125k/yr and save 50% of net, so you save $125k/yr also. How do you only net $250k out of $600k gross income? A 58% effective tax rate!?

Another consideration: if you are willing to move somewhere lower cost in your early retirement, you'll be able to pull some housing equity back out at that point.
My wife and my own combined income wasn't 600K until recently, hence the math.
KlangFool
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Re: Should I move to a high cost of living area?

Post by KlangFool »

EddyB wrote: Thu Feb 28, 2019 4:22 pm
KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
EddyB,

<<Various cost-of-living "calculators" estimate a 50% increase in expenses overall. The major expense is housing; equivalent real estate is approximately double the cost.
I am currently a dutiful boglehead and save approximately 50% of my net salary. In the new job I will expect only a 20% pay raise.>>

<<the monetary factor isn’t enough to swamp them.>>

I disagreed. The monetary factor is huge. OP comes from a 700K paid-off house to a new 700K mortgage. The new pay does not justify the move.

KlangFool
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Watty
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Re: Should I move to a high cost of living area?

Post by Watty »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am In the new job I will expect only a 20% pay raise.
Between federal income tax, state income tax, sales tax, property taxes, and interest on the mortgage(or lost investment income if you pay cash) you would most likely be taking a significant after tax pay cut.

You can afford it though so I would not look at it as a financial decision and more of a lifestyle choice.

I would also suspect that the amount you would need to retire there would be a lot more too but you would need to research that.

It was not clear if you would plan on moving when you retire but I would be cautious about planning on that. Once you settle down in that area you may end up with ties that would make it hard to move later on.
EddyB
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Re: Should I move to a high cost of living area?

Post by EddyB »

KlangFool wrote: Thu Feb 28, 2019 4:43 pm
EddyB wrote: Thu Feb 28, 2019 4:22 pm
KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
EddyB,

<<Various cost-of-living "calculators" estimate a 50% increase in expenses overall. The major expense is housing; equivalent real estate is approximately double the cost.
I am currently a dutiful boglehead and save approximately 50% of my net salary. In the new job I will expect only a 20% pay raise.>>

<<the monetary factor isn’t enough to swamp them.>>

I disagreed. The monetary factor is huge. OP comes from a 700K paid-off house to a new 700K mortgage. The new pay does not justify the move.

KlangFool
I was just pointing out the glaring oversight inherent in your (apparently rhetorical) question of "why bother?".
lexie2000
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Re: Should I move to a high cost of living area?

Post by lexie2000 »

Barsoom wrote: Thu Feb 28, 2019 2:41 pm Is your work going to also be in Marin or will you be commuting into San Francisco or beyond?

I lived in the Bay Area for 30 years (left in 2014), and I can tell you that while it's beautiful the commute is horrible.

I left because 1) the politics was becoming unbearable, 2) I didn't want my ultimate retirement income to be subject to California taxation, and 3) I didn't want my entire retirement income tied up in a mortgage.

-B
+1

I lived in CA my entire life and finally waved the white flag in 2015 and moved out of state. The last 10 years of CA living was in the South Bay. The whacky politics, the congestion, the property taxes, the state income taxes, the this tax, the that tax... and did I mention the congestion? People and cars EVERYWHERE. And it's only gotten worse, all of it, since we left. It used to be a beautiful state and I know there are a lot of places in CA that still are beautiful, but the cost (and I'm not just talking $$) was no longer worth it to us.
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mrspock
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Re: Should I move to a high cost of living area?

Post by mrspock »

The commute entirely depends on *when* you commute. I drive over 40 miles each day, and I cruise to work in nearly the same time as folks who drive between 8-9am but only have 10-15 miles to go. Shift your day a bit, it's a piece of cake and you can enjoy the beach, your good sized house, big yard and just smile as everyone else complains and moans about their commute/rent/housing costs.

I find folks put far too much value in being close to their job, only to just throw the entire advantage in the trash by commuting at the same time as everyone else.

So with that said, if you *must* commute with the masses (job), then think carefully. If you can go off-peak, it makes a *huge* difference (easily 50-60% reduction in time for me, probably 30-40% cheaper housing). Even with a family, I think you can make off-peak commuting work as you can enjoy taking your kids to school in the morning, making/eating breakfast with them and walking the dog etc.

===

I'd approach this by running the math on what I would want to move here, and then counter the offer appropriately. If they say yes, then you have your answer, if they say no.... well it's a harder choice.

Personally, I love it here. Diverse population, well educated, progressive politics, good infrastructure, direct flights to anywhere, good schools, nice weather, performing arts scene, great libraries, tons of job opportunities and excellent paying jobs (6 figure is very common here) and many progressive thinking employers (excellent benefits, fair pay, they treat you like a 1st class citizen/partner etc).

Cheers!
KlangFool
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Re: Should I move to a high cost of living area?

Post by KlangFool »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location
boglefan123,

A) Your net worth is around 2.7 million including the house and you are saving 200K every year. Your annual expense is 200K. But, you could sell the house and buy a nice 350K house in a nice LCOL area. With 2.3 million, you could essentially retire.

B) Move to CA,

i) You go from 700K paid-off house to 700K mortgage.

ii) Your net worth drop from 2.7 million to 2 million

iii) Your annual expense goes up to 300K. Please note that we have not accounted for the increase in taxes.

iv) Your annual saving drop to ??

Now, you need a job.

In my opinion, if you choose to move to CA, you should only make 20% down payment and take the maximum non-recourse loan. Then, you preserve your freedom of walking away from the house and the job if necessary.

What is the quality of life difference between

A) Not needing a job

versus

B) You need a job to feed the house.

KlangFool
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mrspock
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Re: Should I move to a high cost of living area?

Post by mrspock »

KlangFool wrote: Thu Feb 28, 2019 5:42 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location
boglefan123,

A) Your net worth is around 2.7 million including the house and you are saving 200K every year. Your annual expense is 200K. But, you could sell the house and buy a nice 350K house in a nice LCOL area. With 2.3 million, you could essentially retire.

B) Move to CA,

i) You go from 700K paid-off house to 700K mortgage.

ii) Your net worth drop from 2.7 million to 2 million

iii) Your annual expense goes up to 300K. Please note that we have not accounted for the increase in taxes.

iv) Your annual saving drop to ??

Now, you need a job.

In my opinion, if you choose to move to CA, you should only make 20% down payment and take the maximum non-recourse loan. Then, you preserve your freedom of walking away from the house and the job if necessary.

What is the quality of life difference between

A) Not needing a job

versus

B) You need a job to feed the house.

KlangFool
Huh? How did the expenses go up by 100k with a CA mortgage? Also, let’s be fair here... because you may have your career here doesn’t mean you retire here.

You can always sell your nicely appreciated HCOL house and retire anytime to a LCOL area now.... or wait and sell it for more later. They *do* let you keep the principal money when you sell a house in CA... we still have normal banking laws :D . We also have prop 13 , which while absurd (sorry CA, I love you but this is a really stupid idea)... you do benefit as a home owner as property values rise (mitigating higher state tax to a degree).
SC Anteater
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Re: Should I move to a high cost of living area?

Post by SC Anteater »

I live in the Bay Area, but not in Marin.

Marin's a pretty awesome place to live, especially if you like outdoorsy stuff. Like everyone else, I'd look at it as a lifestyle choice (and career -- does this new job excite you more than the current one?) Living in Marin is not so awesome if you need to go south frequently. Actually getting into the city as a commuter isn't so bad -- the busses are nice -- but if you have to drive down the peninsula regularly for work it's rough.

I really like living here (much more than So Cal, where I'm from) but I have a short commute and live in a walkable/bikable town, so I know I have it good. Full disclosure -- I'm sure we're moving out on retirement just because we can cash out our RE gains and live well in a LCOL area. But until that time I'm staying here.
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gunn_show
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Re: Should I move to a high cost of living area?

Post by gunn_show »

SC Anteater wrote: Thu Feb 28, 2019 6:49 pm I really like living here (much more than So Cal, where I'm from)
don't want to derail the thread, but curious why you like bay area more than Socal? I guess partly the answer depends on where you came from in SoCal and where you now live in SFBA. If you went from Downey to Atherton, I get it. If you went from San Diego to San Jose, not so much.
"The best life hack of all is to just put the work in and never give up." Bas Rutten
Starfish
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Re: Should I move to a high cost of living area?

Post by Starfish »

The difference in income makes up the the difference in taxes. Other than that I don't see why people say BA is that much more expensive.
Housing is not a real expense, for the last decades in BA as a much better investment that RE in any LCOL area.

But you should not move for the money only. You should move for future professional growth (probably much better options in BA, who knows how different your income would be in the next 10 years) and you should move if you like the place. What about the fact that you can chose between 20 jobs instead of 2? It helps with income growth but also with lowering the risk of losing the job.

In the previous long weekend I took my kid hiking in the redwood forest, on the beach where he played with crabs and skiing in a world class place. In a weekend. In February. And this is common. Where else could I do that and have a well paid job?
Topic Author
boglefan123
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

bloom2708 wrote: Thu Feb 28, 2019 1:42 pm What is the commute with your $1.4 million house to the new job? Do you want to move?

You can certainly absorb more expenses with your new salary. How safe is that level of income?

Taxes will be much higher with CA state tax. Everything else will be more expensive.

My worry would be you now have a 1 to 1.5 hour commute each way and your quality of life drops dramatically.

I would spend more on rent and be within a 15-20 minute commute or even a walk/bike commute. That type of change can dramatically improve your daily routine. Go without a car possibly? I would not buy a house for a while. You might find that budget is a fixer upper or total re-build type house.

No idea if you are married, kids, leaving family, those type of questions. No help, but maybe some things to think about.
Thanks so much for the thoughtful response -- we have young kids, and I am married. We would limit the commute to < 30 minutes and I would not be commuting to SF itself.
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boglefan123
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

simplesimon wrote: Thu Feb 28, 2019 1:47 pm You say you're concerned about your plans to retire early. Have you done the math? How much later do you think you'll have to retire if you moved?
The math is the fuzzy part, since I'm not certain how much the expenses will increase. Right now we are on-track for early retirement in about 7-8 years based on multiple calculators, but the move will certainly make the calculation more complicated.
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boglefan123
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

ohai wrote: Thu Feb 28, 2019 1:57 pm If your quality of life while working improves, then your desired retirement age should also increase...
This is an excellent point. Really, spot-on. Thank you.
Topic Author
boglefan123
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

EddyB wrote: Thu Feb 28, 2019 4:22 pm
KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
Why, out of curiosity, didn't you want to raise your kids in the Bay Area?
Topic Author
boglefan123
Posts: 7
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Re: Should I move to a high cost of living area?

Post by boglefan123 »

EddyB wrote: Thu Feb 28, 2019 4:22 pm
KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
Why, out of curiosity, didn't you want to raise your kids in the Bay Area?
EnjoyIt
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Re: Should I move to a high cost of living area?

Post by EnjoyIt »

KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
Huh? I often agree with you regarding house spending. But OP has $700k in home equity and wants to move into a 1.4 million home. Therefor his/her mortgage will be $700k and he/she will make $700k per year. This seams like a very reasonable mortgage for said income.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
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Re: Should I move to a high cost of living area?

Post by steadyeddy »

An extra $150k will easily cover the new mortgage payment, but depending on where you’re coming from, the taxes might put you at a net financial loss. I would make the decision based on the merits of the job and lifestyle in the new location vs the old. The finances will be similar enough to take them out of the equation.
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Re: Should I move to a high cost of living area?

Post by Starfish »

boglefan123 wrote: Thu Feb 28, 2019 8:54 pm
bloom2708 wrote: Thu Feb 28, 2019 1:42 pm What is the commute with your $1.4 million house to the new job? Do you want to move?

You can certainly absorb more expenses with your new salary. How safe is that level of income?

Taxes will be much higher with CA state tax. Everything else will be more expensive.

My worry would be you now have a 1 to 1.5 hour commute each way and your quality of life drops dramatically.

I would spend more on rent and be within a 15-20 minute commute or even a walk/bike commute. That type of change can dramatically improve your daily routine. Go without a car possibly? I would not buy a house for a while. You might find that budget is a fixer upper or total re-build type house.

No idea if you are married, kids, leaving family, those type of questions. No help, but maybe some things to think about.
Thanks so much for the thoughtful response -- we have young kids, and I am married. We would limit the commute to < 30 minutes and I would not be commuting to SF itself.
Daycare is expensive because labor is expensive. That and housing are the major cost increases in BA.
Schools are also not that good but you have to compare them with where you are now. This is a CA issue, BA is actually better than the rest.
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Re: Should I move to a high cost of living area?

Post by Glockenspiel »

If you’re making $600k in MCOL area, I’d want at least $1 million/year to move to the Bay Area. Do you like the place you currently live in?
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Re: Should I move to a high cost of living area?

Post by FireSekr »

What appeals to you about the Bay Area? Are any of those things available elsewhere?

I live in SoCal and spend plenty of time up north and in my view, the day that I leave this money grubbing state behind can’t come soon enough. It is by far the worst place I have ever lived. For reference, I have also lived in Seattle, London, and New York, and have spent time in several mid size us cities working with clients. I’d happily retun to any of those places but not CA in a million years.

Sure there are beautiful natural landscapes with great national parks and skiing. But the negatives for me far outweigh the benefits. Constant congestion everywhere, on your commute, at restaurants, at the national parks etc.

[OT comment removed by admin LadyGeek] Where else do they let “non-violent” offenders out of prison early to reduce prison overcrowding and then dare to say it has not caused the significant increase in property crime that has resulted since. We wake up almost weekly to reports of entire streets or neighborhoods having the catalytic converters stolen off their cars. I live in one of the 5 most expensive zip codes in the country and I can’t visit the public library or local parks without worrying about stepping on a needle or human feces. I also worry about violence as there are many mugging and stabbings in our downtown area by deranged homeless people who mean no intentional harm but are not getting the help they desperately need.

The taxes are outrageous and I can’t for the life of me understand where the money is going. I’ve lived in other major cities/states with lower taxes and was provided far better services.

People here are overly sensitive compared to the rest of the country. You have to pander to their emotions and gradually tell them how you appreciate their work but want to consider other approaches to solving the problem rather than just saying “look, this is good work but there are some issues we need to address here they are”.

And no, I am not a disgruntled old guy who complains about everything even though I realize that is exactly how this post comes across. I’m in my 30s and generally very optimistic and love working with people, but nothing about California makes any sense to me at all after living here for a few years now. It really is another country.

I love many of the things it has to offer (redwood, Yosemite, Joshua tree, Mammoth, PCH) but I am leaving here as soon as feasible and will visit here when I want to enjoy those amazing places. Dealing with it daily is not worth it.
Last edited by FireSekr on Thu Feb 28, 2019 10:12 pm, edited 2 times in total.
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Re: Should I move to a high cost of living area?

Post by steadyeddy »

Glockenspiel wrote: Thu Feb 28, 2019 9:56 pm If you’re making $600k in MCOL area, I’d want at least $1 million/year to move to the Bay Area. Do you like the place you currently live in?
Why? It’s not as though everything is twice the price. A $20k car doesn’t cost $40k. A $7 bottle of shampoo doesn’t cost $14. Only housing is dramatically more expensive, and $150k/yr buys a lot of house.

Now if he was making only $150k in MCOL I would agree that double the salary is required, but it’s silly to say that double the salary is required no matter the starting salary.
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Re: Should I move to a high cost of living area?

Post by Dyloot »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am I currently live in a moderate cost of living area of the country but have a job offer to move to a suburb of the Bay Area in Marin County. Various cost-of-living "calculators" estimate a 50% increase in expenses overall. The major expense is housing; equivalent real estate is approximately double the cost.

I am currently a dutiful boglehead and save approximately 50% of my net salary. In the new job I will expect only a 20% pay raise.

While quality of life and job stability may improve, I'm concerned about my plans to retire early. I would greatly appreciate a checkup and the boglehead opinion about my potential options.

Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.

Current portfolio:
1.7M, in boglehead-style index heavy portfolio, approximately 60% stocks, 40% bonds, 35% tax deferred, 15% Roth, rest in taxable.
250K emergency fund/cash available for car purchase and home repair.

Thanks in advance for all your help! Long-time lurker, first time poster.
Well, I must admit, I've never tried to buy a $1.2 million home or live off a $700,000 annual gross paycheck.

I can tell you that Marin County is a great place to live. It's expensive, but not as expensive as the counties to the south. And, really, the traffic isn't nearly as abysmal as other parts of the Bay Area. Highway 101 definitely has its fair share of traffic, but I imagine that you'll be able to manage the commute without too much difficulty if you live in or near the area where you work.

Where is the job exactly?
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Re: Should I move to a high cost of living area?

Post by FireSekr »

steadyeddy wrote: Thu Feb 28, 2019 10:06 pm
Glockenspiel wrote: Thu Feb 28, 2019 9:56 pm If you’re making $600k in MCOL area, I’d want at least $1 million/year to move to the Bay Area. Do you like the place you currently live in?
Why? It’s not as though everything is twice the price. A $20k car doesn’t cost $40k. A $7 bottle of shampoo doesn’t cost $14. Only housing is dramatically more expensive, and $150k/yr buys a lot of house.

Now if he was making only $150k in MCOL I would agree that double the salary is required, but it’s silly to say that double the salary is required no matter the starting salary.
Cars aren’t double in the Bay Area but they are more expensive. When I was buying my last BMW I was in the Bay Area and tried to negotiate with them on the model I wanted (which was a moderately option 5 series not a fancy M car or special order). The first thing they ask you is who you work for trying to gauge how much they can over charge you (if this is a Facebook/Google/Apple guy we can add x %) the best price I could get in the Bay Area was 5% over MSRP.

A dealer in the LA area with the same car offered me 10% below invoice without me negotiating the slightest bit. I told them “thank you for not wasting my time, I’ll be there this afternoon to pick it up”...wasn’t even worth me trying to get more money off. I think I ended up paying about $12k less for the car than the cheapest option in the Bay Area

Everything in NorCal may not be double, but even products like cars will cost more due to hardball tactics
Last edited by FireSekr on Thu Feb 28, 2019 10:23 pm, edited 2 times in total.
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Re: Should I move to a high cost of living area?

Post by ellink »

I love Marin County and would move there in a heartbeat. For me, it would be a lifestyle decision. Good luck!
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Re: Should I move to a high cost of living area?

Post by Watty »

boglefan123 wrote: Thu Feb 28, 2019 9:09 pm Why, out of curiosity, didn't you want to raise your kids in the Bay Area?
Try to picture what it will be like for them there when they are young adults.

My situation was totally different but years ago when I was just out of college I lived in the South Bay near San Jose.

The Bay Area has always been expensive and even back then one of the things I saw that some of my older coworkers had grown kids that were well into their 20's that were still living at home and that was not always a good situation. The problem was that the kids could not afford to rent an apartment even with roommates since they did not have a high income.

I've moved a couple of times since then and I am in Atlanta now where homes are still affordable. My son is 30 now and doing well in his career and he and his wife were able to afford to buy a home that is 10 minutes away from us even though he does not have an exceptional income. With him being so close we frequently get to see our two grandkids.

I also know someone that has a kid that is dyslexic and barely graduated from high school. At one point he was working at a chain muffler shop which is a good honest job but I am sure that it did not pay a lot. Even on his income he was able to save up and buy a small order house that is in a marginal but not terrible area.

There is no telling where your kids will move to when they grow up but some kids will need some extra TLC to launch and if they cannot afford to live near you that can be a problem.
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Re: Should I move to a high cost of living area?

Post by steadyeddy »

ssquared87 wrote: Thu Feb 28, 2019 10:21 pm
steadyeddy wrote: Thu Feb 28, 2019 10:06 pm
Glockenspiel wrote: Thu Feb 28, 2019 9:56 pm If you’re making $600k in MCOL area, I’d want at least $1 million/year to move to the Bay Area. Do you like the place you currently live in?
Why? It’s not as though everything is twice the price. A $20k car doesn’t cost $40k. A $7 bottle of shampoo doesn’t cost $14. Only housing is dramatically more expensive, and $150k/yr buys a lot of house.

Now if he was making only $150k in MCOL I would agree that double the salary is required, but it’s silly to say that double the salary is required no matter the starting salary.
Cars aren’t double in the Bay Area but they are more expensive. When I was buying my last BMW I was in the Bay Area and tried to negotiate with them on the model I wanted (which was a moderately option 5 series not a fancy M car or special order). The first thing they ask you is who you work for trying to gauge how much they can over charge you (if this is a Facebook/Google/Apple guy we can add x %) the best price I could get in the Bay Area was 5% over MSRP.

A dealer in the LA area with the same car offered me 10% below invoice without me negotiating the slightest bit. I told them “thank you for not wasting my time, I’ll be there this afternoon to pick it up”...wasn’t even worth me trying to get more money off.

Everything in NorCal may not be double, but even products like cars will cost more due to hardball tactics
Yes, and the shampoo probably costs a dollar more as well; I don’t deny it’s a HCOL area. I just think it’s silly to say you’d need to $1M versus $600k in...let’s say Chicago. There’s no way there’s a $400k/yr difference in cost of living.
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Re: Should I move to a high cost of living area?

Post by Dyloot »

ssquared87 wrote: Thu Feb 28, 2019 10:02 pm What appeals to you about the Bay Area? Are any of those things available elsewhere?

I live in SoCal and spend plenty of time up north and in my view, the day that I leave this money grubbing state behind can’t come soon enough.

Sure there is beautiful scenery with great national parks and skiing. But the negatives for me far outweigh the benefits. Constant congestion everywhere, on your commute, at restaurants, at the national parks etc. The politics are a complete joke. Where else do they let “non-violent” offenders out of prison early to reduce prison overcrowding and then dare to say it has not caused the significant increase in property crime that has resulted since. I live in one of the 5 most expensive zip codes in the country and I can’t visit the public library or local parks without worrying about stepping on a needle or human feces. The taxes are outrageous and I can’t for the life of me understand where the money is going. I’ve lived in other major cities/states with lower taxes and was provided far better services. People here are overly sensitive compared to the rest of the country. You have to pander to their emotions and gradually tell them how you appreciate their work but want to consider other approaches to solving the problem rather than just saying “look, this is good work but there are some issues we need to address here they are”.

And no, I am not a disgruntled old guy who complains about everything even though I realize that is exactly how this post comes across. I’m in my 30s and generally very optimistic and love working with people, but nothing about California makes any sense to me at all after living here for a few years now. It really is another country.

I love many of the things it has to offer (redwood, Yosemite, Joshua tree, Mammoth, PCH) but I am leaving here as soon as feasible and will visit here when I want to enjoy those amazing places. Dealing with it daily is not worth it
I think it's perfectly reasonable that someone who came from elsewhere finds the culture of California a difficult adjustment. I grew up in the Bay Area and found Orange County to be amazing--but still very, very foreign. I loved the communities but was very happy to return home to the North Bay.

I mean, forget politics! I had to deal with Dodger fans! :D

[OT comments removed by admin LadyGeek]

One of the reasons I love this discussion board is because we all co-exist and discuss important topics without politics tearing us apart.

By the way--next time you visit us up north, check out Pt. Reyes National Seashore. It isn't overcrowded at all, and it's amazingly beautiful.
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Re: Should I move to a high cost of living area?

Post by random_walker_77 »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am
While quality of life and job stability may improve, I'm concerned about my plans to retire early. I would greatly appreciate a checkup and the boglehead opinion about my potential options.

Current gross income:
~600K
Proposed new gross income:
~700-750K
You've got the money such that this is going to be about your family's quality of life, and career satisfaction. Financially, this doesn't seem like a great move, but you can afford it, so I don't think this decision is primarily based on financials. That said you should understand the financial impact.

At ~600K w/ deductions, you're probably looking at an effective fed tax rate of ~31%. At 750K, you're overall blended federal rate will be about 32%, plus another ~9% blended rate for CA. (marginal rates at 37% federal and 11.3% state brackets)

If you get the full 150K raise, I think this means you'll have an extra $25K after-taxes. This is pessimistic if your current state has a decent-sized state income tax. (I'm in Texas, so I don't generally think about state income taxes anymore).

Note that CA doesn't give preferential tax treatment for LTCG or qualified dividends -- all your income from taxable accounts will be taxed at the full 11.3% rate. You've only got $1.5M in after-tax, and figure say 2% dividends, that's 30K, so you'll lose about $3K/yr to state taxes on your investments. Now, you're up $22K. If you have big unrealized LTCGs, just keep in mind that CA will take its 11.3+% when you sell (up to 13.3%).

According to google, the property tax rate in Marin county is about 1.25%. On 1.4M, that's $17.5K/yr. If that's more than you're currently paying in property tax, whatever extra also eats away from the $22K gain.

Childcare is more expensive in the greater bay area.

I think it's roughly a wash, financially. You'll carry a mortgage or face opportunity costs if you raid your taxable investments for the new house.

If you retire early, the state taxation on dividends/capital gains does make it harder to live off of investment income, though the progressive tax brackets make it perhaps more tenable. Of course, early retirement would be easier if you choose to relocate at that time. But that means breaking social ties, and might not be possible depending on whether you need to stay for proximity to kids. For example, if they're in high school, you probably don't want to move them. Or if they're in college, you might not want to move away from them.
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Re: Should I move to a high cost of living area?

Post by visualguy »

ssquared87 wrote: Thu Feb 28, 2019 10:02 pm What appeals to you about the Bay Area? Are any of those things available elsewhere?

I live in SoCal and spend plenty of time up north and in my view, the day that I leave this money grubbing state behind can’t come soon enough. It is by far the worst place I have ever lived. For reference, I have also lived in Seattle, London, and New York, and have spent time in several mid size us cities working with clients. I’d happily retun to any of those places but not CA in a million years.

Sure there are beautiful natural landscapes with great national parks and skiing. But the negatives for me far outweigh the benefits. Constant congestion everywhere, on your commute, at restaurants, at the national parks etc.

[OT comment removed by admin LadyGeek] Where else do they let “non-violent” offenders out of prison early to reduce prison overcrowding and then dare to say it has not caused the significant increase in property crime that has resulted since. We wake up almost weekly to reports of entire streets or neighborhoods having the catalytic converters stolen off their cars. I live in one of the 5 most expensive zip codes in the country and I can’t visit the public library or local parks without worrying about stepping on a needle or human feces. I also worry about violence as there are many mugging and stabbings in our downtown area by deranged homeless people who mean no intentional harm but are not getting the help they desperately need.

The taxes are outrageous and I can’t for the life of me understand where the money is going. I’ve lived in other major cities/states with lower taxes and was provided far better services.

People here are overly sensitive compared to the rest of the country. You have to pander to their emotions and gradually tell them how you appreciate their work but want to consider other approaches to solving the problem rather than just saying “look, this is good work but there are some issues we need to address here they are”.

And no, I am not a disgruntled old guy who complains about everything even though I realize that is exactly how this post comes across. I’m in my 30s and generally very optimistic and love working with people, but nothing about California makes any sense to me at all after living here for a few years now. It really is another country.

I love many of the things it has to offer (redwood, Yosemite, Joshua tree, Mammoth, PCH) but I am leaving here as soon as feasible and will visit here when I want to enjoy those amazing places. Dealing with it daily is not worth it.
You find the Bay Area to be congested and crowded, but ok with Seattle, London, and New York? This makes no sense...

[OT comments removed by admin LadyGeek]

Not sure why CA doesn't make sense to you, but clearly many would disagree judging by how it is such a powerful magnet for people from around the globe, including some of the best global talent.

All locations have their issues, but in my view the Bay Area is one of the very best places to live in the world. It is an extraordinary location with a pretty much unparalleled combination of positive aspects. It so expensive for some really good reasons.
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Re: Should I move to a high cost of living area?

Post by LadyGeek »

I removed some off-topic comments. The discussion is starting to derail on a rant about California's politics, taxes, and incarceration rates.

Please stay focused on the financial aspects.
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Re: Should I move to a high cost of living area?

Post by EddyB »

boglefan123 wrote: Thu Feb 28, 2019 9:09 pm
EddyB wrote: Thu Feb 28, 2019 4:22 pm
KlangFool wrote: Thu Feb 28, 2019 2:04 pm
boglefan123 wrote: Thu Feb 28, 2019 11:10 am
Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location

Planned time to retirement:
10 years.
boglefan123,

You are not paid well enough to move to the new HCOL area. So, why bother?

KlangFool
The OP did say “quality of life and job stability may improve.” Those are real valid reasons. I considered a very similar move not long ago, with very similar numbers, and I had previously lived in the Bay Area, too. I was prepared to spend more on housing, and the bulk of the difference in that expense would have been paid off in ten years. In my case, individually I would have made the move (more interesting job, with more potential room for increase), enough money to deal with some of the headaches of the Bay Area (and there are some advantages that I would have enjoyed returning to), but the bottom line for me was not wanting to raise my kids there (the reason I left in the first place ...). But certainly if the OP sees some reasons to prefer the move, the monetary factor isn’t enough to swamp them.
Why, out of curiosity, didn't you want to raise your kids in the Bay Area?
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Re: Should I move to a high cost of living area?

Post by MathIsMyWayr »

boglefan123 wrote: Thu Feb 28, 2019 11:10 am I currently live in a moderate cost of living area of the country but have a job offer to move to a suburb of the Bay Area in Marin County. Various cost-of-living "calculators" estimate a 50% increase in expenses overall. The major expense is housing; equivalent real estate is approximately double the cost.

I am currently a dutiful boglehead and save approximately 50% of my net salary. In the new job I will expect only a 20% pay raise.

While quality of life and job stability may improve, I'm concerned about my plans to retire early. I would greatly appreciate a checkup and the boglehead opinion about my potential options.

Current gross income:
~600K
Proposed new gross income:
~700-750K
Current expenses:
125K per year
Paid off house:
700K; I would like to buy a 1.2-1.4M house in the new location
Marin County is one of the most expensive areas in the country. As a Bay Area resident, I highly doubt you may find anything in the $1.2-1.4M range. I would guess it will cost at least $3M or more for a comparable house of $700k in MCOL.
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Re: Should I move to a high cost of living area?

Post by TxAg »

ssquared87 wrote: Thu Feb 28, 2019 10:02 pm What appeals to you about the Bay Area? Are any of those things available elsewhere?

I live in SoCal and spend plenty of time up north and in my view, the day that I leave this money grubbing state behind can’t come soon enough. It is by far the worst place I have ever lived. For reference, I have also lived in Seattle, London, and New York, and have spent time in several mid size us cities working with clients. I’d happily retun to any of those places but not CA in a million years.

Sure there are beautiful natural landscapes with great national parks and skiing. But the negatives for me far outweigh the benefits. Constant congestion everywhere, on your commute, at restaurants, at the national parks etc.

[OT comment removed by admin LadyGeek] Where else do they let “non-violent” offenders out of prison early to reduce prison overcrowding and then dare to say it has not caused the significant increase in property crime that has resulted since. We wake up almost weekly to reports of entire streets or neighborhoods having the catalytic converters stolen off their cars. I live in one of the 5 most expensive zip codes in the country and I can’t visit the public library or local parks without worrying about stepping on a needle or human feces. I also worry about violence as there are many mugging and stabbings in our downtown area by deranged homeless people who mean no intentional harm but are not getting the help they desperately need.

The taxes are outrageous and I can’t for the life of me understand where the money is going. I’ve lived in other major cities/states with lower taxes and was provided far better services.

People here are overly sensitive compared to the rest of the country. You have to pander to their emotions and gradually tell them how you appreciate their work but want to consider other approaches to solving the problem rather than just saying “look, this is good work but there are some issues we need to address here they are”.

And no, I am not a disgruntled old guy who complains about everything even though I realize that is exactly how this post comes across. I’m in my 30s and generally very optimistic and love working with people, but nothing about California makes any sense to me at all after living here for a few years now. It really is another country.

I love many of the things it has to offer (redwood, Yosemite, Joshua tree, Mammoth, PCH) but I am leaving here as soon as feasible and will visit here when I want to enjoy those amazing places. Dealing with it daily is not worth it.

Sounds like we'd get along pretty well :sharebeer
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Re: Should I move to a high cost of living area?

Post by fasteddie911 »

I think this is more about quality of life gained vs delay in FI. If we're talking about delaying FI 1-2yrs, maybe it's worth it. 10yrs maybe not. I had to make a similar decision, nowhere near the numbers you have, but I chose the HCOL due to quality of life by being near family. This is costing me maybe 5-10yrs in FI, partly due to lower pay in HCOL area as well. If it weren't for family I probably wouldn't move to a HCOL area, but certainly would visit often.
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Re: Should I move to a high cost of living area?

Post by SC Anteater »

gunn_show wrote: Thu Feb 28, 2019 8:16 pm
SC Anteater wrote: Thu Feb 28, 2019 6:49 pm I really like living here (much more than So Cal, where I'm from)
don't want to derail the thread, but curious why you like bay area more than Socal? I guess partly the answer depends on where you came from in SoCal and where you now live in SFBA. If you went from Downey to Atherton, I get it. If you went from San Diego to San Jose, not so much.
Lived most of my So Cal life in the Pasadena area (other than a brief stint in OC for college) and now live in Contra Costa County.

Lots of reasons why I prefer -- weather is cooler, I don't even need A/C in my house. More open/natural space in close proximity. Although the Bay is getting more congested it's still not nearly like L.A. when it comes to traffic and such, at least in my neck of the woods. Sierras are exponentially better than Big Bear. Lots of great biking routes from my front door, don't need to drive somewhere. Think the culture is a little more accepting/open/unsuperficial, not quite as plastic as L.A. (sorry Angelenos, and I'm sure some would disagree, just looking at my kids high school experiences vs. mine).

I'm still down in L.A. quite a bit, and everytime I'm there I'm happy I don't live there.
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