Living in a HCOL and making a middle class salary is a struggle

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FrugalConservative
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by FrugalConservative »

I'm in a somewhat similiar situation.

I live in Nassau County south shore. Home is worth 600K. Its a small three bedroom, 2 bath home in an average neighborhood. Problem is I have 3 children and two of them are bunking together. We are growing and dont fit in our home anymore. I dont have a garage as I convereted that for additional living space. My taxes are 12K a year. So what do we do? Do we put a dormer on the home for $150K, nope, not worth it, wont get it back when I sell. Do I go buy a new construction for 900K with 25K in taxes ( that is not a typo, newer homes are paying 25K in taxes).My wife and I are finally at the point where we will be moving to NC. I am fortunate as I work from home. We narrowed it down to 2 neigborhoods south of Charlotte.

I really can't swallow the BS of NY anymore. The old and dated infrastructure, the old schools, the beat up roads, the overpriced, well the overpriced everything. I personally think NYC is overrated. I will miss the ocean and my family. But people like myself are leaving NY every year. Budget deficits are in the billions. What happens when the economy slows? Well, taxes go up.

We intend on buying a 650-700K home in NC , which will put us into a beautiful .5 acre 4K sq ft house with a community pool, tennis courts etc, oh and the taxes will be 5K.
BV3273
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by BV3273 »

FrugalConservative wrote: Wed Jan 08, 2020 8:08 am I'm in a somewhat similiar situation.

I live in Nassau County south shore. Home is worth 600K. Its a small three bedroom, 2 bath home in an average neighborhood. Problem is I have 3 children and two of them are bunking together. We are growing and dont fit in our home anymore. I dont have a garage as I convereted that for additional living space. My taxes are 12K a year. So what do we do? Do we put a dormer on the home for $150K, nope, not worth it, wont get it back when I sell. Do I go buy a new construction for 900K with 25K in taxes ( that is not a typo, newer homes are paying 25K in taxes).My wife and I are finally at the point where we will be moving to NC. I am fortunate as I work from home. We narrowed it down to 2 neigborhoods south of Charlotte.

I really can't swallow the BS of NY anymore. The old and dated infrastructure, the old schools, the beat up roads, the overpriced, well the overpriced everything. I personally think NYC is overrated. I will miss the ocean and my family. But people like myself are leaving NY every year. Budget deficits are in the billions. What happens when the economy slows? Well, taxes go up.

We intend on buying a 650-700K home in NC , which will put us into a beautiful .5 acre 4K sq ft house with a community pool, tennis courts etc, oh and the taxes will be 5K.
Good for you! I have a customer who set his wife up down there (she found work as a nurse) and is looking to move down there as soon as he can find something decent for work. This is the new norm these days.
FrugalConservative
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by FrugalConservative »

BV3273 wrote: Wed Jan 08, 2020 8:35 am
FrugalConservative wrote: Wed Jan 08, 2020 8:08 am I'm in a somewhat similiar situation.

I live in Nassau County south shore. Home is worth 600K. Its a small three bedroom, 2 bath home in an average neighborhood. Problem is I have 3 children and two of them are bunking together. We are growing and dont fit in our home anymore. I dont have a garage as I convereted that for additional living space. My taxes are 12K a year. So what do we do? Do we put a dormer on the home for $150K, nope, not worth it, wont get it back when I sell. Do I go buy a new construction for 900K with 25K in taxes ( that is not a typo, newer homes are paying 25K in taxes).My wife and I are finally at the point where we will be moving to NC. I am fortunate as I work from home. We narrowed it down to 2 neigborhoods south of Charlotte.

I really can't swallow the BS of NY anymore. The old and dated infrastructure, the old schools, the beat up roads, the overpriced, well the overpriced everything. I personally think NYC is overrated. I will miss the ocean and my family. But people like myself are leaving NY every year. Budget deficits are in the billions. What happens when the economy slows? Well, taxes go up.

We intend on buying a 650-700K home in NC , which will put us into a beautiful .5 acre 4K sq ft house with a community pool, tennis courts etc, oh and the taxes will be 5K.
Good for you! I have a customer who set his wife up down there (she found work as a nurse) and is looking to move down there as soon as he can find something decent for work. This is the new norm these days.
:sharebeer
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

BV3273 wrote: Tue Jan 07, 2020 9:56 pm
CoastalWinds wrote: Tue Jan 07, 2020 9:22 pm
oldfatguy wrote: Tue Jan 07, 2020 9:13 pm
BV3273 wrote: Tue Jan 07, 2020 7:04 pm Similar to you my wife is a teacher as well and she has a ton of family in the area so moving an hour up the line is not an option for me.
Everybody makes their own priorities, but the idea that someone wouldn't consider moving an hour or two further from family to be in a more affordable area seems a little wacky to me.
Sometimes that means moving an hour or two from one’s job, which might not be easily replaced in the new location. Certainly adding 2-4 hours of commute time per day requires careful deliberation of priorities.
Couldn’t have said it better myself. An hour or 2 each way would be totally unfeasible for me, but what do I know? I guess I’m just wacky.
I would never suggest adding an hour or two in commute time. I was talking about relocating for new jobs.
Calico
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Calico »

I sympathize with the OP as well. While I think the OP is a little better off than me (I am a divorced, single mom, with a annual income of $90k before taxes living in a HCOLA), a lot of what is said rings true. By the way, that's below the median household income where I live. So I make more than the average person in my area, but less than the average family. but I still have most of the expenses as an average family since housing is the biggest cost.

OP, I get by, by being a bit frugal. Not overly so as there are people more frugal than I, but I am still frugal. I don't try to keep up with the Jones, I have a 15-year-old Pontiac, I don't have cable and am lucky enough not to have to pay for my cell phone service. I don't buy new furniture and I repair my appliances and do my own home repairs. I was lucky to buy my home 10 years ago when the market was not yet recovered from 2007-2008. I am also lucky in that my daughter isn't really impacted too much by peer pressure to have the latest stuff. She takes after me in that regard.

What is killing me is that my teen aged daughter will be going to college in about 2.5 years. I won't get into the details because it's complicated and a topic for another thread. But in a nutshell I am too "rich" for financial aid but too "poor" to afford college and programs like ROTC are out because of my daughter's asthma.

Going back to when I was in your shoes and looking for a house, like I said, I had some luck in that the market was still recovering. But even then, a lot of places were out of my range. I had money set aside for a down payment and I needed to work with that number and I wanted good schools for my daughter. I also needed to be close to work because, as a single parent, I was it when my daughter was sick or school was closed. I needed to be nearby because her father moved too far away. What I ended up buying was a well maintained, but dated townhouse house. The previous owner had a philosophy similar to mine, "if it ain't broke... don't fix it. If it is broke, fix it well." The house was on the market for a while and I was able to talk down the price a little because others were passing it up because of the 1980s kitchen and wallpaper (but they were overlooking the less sexy updates like the new heat and AC or the new hot water heater or the window replacements and newer roof new driveway, etc).

So maybe look for a well maintained, but dated home to save money. Not exactly a fixer upper, more of an optional dater upper.
ohai
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ohai »

HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am
Sam1 wrote: Wed Jan 08, 2020 6:16 am
musicmom wrote: Tue Jan 07, 2020 11:09 pm Northern NJ is lovely, not cheap, but not outrageously expensive.

We never made more than $120K yearly.
We sold a family home approx 2000 sq feet on the NJ Transit direct line to NYC last year for $420K.
Walkable diverse small city, great schools, shopping, restaurants, taxes 10K.

Many in our neighborhood walked to the Midtown Direct train to the city.

Just a thought.
The property taxes are very high. My family has a $700k house with $25k in property taxes. I realize OP isn’t going to buy a $700k house but that gives you an idea. $10k in taxes is a lot for a $420k house.
That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.

As a side note, the whole real estate system of Westchester and surrounding areas was based on the assumption of local tax deduction, which was removed in the end of 2018. This deduction was pretty unreasonable, in my opinion, as it took Federal taxes from low cost areas to subsidize things like $100k teachers. Anyway, there is sort of a mini revolt going on, where a lot of home owners are applying for tax relief and the prices of top end houses with high tax are getting crushed. Maybe it's not so visible among $500k houses, but certainly is in the say $1.5 million+ range.
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MrBobcat
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by MrBobcat »

Arlington2019 wrote: Tue Jan 07, 2020 9:38 pm I note the OP's comments as to household income and housing costs are remarkably similar to the Seattle-Eastside area. Lots and lots of dual-income couples at that level (or even higher if both of them are code monkeys at Microsoft/Google/Amazon) and yet are struggling to afford a house, pay for daycare and put something aside for tomorrow.
This is a common plight to all young couples regardless of time or place. It's not a new phenomena and no I don't believe it's harder now than in the 'good ole days'.
ohai
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ohai »

FrugalConservative wrote: Wed Jan 08, 2020 8:08 am I'm in a somewhat similiar situation.

I live in Nassau County south shore. Home is worth 600K. Its a small three bedroom, 2 bath home in an average neighborhood. Problem is I have 3 children and two of them are bunking together. We are growing and dont fit in our home anymore. I dont have a garage as I convereted that for additional living space. My taxes are 12K a year. So what do we do? Do we put a dormer on the home for $150K, nope, not worth it, wont get it back when I sell. Do I go buy a new construction for 900K with 25K in taxes ( that is not a typo, newer homes are paying 25K in taxes).My wife and I are finally at the point where we will be moving to NC. I am fortunate as I work from home. We narrowed it down to 2 neigborhoods south of Charlotte.

I really can't swallow the BS of NY anymore. The old and dated infrastructure, the old schools, the beat up roads, the overpriced, well the overpriced everything. I personally think NYC is overrated. I will miss the ocean and my family. But people like myself are leaving NY every year. Budget deficits are in the billions. What happens when the economy slows? Well, taxes go up.

We intend on buying a 650-700K home in NC , which will put us into a beautiful .5 acre 4K sq ft house with a community pool, tennis courts etc, oh and the taxes will be 5K.
If you ask me, NY is appropriate for households making $500k+, who won't have access to the same jobs in NC or other areas. People tolerate the frustrating bureacracy, overcrowding, and lunatic politics because their careers offset those downsides. Any household making say, $250k or less, is probably better off moving. In my opinion.
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Sandtrap
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Sandtrap »

Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
Imagine:
Retired couple. 4 income (pensions/SS). Home mortgage free. 2 cars (no loans). HELOC.
Income: $90k/year
Lifestyle: very very frugal
Status: "Barely Getting By".

Location: Honolulu, Hawaii.
($600k would get you a condo "fixer upper")

One Solution: Relocate.
IE: The cost of living index difference between Arizona and Hawaii is "about" 48% (that means nearly doubling one's income by moving from UHCOL to LCOL, assuming retention of income)

j :happy
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J45
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by J45 »

Hey you need to talk to a New Yorker for this! :D

Westchester is one of the highest in taxes though whole state is no different. My taxes go more than 20 grand a year, so I can understand where you are coming from. I would suggest moving into a less expensive, tax saving but good school district neighborhood. There are several in your area.

Now if you love snow, then consider upstate NY. Not sure what professions you are in, but you could save significant amount of money. Kids will add a lot to your plate. Think about daycare, daily supplies, 529s etc.

My suggestion: Go where your hard earned money makes you feel good! I am sure, you will appreciate this move 25 years later.
smitcat
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by smitcat »

ohai wrote: Wed Jan 08, 2020 9:28 am
FrugalConservative wrote: Wed Jan 08, 2020 8:08 am I'm in a somewhat similiar situation.

I live in Nassau County south shore. Home is worth 600K. Its a small three bedroom, 2 bath home in an average neighborhood. Problem is I have 3 children and two of them are bunking together. We are growing and dont fit in our home anymore. I dont have a garage as I convereted that for additional living space. My taxes are 12K a year. So what do we do? Do we put a dormer on the home for $150K, nope, not worth it, wont get it back when I sell. Do I go buy a new construction for 900K with 25K in taxes ( that is not a typo, newer homes are paying 25K in taxes).My wife and I are finally at the point where we will be moving to NC. I am fortunate as I work from home. We narrowed it down to 2 neigborhoods south of Charlotte.

I really can't swallow the BS of NY anymore. The old and dated infrastructure, the old schools, the beat up roads, the overpriced, well the overpriced everything. I personally think NYC is overrated. I will miss the ocean and my family. But people like myself are leaving NY every year. Budget deficits are in the billions. What happens when the economy slows? Well, taxes go up.

We intend on buying a 650-700K home in NC , which will put us into a beautiful .5 acre 4K sq ft house with a community pool, tennis courts etc, oh and the taxes will be 5K.
If you ask me, NY is appropriate for households making $500k+, who won't have access to the same jobs in NC or other areas. People tolerate the frustrating bureacracy, overcrowding, and lunatic politics because their careers offset those downsides. Any household making say, $250k or less, is probably better off moving. In my opinion.
NY State is fine for folks making far less than $250K per year.
There are plenty of homes less than $300K.
There are plenty that have low taxes.
The schools are most often very good, crime low , and infrastructure excellent.
There are many jobs and the opportunity to work your way up great.
NoVa Lurker
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by NoVa Lurker »

ohai wrote: Wed Jan 08, 2020 9:28 am If you ask me, NY is appropriate for households making $500k+, who won't have access to the same jobs in NC or other areas. People tolerate the frustrating bureacracy, overcrowding, and lunatic politics because their careers offset those downsides. Any household making say, $250k or less, is probably better off moving. In my opinion.
Yes, for all of the flack OP is getting, I completely understand the original post.

I had the opportunity to move to the NYC area recently and would have probably lived somewhere in Westchester. Salary for my wife and I combined would have been close to $500k. We are around $350k in Northern Virginia. Her job would have been very comparable, mine would have had slightly longer hours but less travel and a bit more interesting than my current job - on a net basis, kind of a wash, except a significantly higher salary.

We chose not to make the move for a few reasons, despite the ~$150k annual pay bump. Northern Virginia is by no means cheap, but in Westchester, you are surrounded by truly wealthy people and high income / high spenders. So you "feel" more middle class, even at a much higher income than OP is describing. I didn't think we would "feel" more wealthy with the move, even if it makes financial sense on paper.

Note that I am 43 with three kids, so my financial position is similar to OP's, just fast-forwarded a decade. On balance, Northern Virginia is a good spot for people like us - lots of work opportunities, nice enough, and not completely outrageous home prices / taxes. Even then, $500k isn't going to buy you a move-in ready home in a good school district.
ryman554
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ryman554 »

scout1 wrote: Tue Jan 07, 2020 4:53 pm
HEDGEFUNDIE wrote: Tue Jan 07, 2020 4:49 pm A $600k home bought at 20% down with mortgage rate of 3.5% and property tax of 2% will cost you $3k per month all-in.

That’s $36k per year.

You’re telling us you can’t afford that on $230k annual income?
This.

The cost of a home is the interest paid, not the principal since you basically get that back.
Nope. Maybe after you *sell* it, the cost of the home is interest (plus taxes, maintenance, minus imputed rent). This is spoken like a person who has not had to replace their roof in the past year... =)

If you need a mortgage to afford the house, the cost of the home is really decreased cash flow, compared to renting, and the transaction cost (in $$ and mobility) on the front and back end (which is significant on the back end). In an efficient market, it's usually cheaper to buy than to rent if you're not going to move (since you don't have to pay the landlord's salary) and you do due diligence on the inspection. In a market such as in the bay area, renting is likely cheaper for the short-term as rents have not yet caught up to cover the high mortgage costs.

All that being said, I agree with the second-to-last post in this reply: $3k/month PITI is VERY doable on a $230k salary. I did more (4k) on less (<200k) and still was able to save plenty for retirement. The OP may have a budgeting issue vs. an inability to purchase a house.
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

ohai wrote: Wed Jan 08, 2020 9:28 am
If you ask me, NY is appropriate for households making $500k+, who won't have access to the same jobs in NC or other areas. People tolerate the frustrating bureacracy, overcrowding, and lunatic politics because their careers offset those downsides. Any household making say, $250k or less, is probably better off moving. In my opinion.
Assume you are talking about NYC metro area, not NY state.

Even in NYC, though, there are tons of families living very happily on far less than 250K.
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
How much can you put down on the house? If you put down 20%, you can afford a home costing $500K with 2-2.5% tax rate. Do not buy a home with a 4% tax rate unless they give you the house for $350K. What towns are you looking in? Do not move - you can not give up those benefits your wife has - tenure, pension, vacation, healthcare - those are alone worth 30-40% of pay even though you will not realize pension for years. NYS Teachers Pension plan is very well funded.
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HEDGEFUNDIE
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HEDGEFUNDIE »

ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am
Sam1 wrote: Wed Jan 08, 2020 6:16 am
musicmom wrote: Tue Jan 07, 2020 11:09 pm Northern NJ is lovely, not cheap, but not outrageously expensive.

We never made more than $120K yearly.
We sold a family home approx 2000 sq feet on the NJ Transit direct line to NYC last year for $420K.
Walkable diverse small city, great schools, shopping, restaurants, taxes 10K.

Many in our neighborhood walked to the Midtown Direct train to the city.

Just a thought.
The property taxes are very high. My family has a $700k house with $25k in property taxes. I realize OP isn’t going to buy a $700k house but that gives you an idea. $10k in taxes is a lot for a $420k house.
That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

oldfatguy wrote: Wed Jan 08, 2020 9:42 am
ohai wrote: Wed Jan 08, 2020 9:28 am
If you ask me, NY is appropriate for households making $500k+, who won't have access to the same jobs in NC or other areas. People tolerate the frustrating bureacracy, overcrowding, and lunatic politics because their careers offset those downsides. Any household making say, $250k or less, is probably better off moving. In my opinion.
Assume you are talking about NYC metro area, not NY state.

Even in NYC, though, there are tons of families living very happily on far less than 250K.
+1. I grew up in NYC, you do not need $250K or more to live. However, each person has a different definition for standard of living. If you want to go to fancy restaurants, drinking, sit in the orchestra at a play, wear $2000 handbags, have a live-in nanny, send kids to private school where tuition runs $50k a year for private elementary school (they do!). Then yes, you'll need every penny of $500K and more. You can never have enough, especially if you are living in Manhattan.
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BV3273
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by BV3273 »

A lot of posts about relocating. OP said he can’t for various reasons he stated.

The post about 500k+ income is pretty spot on. Increasing earning power by any means necessary is the only way the OP, and myself for that matter, will be able to survive long term in Westchester county. That and having absolutely no debt other than a mortgage (for now anyway).

Living frugal type lifestyle will help, but it won’t solve the problem entirely.
CoastalWinds
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by CoastalWinds »

MrBobcat wrote: Wed Jan 08, 2020 9:20 am This is a common plight to all young couples regardless of time or place. It's not a new phenomena and no I don't believe it's harder now than in the 'good ole days'.
OK boomer.

https://youtu.be/ATTMB4gH3sU
ohai
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ohai »

HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am
Sam1 wrote: Wed Jan 08, 2020 6:16 am
musicmom wrote: Tue Jan 07, 2020 11:09 pm Northern NJ is lovely, not cheap, but not outrageously expensive.

We never made more than $120K yearly.
We sold a family home approx 2000 sq feet on the NJ Transit direct line to NYC last year for $420K.
Walkable diverse small city, great schools, shopping, restaurants, taxes 10K.

Many in our neighborhood walked to the Midtown Direct train to the city.

Just a thought.
The property taxes are very high. My family has a $700k house with $25k in property taxes. I realize OP isn’t going to buy a $700k house but that gives you an idea. $10k in taxes is a lot for a $420k house.
That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
"Property value" varies wildly and is completely subjective. We have houses in NY area that are appraised for 50% of market value, so that the math with a percentage tax works out to the desired number. Property tax is a function of local budget - they need to raise funds to run local stuff. That is simply how they come to that number. Why is OP's dollar tax the same as California, despite vastly different house value? It is because the local budget doesn't care about home value. Why should it?
HEDGEFUNDIE
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HEDGEFUNDIE »

ohai wrote: Wed Jan 08, 2020 9:53 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am
Sam1 wrote: Wed Jan 08, 2020 6:16 am

The property taxes are very high. My family has a $700k house with $25k in property taxes. I realize OP isn’t going to buy a $700k house but that gives you an idea. $10k in taxes is a lot for a $420k house.
That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
"Property value" varies wildly and is completely subjective. We have houses in NY area that are appraised for 50% of market value, so that the math with a percentage tax works out to the desired number. Property tax is a function of local budget - they need to raise funds to run local stuff. That is simply how they come to that number. Why is OP's dollar tax the same as California, despite vastly different house value? It is because the local budget doesn't care about home value. Why should it?
Delaware property tax is 0.56%.

You’re telling me city services cost 75% less in Delaware than in NY? Or DE homes are 4x the cost of NY homes? Which is it?
Last edited by HEDGEFUNDIE on Wed Jan 08, 2020 10:00 am, edited 1 time in total.
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am
Sam1 wrote: Wed Jan 08, 2020 6:16 am
musicmom wrote: Tue Jan 07, 2020 11:09 pm Northern NJ is lovely, not cheap, but not outrageously expensive.

We never made more than $120K yearly.
We sold a family home approx 2000 sq feet on the NJ Transit direct line to NYC last year for $420K.
Walkable diverse small city, great schools, shopping, restaurants, taxes 10K.

Many in our neighborhood walked to the Midtown Direct train to the city.

Just a thought.
The property taxes are very high. My family has a $700k house with $25k in property taxes. I realize OP isn’t going to buy a $700k house but that gives you an idea. $10k in taxes is a lot for a $420k house.
That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
Half the cost of overall property taxes are the schools. Many of the towns in NY/NJ/CT are well established (read: old) with deferred maintenance and new mandates from educational authorities on how many kids can be in a classroom. Modification of such structures costs money, lots of money. Construction is not cheap. Each town is responsible for their own school budget, the schools are not regionalized where costs can be spread out amongst many towns, therefore taxes in one town could be higher than the adjacent ones. Highest property taxes in NJ is Essex County, Bergen isn't too far behind, nor is Morris and Union Counties. In NYS, Westchester is high as are parts of Long Island. NYC taxes are lower due to high commercial tax base, though residential taxes have begun to creep up with looming pension issues and businesses relocating jobs out of state. CT is in its own world, they have similar problems - high taxes.

Weather related costs are not that significant percentage wise of municipal budgets exceeding 7 or 8 digits. All the data is online, the OP should research the towns they are targeting to live in to see what the budget has been over the past few years. They definitely do not want to move to a town with budget issues and prolifigate spending.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
ohai
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ohai »

HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:58 am
ohai wrote: Wed Jan 08, 2020 9:53 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am

That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
"Property value" varies wildly and is completely subjective. We have houses in NY area that are appraised for 50% of market value, so that the math with a percentage tax works out to the desired number. Property tax is a function of local budget - they need to raise funds to run local stuff. That is simply how they come to that number. Why is OP's dollar tax the same as California, despite vastly different house value? It is because the local budget doesn't care about home value. Why should it?
Delaware property tax is 0.56%.

You’re telling me city services cost 75% less in Delaware than in NY? Or DE homes are 4x the cost of NY homes? Which is it?
"Delaware" either gets funding from somewhere else, or the relevant municipalities have chosen to not support the services of NY towns. If NY towns decide to defund schools or not fix roads, they can lower taxes. I don't know what Delaware does, nor is it relevant to what a NY town decides its budget should be.

Do you know how a local tax appeal works? You go to the town office and have a negotiation with the local government representative. It's all a bunch of people just trying to fill budget needs.

Now, one hole in my argument is that I am not 100% sure how local/state funding works in NY State compared to California. However, the baseline property tax dollar amount seems reasonable and would be non dependent on actual home prices.
Last edited by ohai on Wed Jan 08, 2020 10:06 am, edited 2 times in total.
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:58 am
ohai wrote: Wed Jan 08, 2020 9:53 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 7:13 am

That’s crazy. In the Bay Area I pay $22k for a $1.8M house.
Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
"Property value" varies wildly and is completely subjective. We have houses in NY area that are appraised for 50% of market value, so that the math with a percentage tax works out to the desired number. Property tax is a function of local budget - they need to raise funds to run local stuff. That is simply how they come to that number. Why is OP's dollar tax the same as California, despite vastly different house value? It is because the local budget doesn't care about home value. Why should it?
Delaware property tax is 0.56%.

You’re telling me city services cost 75% less in Delaware than in NY? Or DE homes are 4x the cost of NY homes? Which is it?
Delaware has poor school system and receives a fair portion of its overall budget from corporation tax. All those companies domiciled in the State of Delaware pay hefty fees to do so. Those fees artificially depress the true public cost of running the state. DE homes can be cheap or more expensive than NY homes depending on location.
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NJdad6
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by NJdad6 »

musicmom wrote: Wed Jan 08, 2020 5:19 am @ImmigrantSaver-
Morristown

There are towns closer in that are possibilities:
Madison
Chatham
Maplewood
West Orange
Whippany
Livingston
Cedar Grove

Again, not inexpensive, but possibilities.
No way. Would take 90 minutes+ to commute to Westchester. Horrible way to live.

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas after you take out federal tax, high state and local taxes, 401k, commuting costs, health expenses, mortgage, car expenses, utilities, college savings, etc. Most in this category are not driving BMWs, jetting to Europe or joining country clubs. They just want to have a nice house and live a relatively comfortable life like folks in other parts of the country.
HEDGEFUNDIE
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HEDGEFUNDIE »

ohai wrote: Wed Jan 08, 2020 10:02 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:58 am
ohai wrote: Wed Jan 08, 2020 9:53 am
HEDGEFUNDIE wrote: Wed Jan 08, 2020 9:45 am
ohai wrote: Wed Jan 08, 2020 9:17 am

Property tax is more like a required dollar fee that is used to run local services like schools, road maintenance, town administration, and so on. Therefore, the dollar tax seems like it would be comparable between areas with similar costs of these things. NE area in fact, will likely have higher town maintenance costs due to weather related services.
If this were true, property tax would be assessed as a flat dollar rate per sqft.

But everywhere I know assesses tax as a % of property value.

Some municipalities are just greedier than others.
"Property value" varies wildly and is completely subjective. We have houses in NY area that are appraised for 50% of market value, so that the math with a percentage tax works out to the desired number. Property tax is a function of local budget - they need to raise funds to run local stuff. That is simply how they come to that number. Why is OP's dollar tax the same as California, despite vastly different house value? It is because the local budget doesn't care about home value. Why should it?
Delaware property tax is 0.56%.

You’re telling me city services cost 75% less in Delaware than in NY? Or DE homes are 4x the cost of NY homes? Which is it?
"Delaware" either gets funding from somewhere else, or the relevant municipalities have chosen to not support the services of NY towns. If NY towns decide to defund schools or not fix roads, they can lower taxes. I don't know what Delaware does, nor is it relevant to what a NY town decides its budget should be.

Do you know how a local tax appeal works? You go to the town office and have a negotiation with the local government representative. It's all a bunch of people just trying to fill budget needs.
If you believe this I have a bridge to sell you. Take your pick, Golden Gate or Brooklyn.

Governments will spend any and all money they can get their hands on.

CA property tax is only 1.2% because Proposition 13 locked the rate in place in 1978. NY didn’t. So now, 40 years later, you guys are paying 2x the property taxes we are. If I bought a $700k house in the East Bay, I would only pay $8k in property tax. Looks like I would pay $14k or more for that same house in NY. And income and sales taxes are comparable between NY and CA, so it’s not like that cost is being made up elsewhere. And are you going to tell me CA has worse services than NY?

Bottom line: if you don’t like paying taxes, find a place that doesn’t make you pay high taxes.
Last edited by HEDGEFUNDIE on Wed Jan 08, 2020 10:17 am, edited 2 times in total.
KlangFool
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by KlangFool »

NoVa Lurker wrote: Wed Jan 08, 2020 9:39 am
Note that I am 43 with three kids, so my financial position is similar to OP's, just fast-forwarded a decade. On balance, Northern Virginia is a good spot for people like us - lots of work opportunities, nice enough, and not completely outrageous home prices / taxes. Even then, $500k isn't going to buy you a move-in ready home in a good school district.
NoVa Lurker,

I disagreed.

My neighborhood in NoVA fit that requirement.

KlangFool
JuniorBH
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by JuniorBH »

Similar situation to OP, though I'm across the Tappan Zee, the situation is the same (Rockland property taxes are ~3.5% of home value, average house is in the $450K range).

When we first moved here and bought our house, we were making ~$180K and it felt like a struggle, especially once the daycare payments started. To everyone saying this isn't "middle class"; you're probably right in other parts of the country, but in an NYC suburb $180K probably means you can pay all your bills, max your 401K and be left with $1K a month in additional money. I realize that's far from living paycheck to paycheck, but you're not going to feel rich either.

OP - some else mentioned this, but the upside here is that once you buy a house, you will set your monthly expense. It shouldn't change much(other than tax increases, which I'm all too familiar with), but your salary should increase which will make the mortgage more palatable and allow you to save money elsewhere.

Interested to see where this thread continues to go, particularly in responses from people who actually live in the area and understand the dynamics.
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

NJdad6 wrote: Wed Jan 08, 2020 10:09 am

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas ...
Others have already linked data that demonstrates this simply isn't true. Median household income for OP's area is under 100K.
Jags4186
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Jags4186 »

OP the best course of action (and what my wife and I should have done) is to save aggressively until you have enough money to put down on a house that is acceptable for the mid to long term with a payment you are comfortable with. That may mean not buying until you are 36 or 37.

Thinking back on it, I would much rather have put $400k down on an $800k house that I'd never have to leave than rush and put $150k down on a $470k house that I know we'll be out of in the next 4-5 years. It would have delayed us probably 4 years. But we wouldn't have had to worry about upgrading. There are so many costs associated with buying and selling homes that it makes sense to wait until you can get what you want.
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

NJdad6 wrote: Wed Jan 08, 2020 10:09 am
musicmom wrote: Wed Jan 08, 2020 5:19 am @ImmigrantSaver-
Morristown

There are towns closer in that are possibilities:
Madison - too far
Chatham - ditto
Maplewood - Essex county, need I say more?
West Orange - some parts are nice, but high taxes and long commute
Whippany - Morris county, that is way too far of a commute to Westchester
Livingston Essex County, nice town, still too far to commute to New York
Cedar Grove Essex County, affordable, but try driving from there to Westchester - long on a no traffic day, try it in traffic

Again, not inexpensive, but possibilities.
No way. Would take 90 minutes+ to commute to Westchester. Horrible way to live.

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas after you take out federal tax, high state and local taxes, 401k, commuting costs, health expenses, mortgage, car expenses, utilities, college savings, etc. Most in this category are not driving BMWs, jetting to Europe or joining country clubs. They just want to have a nice house and live a relatively comfortable life like folks in other parts of the country.
A $230K salary will provide a lower end nice car like a Subaru Outback (new), electric utilities are spotty in Westchester (known problem with local utility due to all the trees), heating may be an issue - there is a current constraint on bringing gas into that county due to lack of pipeline capacity (known issue) so if home doesn't have gas, you'll be heating with oil (oil is subject to market conditions and geopolitical issues). They may be able to jet off to Europe just not first class and that should be fine.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Jags4186
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Jags4186 »

oldfatguy wrote: Wed Jan 08, 2020 10:22 am
NJdad6 wrote: Wed Jan 08, 2020 10:09 am

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas ...
Others have already linked data that demonstrates this simply isn't true. Median household income for OP's area is under 100K.
I don't know what the "area" is but I live in Essex County, NJ which includes Newark, Irvington, Orange, and East Orange. All very poor cities. There are also tons of retired folks with artificially low incomes. What matters to the OP is where he sits compared to other people buying homes. Saying the OP is "2x median income" is unhelpful if people living below-median income are living in tenements or retired folks living on social security and investment accounts.
Last edited by Jags4186 on Wed Jan 08, 2020 10:28 am, edited 1 time in total.
KlangFool
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by KlangFool »

JuniorBH wrote: Wed Jan 08, 2020 10:20 am
OP - some else mentioned this, but the upside here is that once you buy a house, you will set your monthly expense. It shouldn't change much(other than tax increases, which I'm all too familiar with), but your salary should increase which will make the mortgage more palatable and allow you to save money elsewhere.
JuniorBH,

But, isn't this the biggest issue? And, if this is true, owning the house is not going to help you. The combination of property value increases and the property tax rate hike will increase the housing expense every year.

I lived in NoVA. In my county, the property tax rate is at 1% and dropping.

KlangFool
Grt2bOutdoors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

oldfatguy wrote: Wed Jan 08, 2020 10:22 am
NJdad6 wrote: Wed Jan 08, 2020 10:09 am

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas ...
Others have already linked data that demonstrates this simply isn't true. Median household income for OP's area is under 100K.
No one is buying a home today in Westchester county for 500K, paying a mortgage, taxes, insurance, childcare, funding a 401k, paying for healthcare on under $100K. Especially with zero help on home purchase.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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CyclingDuo
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by CyclingDuo »

Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
Everyone has different goals and situations, but we spent 20 years living in HCOL cities renting and saving money.

You capitalize on your human capital and remain renting while building up the nest egg as well as a home purchase fund. Be patient. We lived in HCOL cities in Europe and the US for 20 years while renting and building up nest egg funds. A two bedroom apartment served our needs very well for our family size, and especially the apartment we had for 8 years when the kids were little that opened up into a common backyard area of our building so the kids could play in a fenced yard right outside our back door. We were not suffering by not owning our own property for all of those years.

An opportunity always opens up at some point in the future. On your salaries, you should be able to set aside a nice chunk of change each year that can be ear marked for the future purchase of a home.

We bought one at ages 42 & 45 respectively (kids were ages 8 and 10 at the time). Waiting until that time after all the years of living in HCOL cities and renting didn't hurt any of us in terms of our lifestyle, enjoyment of life, and family experiences.

A home is not an investment. It provides shelter. So too does renting a place. Home ownership is full of repairs/maintenance, yard work, snow removal, property taxes, non stop DIY little fix it projects, etc... . Let somebody else take care of all of that while you continue with your careers, save your money, and start a family.

At least that is the path we took until we purchased our current home. We've been in it for 17 years now, so can freely comment on the upkeep/repair/maintenance/fix-it/taxes as well as constant yard work and snow removal (and we bought it brand new). Not to mention all the extra "stuff" you need: tools, tool bench, rakes, mower, snow blower, shovels, garden tools, water hoses, weed trimmer, leaf blower, wheel barrow, shed, etc... .

Not trying to deter your quest for home ownership, but the grass isn't always greener on the other side of the renting fence when it comes down to all the actual costs involved and what it provides. We'd be just as happy now going back to renting since home ownership costs us more than renting when you factor in all that goes with it.

This map shows how much more expensive it is to own a home than to rent in every US state


https://www.cnbc.com/2019/02/13/how-muc ... state.html

While renting, make yourself as comfortable as possible and just enjoy it. You're saving money...
"Save like a pessimist, invest like an optimist." - Morgan Housel
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Psyayeayeduck
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Psyayeayeduck »

KlangFool wrote: Wed Jan 08, 2020 10:15 am
NoVa Lurker wrote: Wed Jan 08, 2020 9:39 am
Note that I am 43 with three kids, so my financial position is similar to OP's, just fast-forwarded a decade. On balance, Northern Virginia is a good spot for people like us - lots of work opportunities, nice enough, and not completely outrageous home prices / taxes. Even then, $500k isn't going to buy you a move-in ready home in a good school district.
NoVa Lurker,

I disagreed.

My neighborhood in NoVA fit that requirement.

KlangFool
Yeah, I'm trying to figure out where this "500k isn't going to buy you a move-in ready home in a good district" is coming from. I lived in the area for years and I can easily point to neighborhoods where this statement is completely false unless NoVA Lurker has ridiculous standards.
Jags4186
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Jags4186 »

JuniorBH wrote: Wed Jan 08, 2020 10:20 am Similar situation to OP, though I'm across the Tappan Zee, the situation is the same (Rockland property taxes are ~3.5% of home value, average house is in the $450K range).

When we first moved here and bought our house, we were making ~$180K and it felt like a struggle, especially once the daycare payments started. To everyone saying this isn't "middle class"; you're probably right in other parts of the country, but in an NYC suburb $180K probably means you can pay all your bills, max your 401K and be left with $1K a month in additional money. I realize that's far from living paycheck to paycheck, but you're not going to feel rich either.

OP - some else mentioned this, but the upside here is that once you buy a house, you will set your monthly expense. It shouldn't change much(other than tax increases, which I'm all too familiar with), but your salary should increase which will make the mortgage more palatable and allow you to save money elsewhere.

Interested to see where this thread continues to go, particularly in responses from people who actually live in the area and understand the dynamics.
I disagree here. In this area there are tons of old homes. A 1960 house is "newer" as most homes are built in the 1930-1950. That means that there's lots of things that break and need fixing. Perhaps if you are very handy you can take care of much of this but I figure one needs to account for significant maintenance expense after purchase of an older home.
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

Jags4186 wrote: Wed Jan 08, 2020 10:26 am
oldfatguy wrote: Wed Jan 08, 2020 10:22 am
NJdad6 wrote: Wed Jan 08, 2020 10:09 am

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas ...
Others have already linked data that demonstrates this simply isn't true. Median household income for OP's area is under 100K.
I don't know what the "area" is but I live in Essex County, NJ which includes Newark, Irvington, Orange, and East Orange. All very poor cities. There are also tons of retired folks with artificially low incomes. What matters to the OP is where he sits compared to other people buying homes. Saying the OP is "2x median income" is unhelpful if people living below-median income are living in tenements or retired folks living on social security and investment accounts.
The area is Westchester county, NY. Of course there are low income households there, as in every other area. Those would be the people below the median. More than 2x the median, by definition, is not "average middle class lifestyle."
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Grt2bOutdoors »

KlangFool wrote: Wed Jan 08, 2020 10:27 am
JuniorBH wrote: Wed Jan 08, 2020 10:20 am
OP - some else mentioned this, but the upside here is that once you buy a house, you will set your monthly expense. It shouldn't change much(other than tax increases, which I'm all too familiar with), but your salary should increase which will make the mortgage more palatable and allow you to save money elsewhere.
JuniorBH,

But, isn't this the biggest issue? And, if this is true, owning the house is not going to help you. The combination of property value increases and the property tax rate hike will increase the housing expense every year.

I lived in NoVA. In my county, the property tax rate is at 1% and dropping.

KlangFool
What are the demographics in NO Va? Isn't it becoming more crowded, more people and businesses moving into the community? New investments like Amazon building a headquarters there, close to DC so more government employees, a large and by far stable source of funding to the surrounding communities? The biggest issues in NYS are the opposite of the demographics of No Va, there are large legacy costs, less investment both private and public so the burden falls to those who reside in places where those costly services are.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

Grt2bOutdoors wrote: Wed Jan 08, 2020 10:30 am
oldfatguy wrote: Wed Jan 08, 2020 10:22 am
NJdad6 wrote: Wed Jan 08, 2020 10:09 am

I understand how the OP feels. Many of the comments here are not helpful. $230k before taxes will provide an average middle class lifestyle in HCOL areas ...
Others have already linked data that demonstrates this simply isn't true. Median household income for OP's area is under 100K.
No one is buying a home today in Westchester county for 500K, paying a mortgage, taxes, insurance, childcare, funding a 401k, paying for healthcare on under $100K. Especially with zero help on home purchase.
Of course not. But having all those things is not an average middle class lifestyle for that location.
Thegame14
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Thegame14 »

Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
dw 37 and myself 39, make combined $160K, line in NJ right outside NYC, house is about $500K, two kids in daycare costs us $2,700 a month, mortgage taxes insurance cost us $2,600 a month, property taxes are $12K and I still max out my 401K, so we make 50K less and can do it with 2 kids, also went through a few long stretches of me not working and we survived... Don't drive expensive cars, don't go out to eat unless you have a gift card or coupon, and even then anything over $15 per person is much too expensive
KlangFool
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by KlangFool »

Grt2bOutdoors wrote: Wed Jan 08, 2020 10:34 am
KlangFool wrote: Wed Jan 08, 2020 10:27 am
JuniorBH wrote: Wed Jan 08, 2020 10:20 am
OP - some else mentioned this, but the upside here is that once you buy a house, you will set your monthly expense. It shouldn't change much(other than tax increases, which I'm all too familiar with), but your salary should increase which will make the mortgage more palatable and allow you to save money elsewhere.
JuniorBH,

But, isn't this the biggest issue? And, if this is true, owning the house is not going to help you. The combination of property value increases and the property tax rate hike will increase the housing expense every year.

I lived in NoVA. In my county, the property tax rate is at 1% and dropping.

KlangFool
What are the demographics in NO Va? Isn't it becoming more crowded, more people and businesses moving into the community? New investments like Amazon building a headquarters there, close to DC so more government employees, a large and by far stable source of funding to the surrounding communities? The biggest issues in NYS are the opposite of the demographics of No Va, there are large legacy costs, less investment both private and public so the burden falls to those who reside in places where those costly services are.
Grt2bOutdoors,

In my county, we have the best combination: more data centers. A lot more commercial property taxes but not as many people related expenses/services required by the county. So, the trend is for the residential property tax rate to drop. The county has too much money now.

KlangFool
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by geerhardusvos »

Lol... Has OP still not responded? What did he expect us to say? :oops:
VTSAX and chill
KlangFool
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by KlangFool »

Thegame14 wrote: Wed Jan 08, 2020 10:37 am
Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
dw 37 and myself 39, make combined $160K, line in NJ right outside NYC, house is about $500K, two kids in daycare costs us $2,700 a month, mortgage taxes insurance cost us $2,600 a month, property taxes are $12K and I still max out my 401K, so we make 50K less and can do it with 2 kids, also went through a few long stretches of me not working and we survived... Don't drive expensive cars, don't go out to eat unless you have a gift card or coupon, and even then anything over $15 per person is much too expensive
Thegame14,

<<house is about $500K>>

Just for comparison, my neighborhood is about $200 per square feet. So, that will be about 2,500 square feet. What is the size of your house?

<< property taxes are $12K >>

Property taxes will be about 5K.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Bob Sacamano »

oldfatguy wrote: Wed Jan 08, 2020 8:47 am
BV3273 wrote: Tue Jan 07, 2020 9:56 pm
CoastalWinds wrote: Tue Jan 07, 2020 9:22 pm
oldfatguy wrote: Tue Jan 07, 2020 9:13 pm
BV3273 wrote: Tue Jan 07, 2020 7:04 pm Similar to you my wife is a teacher as well and she has a ton of family in the area so moving an hour up the line is not an option for me.
Everybody makes their own priorities, but the idea that someone wouldn't consider moving an hour or two further from family to be in a more affordable area seems a little wacky to me.
Sometimes that means moving an hour or two from one’s job, which might not be easily replaced in the new location. Certainly adding 2-4 hours of commute time per day requires careful deliberation of priorities.
Couldn’t have said it better myself. An hour or 2 each way would be totally unfeasible for me, but what do I know? I guess I’m just wacky.
I would never suggest adding an hour or two in commute time. I was talking about relocating for new jobs.
you may not be familiar with the tristate. the jobs are here, in NYC and immediate suburbs. not an hour or two into PA, NY or NJ. issue is, i'm in a role that is transferable and have no real need for NYC. i am competing with finance, big law and tech professionals who probably out earn us to the conservative tune of 2-3x.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Jags4186 »

oldfatguy wrote: Wed Jan 08, 2020 10:33 am The area is Westchester county, NY. Of course there are low income households there, as in every other area. Those would be the people below the median. More than 2x the median, by definition, is not "average middle class lifestyle."
I understand it's Westchester County. What I think people don't consider (or maybe they do but don't care) is that median for an "area" isn't necessarily an appropriate statistic for the OP.

I don't know Westchester as well as NJ so I will use where I live as an example.

Essex County, NJ has a population of ~800,000 people. ~425,000 live in East Orange, Orange, Irvington, or Newark. These are all poor inner-city communities. If you don't want to live in those cities where the majority of the below-median folks reside, then the median income for the county isn't helpful to you because you're competing against the median income the remaining 375,000 folks. Median isn't helpful is the income distribution is predominantly dumbbell shaped.

Median income also isn't a helpful statistic for a potential home buyer. You can look at many (most?) towns and see that the median reported income does not support purchasing the median home.
Last edited by Jags4186 on Wed Jan 08, 2020 10:58 am, edited 1 time in total.
Admiral
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Admiral »

Bob Sacamano wrote: Tue Jan 07, 2020 4:18 pm wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
You have two realistic options, which may go hand in hand:

Rent. While you rent, save money for a large downpayment that will enable you to reduce your mortgage amount.

Stretch. If you absolutely cannot or won't move, AND don't care to rent (or rents are also too expensive) you can bite the bullet and buy as much as you can reasonably afford, perhaps that's a fixer upper where some fixes can be put off. (Get a VERY good home inspection.) Hopefully your salaries will go up.

I won't pile on, as others have, on your characterization of being middle class. I understand you feel pinched, and that's all that matters for you. I sympathize with your situation, but I don't see too many other options.

If it were me, I would rather rent than take on a debt that was so burdensome that I would be on the treadmill for the next 30 years--and have no extra $ for vacations, restaurants, activities, etc.
oldfatguy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by oldfatguy »

Bob Sacamano wrote: Wed Jan 08, 2020 10:47 am
you may not be familiar with the tristate. the jobs are here, in NYC and immediate suburbs. not an hour or two into PA, NY or NJ. issue is, i'm in a role that is transferable and have no real need for NYC. i am competing with finance, big law and tech professionals who probably out earn us to the conservative tune of 2-3x.
I am familiar with the area, and know many family and friends who are employed all over the region, both in and outside the NYC metro area.

When I have relocated for work (multiple times), I specifically excluded HCOL areas from my search. You may be unwilling to do that. Everybody has different values.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by smitcat »

Bob Sacamano wrote: Wed Jan 08, 2020 10:47 am
oldfatguy wrote: Wed Jan 08, 2020 8:47 am
BV3273 wrote: Tue Jan 07, 2020 9:56 pm
CoastalWinds wrote: Tue Jan 07, 2020 9:22 pm
oldfatguy wrote: Tue Jan 07, 2020 9:13 pm

Everybody makes their own priorities, but the idea that someone wouldn't consider moving an hour or two further from family to be in a more affordable area seems a little wacky to me.
Sometimes that means moving an hour or two from one’s job, which might not be easily replaced in the new location. Certainly adding 2-4 hours of commute time per day requires careful deliberation of priorities.
Couldn’t have said it better myself. An hour or 2 each way would be totally unfeasible for me, but what do I know? I guess I’m just wacky.
I would never suggest adding an hour or two in commute time. I was talking about relocating for new jobs.
you may not be familiar with the tristate. the jobs are here, in NYC and immediate suburbs. not an hour or two into PA, NY or NJ. issue is, i'm in a role that is transferable and have no real need for NYC. i am competing with finance, big law and tech professionals who probably out earn us to the conservative tune of 2-3x.
Linking this article again for locations in your area...
http://www.westchestermagazine.com/10-o ... stchester/
Nyc10036
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Nyc10036 »

Bob Sacamano wrote: Wed Jan 08, 2020 10:47 am you may not be familiar with the tristate. the jobs are here, in NYC and immediate suburbs. not an hour or two into PA, NY or NJ. issue is, i'm in a role that is transferable and have no real need for NYC. i am competing with finance, big law and tech professionals who probably out earn us to the conservative tune of 2-3x.
I am very familiar with the tristate area.
I have lived in central NJ for 20 years.
And contrary to what you write, an or two hour into NJ puts you into prime jobs area for NJ.

As an engineer who never made more than $100K a year in my entire life, I never found it to be "a struggle".
Your family income is not "middle class".
My parents never made more than your salary their entire working life.

I find it very difficult to empathize with your situation.
.
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