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High salary vs. High cost of living article
Old 05-23-2005, 10:49 AM   #1
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High salary vs. High cost of living article

This subject has come up before, but here is a study claiming that the high salaries in expensive areas does not make up for the cost of living.

http://www.msnbc.msn.com/id/7952660/

So maybe the low salary/low cost city is the best way to ER?
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Re: High salary vs. High cost of living article
Old 05-23-2005, 01:03 PM   #2
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Re: High salary vs. High cost of living article

I like the high salary, low cost approach

Thats why I took the company relocation from the bay area to podunk-land 10 years ago. I took it along with my bay area salary. Didnt hurt that podunk-land housing shot up to near bay-area levels.
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Re: High salary vs. High cost of living article
Old 05-23-2005, 02:22 PM   #3
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Re: High salary vs. High cost of living article

The strategy is that if you do mind the long commute, live further away. For example, if you have a job in San Francisco, you could live in San Leandro (or Oakland) where the cost of living is a lot lower than that in San Francisco. You can just take the BART to downtown in about half an hour.
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Re: High salary vs. High cost of living article
Old 05-23-2005, 02:25 PM   #4
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Re: High salary vs. High cost of living article

I am trying to end up in one of those areas when I get done. *Not just b/c of ER but also for the lifestyle. *Suppose the study didn't make you feel any better Mephisto from CA? *Gotta admit though that some people have done extremely well by being in those areas for 'x' amount of time and then selling the real estate before a move. *Yeah it may not compensate one it terms of salary but what about the real estate some people are sitting on? *Delayed compensation or what? *
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Re: High salary vs. High cost of living article
Old 05-23-2005, 02:28 PM   #5
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Re: High salary vs. High cost of living article

On the topic of salaries vs high cost of living, yes thats spot-on.

I've seen plenty of 'cost of living salary adjustments' human resources blah blah to notice that they dont even come close to compensating.

My last company offered something like a 5-9% 'adjustment' for people moving into the SF Bay Area, where homes cost 2-3x what they do in surrounding high cost regions, and 4-5x what they do in the rest of the country. Expensive restaurants, expensive shopping, long slow moving commutes...20-30% wouldnt cut the mustard.

I dont think the offered salaries in general, outside of in-company adjustments, are that great either. What you DO have is a greater set of employment opportunities, and odds of very little time spent between jobs before getting an offer.
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Re: High salary vs. High cost of living article
Old 05-23-2005, 06:09 PM   #6
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Re: High salary vs. High cost of living article

I've seen both worlds...

DH is from Boston and he left there because you just can't get ahead in that city. He left to go to graduate school and never looked back. His friends stayed behind and all of them had to borrow money from the parents just to put a downpayment on their first homes while DH and I are mortgage free DH's mother and sister still live there...it's nice to visit them every year but as for moving back? Not in my lifetime!

On the other hand, we've also lived in Tulsa, OK. Sorry for all the Southerners on this board but I couldn't get out of there fast enough! Yes, we were compensated well but it's definitely a boring place to live (besides all the violence that is ) We were able to save a bundle because there's no where to spend it :P

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Re: High salary vs. High cost of living article
Old 05-23-2005, 06:29 PM   #7
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Re: High salary vs. High cost of living article

* *Hmm, DH lived out in Tulsa for a while .. never heard him say a bad word about the place -- especially violence.*

* *I go with the high salary/ low cost of living approach, too. I doubt we'd be mortgage-free if we were living out East (at least from what friends out there are telling us about costs.)
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Re: High salary vs. High cost of living article
Old 05-24-2005, 08:52 AM   #8
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Re: High salary vs. High cost of living article

How about collecting a high salary and telecommuting?

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Re: High salary vs. High cost of living article
Old 05-24-2005, 10:20 AM   #9
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Re: High salary vs. High cost of living article

One of the things that benefits the high cost of living locations is real estate appreciation.

I know people who live in New York. They bought a house 25 years ago for $50,000. Now you can sell it for well over $500,000. A lot of people on the coasts have most of their wealth in their house and have done a lot better than us who live in a low cost area. The question now is will this continue for the people who are buying now?
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Re: High salary vs. High cost of living article
Old 05-24-2005, 10:32 AM   #10
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Re: High salary vs. High cost of living article

We can only use the past as a rule to measure if the properties in one area or another will continue to grow over the long haul.
But no one has a magic wand.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 10:40 AM   #11
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Re: High salary vs. High cost of living article

Quote:
Originally Posted by Texas Proud
One of the things that benefits the high cost of living locations is real estate appreciation.

I know people who live in New York.* They bought a house 25 years ago for $50,000.* Now you can sell it for well over $500,000.* A lot of people on the coasts have most of their wealth in their house and have done a lot better than us who live in a low cost area. The question now is will this continue for the people who are buying now?
Of course, they must sell, then move to a lower cost area, to receive the benefit.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 01:37 PM   #12
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Re: High salary vs. High cost of living article

Quote:
Originally Posted by Have Funds, Will Retire
Of course, they must sell, then move to a lower cost area, to receive the benefit.
Yes, many people have moved on to more affordable areas, i.e., from the Bay Area to Sacramento (not cheap anymore), Orange County to Riverside County (though it is getting expensive), New York City to Lake Placid, etc.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 03:52 PM   #13
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Re: High salary vs. High cost of living article

I consider selling my house and moving someplace cheaper in retirement as my "plan B". But I have a feeling that if my total market portfolio tanks that bad, I might not have many buyers lined up.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 05:38 PM   #14
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Re: High salary vs. High cost of living article

This somewhat reinforces my pov; you cannot count the equity in your house as part of your retirement portfolio (aside from having low or no mortgage payments), unless you plan to cash out. I suppose you could also do a heloc, second mortgage, reverse mortgage, but going further into debt is anathema to most on this board.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 06:21 PM   #15
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Re: High salary vs. High cost of living article

Laurence:
We are up in Orange County and houses have tripled in price. Our mortgage is paid in full, so sitting on a nice chunk of change. We are in a great 'location' and, hopefully, prices will continue to rise. Are you concerned about 'earthquakes?" I would move in a heartbeat if property taxes were to remain low. Anyone in a Del Webb environment? Heard parts of Arizona now have "lotteries" for housing.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 06:23 PM   #16
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Re: High salary vs. High cost of living article

Laurence:
*We are up in Orange County and houses have tripled in price. *Our mortgage is paid in full, so sitting on a nice chunk of change. *We are in a great 'location' and, hopefully, prices will continue to rise. *Are you concerned about 'earthquakes?" * *I would move in a heartbeat if property taxes were to remain low. * Anyone in a Del Webb environment? * * Heard parts of Arizona now have "lotteries" for housing. * :
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Re: High salary vs. High cost of living article
Old 05-24-2005, 06:57 PM   #17
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Re: High salary vs. High cost of living article

Free land in rural Kansas if well cough you want to live in rural Kansas
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Re: High salary vs. High cost of living article
Old 05-24-2005, 07:50 PM   #18
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Re: High salary vs. High cost of living article

Ginger, my house was at the epicenter of the Northridge earthquake, there was damage, there was drama, it took about a year for things to get back to normal. I figure I've seen the worse. Plus, what your home sits on has as much to do with your risk as where you are. San Diego is a little better as a location, and I'm on a hill of bedrock. The homes in the valley that were destroyed were on silty riverbed type soil, shake and quaked to death.

On another note, you can carry over your old property tax if you move to a cheaper home. IE move to semi-rural CA, just as nice a house, have a little equity cashed out, keep the property tax from when you bought this house. So your not trapped in that house if you really want a differrent location, just can't "upgrade" in the same neighborhood.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 07:57 PM   #19
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Re: High salary vs. High cost of living article

Quote:
Originally Posted by Ginger
Heard parts of Arizona now have "lotteries" for housing.*
Developers in Hawaii use them so that buyers don't have to camp out in line for a week before the grand opening.
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Re: High salary vs. High cost of living article
Old 05-24-2005, 08:25 PM   #20
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Re: High salary vs. High cost of living article

Quote:
Originally Posted by Ginger
Laurence:
*We are up in Orange County and houses have tripled in price. *Our mortgage is paid in full, so sitting on a nice chunk of change. *We are in a great 'location' and, hopefully, prices will continue to rise. *Are you concerned about 'earthquakes?" * *I would move in a heartbeat if property taxes were to remain low. * Anyone in a Del Webb environment? * * Heard parts of Arizona now have "lotteries" for housing. * :
We have a Del Webb "Sun City" in Huntley, Illinois outside of Chicago.
"Sun City"? What is that? I thought it was a goofy concept but am told
that this development has been quite successful. Seems like a
contradiction in terms (Sun City in Illinois).

JG
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