Dreaming of Affordability/ER in Seattle

[Fool_working]

Hey all.

I am currently living in Seattle, which is REALLY expensive. I'm at present living on 1/3 my salary, using the other 2/3 to pay off surgery debt and student loans (I just graduated from a Master's program 2 years ago). I'm single, and share an apartment with a friend to save on rent (still really expensive - guess where most of that 1/3 goes?).

I'll be getting the opportunity at my job in the next few months to transfer offices (and get a big raise at the same time). I'm thinking of using the transfer to go to back to Salt Lake County in Utah (where I am from). This is because I'd like to someday own a house, which I know is never going to happen now at Seattle prices. I also haven't been in Seattle very long. I moved up to Seattle to find work after graduating from school.

Is is possible to ever retire early in expensive places like Seattle? Especially while owning property? Seems pretty impossible if I'd have to pay 8x my annual salary to get an entry level house in Seattle.

I'd be interested in hearing peoples stories about retiring early in really expensive areas of the country.

 

[dex]

I think you have to take the long term view on this one. Living and working in an expensive city has positives and negatives
Positives
You make a lot more money
Your real estate appreciates greater than in less desireable cities
Negatives
It is expensive
You may have to make quality of life comprimises until you are making more money.

From what I've seen people not from an expensive city tend to gravitate to the expensive parts of town. For example, I grew up in the Bronx, New York City. Most of the people I met in Manhattan (NYC) were from the Midwest. I was paying about 1/3 the rent they were in Manhattan and every thing else was also less expensive for me also. However, my commute was longer.

I was to Seattle last year. For some reason the highways gave me a feeling of clostrophobia.

Movinging out of the city and carpooling might be a way to begin the journey.

 

[mb]

Fool

First, if you continue to live on 1/3 of your salary it will not be that long before your debts are paid and your net worth starts to shoot up.

Second, yes you can ER in an expensive place. Many on this board have done it in CA, NY, DC, Hawaii, etc.

It is easier if you are either single or DINKs. If you want a family with a stay at home parent and a big house for them it will just take a while longer.

If you are not married make sure that you and a prospective DW are financially compatable. I was lucky. I got one by accident but others on the board haven't been so lucky.

I am in CA, approaching 50, with a paid for house and a portfolio that should support ER.

DW and I both make above average salaries but definitely nothing that is CEO-like. For most of the last 25 years we have saved and invested 25 to 50% of our net pay. Nothing fancy, just monthly automatic withdrawals from the checking account into Vanguard. We have always maxed out our 401ks and usually contributed to non-deductable IRAs.

Made some mistakes along the way but nothing huge. Helped a broker at Dean Witter pay his mortgage for a while. Kept to much money in the money market for a long time. But it still worked out fairly well.

We have had nice vacations (Hawaii a couple of time, Europe pre-kids) but nothing that was really expensive. We are not frugal to extremes but with a few exceptions we typically buy things because we need them not because we want them. DS once remarked that we must be poor because if we were rich we would have nicer cars and a better TV with cable.

Paid $100k for the first house when we were making about $20k but our loan was at 13 1/2%.

Have two kids now but didn't have them until our 30s. In the 80s when most young DINKs were spending like crazy we were saving so by the time we had kids we were in pretty good financial shape and DW was able to take a couple of years off work.

MB, an ex-SLCer

 

[haha]

Movinging out of the city and carpooling might be a way to begin the journey.

IMO, not a good idea. Our traffic is so horrendous it is much better to rent in city. A long day of work with trying commutes as bookends is not what most people want.

Ha

 

[bright eyed]

A long day of work with trying commutes as bookends is not what most people want.

Ha

what! that'd be a news flash for most in southern cali!

 

[kcowan]

Because FW is currently renting in Seattle, I guess there are 3 choices:
1) Stay put and keep saving
2) Buy a house and become house poor
3) Move to a cheaper place, and do 1) or 2).

I think I would stay put if I could unless an attractive job offer prompts a move under item 3).

 

[AzDreamer]

I moved to Seattle 20 years ago and financially it's worked out well. I don't know if you'll see the same appreciation in housing values we have enjoyed, but our economy is strong and diverse so it's as good a bet here and anywhere.

 

[Fool_working]

I agree about not living out-side of Seattle. I have seen the traffic downtown when I get off work. Its very fun just flying by 30 cars on my bike on the way home

Nice to hear that ER can happen even in expensive places. Guess I'll just keep plugging away at my debt! I did manage to pay off the first credit card today, and put away a big chunk of the second card. O0

Its just hard listening to co-workers sometimes - my boss is in the process of buying a house... for $750,000! and my co-worker brought in a bunch of flyers from around her neighborhood of houses for sale in the low $900,000!!! Makes home ownership around here seem like its out of reach - which is really depressing because I always wanted to own my place.

 

[kcowan]

One thing you will learn here is to run the numbers and never buy anything purely on emotion. Villas in Tuscany and yachts are also appreciating in value. Doesn't mean that you have to participate.

 

[Dog]

Is it possible to work from home or flex time? That way you could find something outside of the Seattle for less money and not worry about the commute.

 

[CyclingInvestor]

It can be done. I retired last year at 48 from a programming career in Los Angeles.
I owned a house since 1980, paying 4.6X my salary (83K vs 18K) for a tiny
house in a crappy neighborhood, moving up once in 1987.

 

[lazygood4nothinbum]

is all of seattle that expensive? many people complain in south florida how expensive everything is but really everything is not that expensive, just maybe their first choice of where in the city they'd rather live. i'd like to live in a house on the ocean or like my parents off the intracoastal waterway with a big boat behind my house but guess what, i'll never have that much money.

so i bought in a--to be polite--"fringe" area known more for crack sales than yacht sales. guess what, 10 years later people are complaining that my area is too expensive for them to buy a house here.

ps. just checked realtor.com. my area has 6 houses under $400k for sale. seattle shows 19 under $400k. though i don't know your area, i know around here there are current "fringe" areas where you can buy for under $250 (realtor.com shows 40 of them in coastal fort lauderdale, never mind what's out west). who knows what those places will be worth in 10 years.

 

[Fool_working]

Wow.. I calculate I would have to make at least $120,000 to get a loan for a $400,000 house (A GOOD loan - I won't do any of those balloon loans, adjusting interest rate, or interest only loans)

Which means that I need to get a 400% raise... and this year I got a 4% raise(highest in the whole company! oh boy...)... hmmm... thats going to take some major plan to pull off.....

 

[kcowan]

We took a job change to a small city where we could afford to buy a starter house. After 3 more transfers (14 years), we were back where we started in a 5000sqft estate home on 1 acre (15x the market value). Moving can leverage your job situation as much as your equity. YMMV

 

[lazygood4nothinbum]

thats going to take some major plan to pull off.....

unless i landed a job making lots of $s just out of school, i wouldn't be setting my sights on a medium priced house as my starter home. that really would be beating yourself over the head with a bat. i couldn't imagine buying a medium priced home without a substantial downpayment. it took me 5 years of saving, then i lost all that money to a construction accident, then another 5 years of saving again before i was able to buy a house in crack town.

after some sweat equity into the house and working with the city on regulatory boards to help improve our neighborhood, this area has become so desirable that you can now purchase for about $500k a nice townhome where the drug rehab building used to stand. so i managed to find my way into a medium priced home without ever having made dollars being employed that would impress anyone. given a little patience and a lot of time, you'd be amazed at what is within your reach.

 

[Brat]

Living below your means is the key to long term wealth accumulation. The advantage of staying in Seattle is building your professional resume.

When I graduated from college my Mother advised that I work for several years in NYC and when I was seasoned in my profession then find a position in my home town. She said it is better to make the apprentice mistakes where your old friends and neighbors won't revisit them when you are 40.

My apartment in NYC looked like a dorm room and we had a ball. But, I was still a Duck and the NW was where I wanted to raise my family.

Stash your cash, remember Washington has no income tax and if your lifestyle is modest you won't spend many pennies in sales tax.

After you are a seasoned professional then find a position in Utah, you will be coming back at a higher pay point. When you date in Seattle keep in mind that you really want to raise your family in Utah and select accordingly.

Would I commute by car from the 'burbs in your situation, NO WAY!! Note the photo from my study.

 

[Trek]

Back in the late 90's I worked in Seattle but lived in Olympia. I made great money in Seattle and had a very low COL in Olympia (renting at the time).

Took me 45 minutes to get to work in the morning (I didn't have to be there till 10am). My exit was one of the first approaching downtown. Worked in the Elliott/Mercer Ave area. It did take me 90 minutes to get home though as I would get caught in rush hour leaving.

Seattle is a cool city, but not cool enough to pay the price to live there, IMO. I didn't find the commute a big deal, especially considering all the extra money I had doing it (even with gas/wear and tear). And Oly is a cool town to live. But you could live much closer than I did and still have a lower COL with less commute.