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I just booked two tickets to South Carolina to go house shopping (not for me) with my best friend. He and his GF are planning on moving down there in January. They both have good jobs and their company will transfer them at the same rate. So it is a win-win for them. They planned on buying a home up here, but after taxes, COL and the attitude they decided why struggle up here when down there they can actually save and be happy.
2 young people (28yo) moving. Granted they might come back in 1, 2, 5 or 10 years, but as of this moment they are out.
The key here is that they are coming FROM a high wage state (CT) TO a low wage state (SC) and are keeping the high wage because they are transferring within the company. Of course they'll be better off in SC, but that situation doesn't apply to a lot of people.
Think of it like this: nep lives in CT and makes $90k in a professional accounting job - he isn't rich, but he's certainly better off than most people his age in SC. Let's say he tests the job market in SC on his own. Assuming he can find an equivalent accounting job in SC (difficult - as the low wage states are often disproportionately represented in "low wage work"), he's likely to keep a wage above the prevailing market rate (which is say $50k) as an employer will know he won't take a nearly 50% pay cut to work in SC. They may offer nep his current salary (or close to it) because he is from a high wage state and wouldn't otherwise relocate if they paid him half his CT salary, but the local candidate making $50k may only get a 10% bump to $55k for the exact same role.
Let's flip it the other way. Let's say you are a new grad and underemployed making $10-$12/hr in some low wage area, but could make $50k-$60k in CT or some high COL area. The company in the high COL area will probably low ball the person from the low COL area, because even the low ball offer would be enough to get them to accept, but still not be the true local market rate. If the person from the low COL area does accept the low ball offer, future offers in the high COL will often be based off this original low ball, retarding the person's salary from where a lifelong local would have been. Many companies base offers off what you made before. Simply ever working in the low COL area could retard wage growth permanently.
Exactly why I'm glad I started my career in a high COL area. That said, if you're coming from a low COL you should atleast use a COL calculator to evaluate an offer and even use it as a negotiation tool.
The key here is that they are coming FROM a high wage state (CT) TO a low wage state (SC) and are keeping the high wage because they are transferring within the company. Of course they'll be better off in SC, but that situation doesn't apply to a lot of people.
Think of it like this: nep lives in CT and makes $90k in a professional accounting job - he isn't rich, but he's certainly better off than most people his age in SC. Let's say he tests the job market in SC on his own. Assuming he can find an equivalent accounting job in SC (difficult - as the low wage states are often disproportionately represented in "low wage work"), he's likely to keep a wage above the prevailing market rate (which is say $50k) as an employer will know he won't take a nearly 50% pay cut to work in SC. They may offer nep his current salary (or close to it) because he is from a high wage state and wouldn't otherwise relocate if they paid him half his CT salary, but the local candidate making $50k may only get a 10% bump to $55k for the exact same role.
Let's flip it the other way. Let's say you are a new grad and underemployed making $10-$12/hr in some low wage area, but could make $50k-$60k in CT or some high COL area. The company in the high COL area will probably low ball the person from the low COL area, because even the low ball offer would be enough to get them to accept, but still not be the true local market rate. If the person from the low COL area does accept the low ball offer, future offers in the high COL will often be based off this original low ball, retarding the person's salary from where a lifelong local would have been. Many companies base offers off what you made before. Simply ever working in the low COL area could retard wage growth permanently.
My salary is only $75K, not $90K. That's only if you include the bonus. I also work 39 hours a week and am entitled to 23 PTO days per year, because I'm special.
He didn't say your salary is $90k but it is what you make
Well, I suppose technically that would be my annual earnings in total. But it's not great for FFC standards. I wish there was a government program or something that provides subsidies to people like me who want a shot at home ownership. Kind of like a basic guaranteed minimum income. Some experts, such as Thom Hartmann have discussed the concept before. It would help the economy at large. In other words, in addition to my $90K, I could receive an additional $20K during the course of a year. That would allow me to save and spend more money back into the economy, which makes everyone better off.
You can learn more about the basic minimum income here:
Woah, now that's an exotic move. Even though it's even more expensive COL in Europe than CT, I don't think I could give up the opportunity to live there at least for a few years. Way cool.
What made you decide not to? My wife would prob divorce me because I would be snowboarding with all my free time.
My wife was on board with the move and my realtor was ready to list our house. I would have to be in Zurich for Oct. 1st. Ultimately, it came down to the position and the business unit within the company I work for. I would be assuming my boss's position, but I have an issue with the commitment of management for the particular area of the business that I'm in. Basically, the company has refused to hire proper talent and inexperienced personal are making product decisions which have drove this unit into the ground with a negative P&L. I was advised by my current boss who I'd be replacing to use the reloc offer as an opportunity into Headquarters (Zurich) and exposure to other possible positions. Great concept in theory but for the 1-2 years that I would fill the offered position I would probably dislike going to work every day.
We were also not a fan of going back to apartment living - at twice the cost of our current mortgage.
Well, I suppose technically that would be my annual earnings in total. But it's not great for FFC standards. I wish there was a government program or something that provides subsidies to people like me who want a shot at home ownership. Kind of like a basic guaranteed minimum income. Some experts, such as Thom Hartmann have discussed the concept before. It would help the economy at large. In other words, in addition to my $90K, I could receive an additional $20K during the course of a year. That would allow me to save and spend more money back into the economy, which makes everyone better off.
You can learn more about the basic minimum income here:
I'm hoping this becomes a reality soon, because I could sure use some help!
Here's a theory...living within your means. Why do people always want hand outs?!
How about you make X amount and that you can afford X house in X neighborhood. Granted it might be a tad far from work, it won't be perfect and could be bigger. But you know what, its what you can afford. if you want t bigger/better house MAKE MORE MONEY. I want to own a yacht like the owner of my company, but I can't afford it. Should we start a government program for people like me who wants a yacht and give them money. FYI in part of what you "want" was called A subprime loan and look how royally it screwed stuff up.
I could afford a house at $55k a year, you can sure afford one at $90k a year. Will it be perfect, no. Will it have a longer commute, more than likely. You have some serious high unrealistic expectation that goes well beyond where you live. I have a small house, but you know what. I bled building it and to me, and to many others, THAT means more than having a mansion.
Exactly why I'm glad I started my career in a high COL area. That said, if you're coming from a low COL you should atleast use a COL calculator to evaluate an offer and even use it as a negotiation tool.
Most COL calculators provide only very rough figures and don't get into the minutiae of COL and taxation.
When I moved from TN to IN, the higher taxes were a real shock to me, especially going from red state to red state. TN has no state income tax at the state or local level - here in IN, I pay roughly 4% to the state and 1% more to the county. The sales tax went down from 9.5% to 6%, and food is not taxed in IN, but I am not saving a great deal on sales taxes. Property taxes are a toss-up between the states depending on location. Miscellaneous taxes and fees are considerably higher in Indiana. Property values are a toss-up, with the top suburbs of Indy being considerably cheaper than the top suburbs of Nashville. Many other small cities and smaller areas are a toss-up. I had to pay $5 to simply enter a state park in IN last week - in TN, entering a state park is free. Registering/titling/tagging my car in Indiana was nearly $500 - in TN, registration/titling/tagging ran me about $50 total when I bought a new car last year. Gas is more expensive in IN, but insurance is slightly less.
Cost of living calculators don't go into this level of detail, and one needs to do plenty of their own research to get a fuller picture and to account for personal habits. Someone going to the park once a week here in Indiana would be out about $250 annually, which isn't a negligible expense for something so mundane. Indiana is a middle of the road state for taxation and it's high to me - moving from TN to CT would make many people scream about high taxes. Still, the salary would often more than make up for it, and many significant expenses, like a new car, are static, and others, like the price of gas, don't increase proportionally with income.
Nep's income of $90k equates to about $55k-$60k in Indy or Nashville. Gas is around $3.50 in both places, and $4 in Stamford. The price of gas increases in absolute terms from CT to IN/TN, but as a proportion of income, nep will spend more on gas in IN/TN than CT if gas usage remains constant.
This isn't counting additional retirement contributions, capital gains from those contributions, increased SS payments in the future due to the higher income, other investment gains one could make from the additional earnings (a person making a lot of money in CT could more easily buy rental property in a low cost place like TN than a TN local earning a TN wage). One can shelter much of their additional income in savings/investments that are either tax-deferred or not taxed as heavily as earned income.
Quote:
Originally Posted by nep321
Well, I suppose technically that would be my annual earnings in total. But it's not great for FFC standards. I wish there was a government program or something that provides subsidies to people like me who want a shot at home ownership. Kind of like a basic guaranteed minimum income. Some experts, such as Thom Hartmann have discussed the concept before. It would help the economy at large. In other words, in addition to my $90K, I could receive an additional $20K during the course of a year. That would allow me to save and spend more money back into the economy, which makes everyone better off.
You can learn more about the basic minimum income here:
I hope it becomes a reality soon. I could greatly benefit from it, and so can you.
Again, you're asking to buy a home in one of the most expensive counties in the country as a single person on a good, but not excellent, salary, and then you want to be subsidized for the difference? That's insane. Subsidizing the FFC real estate market is only going to drive costs even higher. If you want high real estate prices, just offer subsidies to potential buyers and watch prices zoom past where they are now as the government artificially stimulates an already hot market.
You have several choices, none of which you seem amenable to. It's hard to afford a home as a single income earner anywhere - doubly so in high COL coastal areas. You are still doing way better than most people your age in your area.
1) Commute longer to your current job and move out to a more affordable area.
2) Move elsewhere in the country where you can find a job and owning a home is more affordable.
Beyond that and as picky as you are about location, you're just at an impasse. The problem is FFC is very desirable, and there are people making more than you are that are bidding prices up beyond what you can afford.
Most COL calculators provide only very rough figures and don't get into the minutiae of COL and taxation.
When I moved from TN to IN, the higher taxes were a real shock to me, especially going from red state to red state. TN has no state income tax at the state or local level - here in IN, I pay roughly 4% to the state and 1% more to the county. The sales tax went down from 9.5% to 6%, and food is not taxed in IN, but I am not saving a great deal on sales taxes. Property taxes are a toss-up between the states depending on location. Miscellaneous taxes and fees are considerably higher in Indiana. Property values are a toss-up, with the top suburbs of Indy being considerably cheaper than the top suburbs of Nashville. Many other small cities and smaller areas are a toss-up. I had to pay $5 to simply enter a state park in IN last week - in TN, entering a state park is free. Registering/titling/tagging my car in Indiana was nearly $500 - in TN, registration/titling/tagging ran me about $50 total when I bought a new car last year. Gas is more expensive in IN, but insurance is slightly less.
Cost of living calculators don't go into this level of detail, and one needs to do plenty of their own research to get a fuller picture and to account for personal habits. Someone going to the park once a week here in Indiana would be out about $250 annually, which isn't a negligible expense for something so mundane. Indiana is a middle of the road state for taxation and it's high to me - moving from TN to CT would make many people scream about high taxes. Still, the salary would often more than make up for it, and many significant expenses, like a new car, are static, and others, like the price of gas, don't increase proportionally with income.
Nep's income of $90k equates to about $55k-$60k in Indy or Nashville. Gas is around $3.50 in both places, and $4 in Stamford. The price of gas increases in absolute terms from CT to IN/TN, but as a proportion of income, nep will spend more on gas in IN/TN than CT if gas usage remains constant.
This isn't counting additional retirement contributions, capital gains from those contributions, increased SS payments in the future due to the higher income, other investment gains one could make from the additional earnings (a person making a lot of money in CT could more easily buy rental property in a low cost place like TN than a TN local earning a TN wage). One can shelter much of their additional income in savings/investments that are either tax-deferred or not taxed as heavily as earned income.
Again, you're asking to buy a home in one of the most expensive counties in the country as a single person on a good, but not excellent, salary, and then you want to be subsidized for the difference? That's insane. Subsidizing the FFC real estate market is only going to drive costs even higher. If you want high real estate prices, just offer subsidies to potential buyers and watch prices zoom past where they are now as the government artificially stimulates an already hot market.
You have several choices, none of which you seem amenable to. It's hard to afford a home as a single income earner anywhere - doubly so in high COL coastal areas. You are still doing way better than most people your age in your area.
1) Commute longer to your current job and move out to a more affordable area.
2) Move elsewhere in the country where you can find a job and owning a home is more affordable.
Beyond that and as picky as you are about location, you're just at an impasse. The problem is FFC is very desirable, and there are people making more than you are that are bidding prices up beyond what you can afford.
I would move elsewhere in the country if I could, but I only like small/mid sized metro areas. Even places like Pittsburgh, Tampa and Denver are a bit too big for me. But the smaller metro areas have almost no jobs!
I like places like Boise, Reno, Eugene, Salem, Tallahassee, etc. Virtually no corporate tax jobs there though.
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