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I assume there are exceptions of just some anomalies that just aren't worth it. Some cheap places have very little opportunity to where its not worth it. And some places are too pricy even for all the merits they offer. And most importantly, it depends on what industries you work in and what job offer you get. But that aside.
But on the whole seems like the majority of areas, cost of living has a way of balancing out. And there's no such thing as a free lunch. I feel like many people move to a cheaper area thinking they're going to save money, but then realize there's a lot of costs they didn't take into consideration.
Places with lower home prices and lower CoL typically have lower wages and less career opportunities..
Places with lower taxes in some aspects, usually make up for it by charging other types of taxes/fees. Or the public services may be lacking.
From what I've seen, there's usually something. For example, there may be little difference in property taxes you pay in a place with high tax rate/low property vs. a place with high tax rate/low property values. Or you might find an affordable place to live but high HOA and/or high cost of home insurance.. etc.
It's easy to move somewhere because of 1-2 of these factors in isolation, but everything put together, there's usually a compromise somewhere.
What has been your personal experience with this? Do you find that CoL often equalizes?
Yeah idk. I moved from MA to NJ in 2021. I feel NJ offers a slightly higher QOL for middle income people while being consistently 10-25% (or more) less expensive than Eastern Massachusetts.
I do have to say, wages are slightly lower in NJ than MA granted the cost of living is quite a bit lower in NJ than Ma. But not so much more that you have more people struggling with rent. I think wages are about 5-15% lower than MA here while rent is 10-25% lower. I have been applying to jobs, a few in MA recentyl, and while the offers are significantly higher… I cant find a single apartment that is livable within 45 minutes to Logan/Downtown/Cambridge. If I follow that path and live in MA… id be paying much more in rent and amenities but I would be able to do far faarr less than here in NJ. Is that really a higher QOL in MA just because its more expensive than NJ?
So in general, i give a mixed answer. More money = more services = more quality = better lives. However, there are exceptions to the rule. Imho.
But when I lived in Central FL and Central New York, yes, it was apparent. But I think the offerings were higher in CNY over CFL, despite it being cheaper.
Maybe its all relative.
I myself am in this predicament. Stay in Jersey with a decent wage and pay $2,500 for a really nice modern 2 bedroom 2 bathroom on the Jersey City light rail. Or, take a slightly higher pay in Massachusetts and live further out paying 2,850 for a 2 bedroom built in 2004 with no direct rail access (i would have to drive to the CR). While the answer might seem obvious (stay in jersey) there are other factors like family to consider. I consider Jersey the highest QOL place for me at this time given its high, but not the highest COL.
I think if we put a scatter plot if HDI or QOL Measure over COL, it would be rather correlated. I think there are multiple studies that show this.
Last edited by masssachoicetts; 11-13-2022 at 09:29 AM..
There are exceptions. Los Angeles and Miami are very expensive for their wages.
Cincinnati and St Louis as particularly cheap
I remember they were doing a thread Bos v Philly v Chicago and as it turns out adjusted for incomes Boston is actually cheaper than Chicago and a bit more expensive than Philly but the gap IMO isn’t big enough to pick the city based on COL.
With the caveat that in many cases the income gap is drives by compositional differences in the workforce vs higher wages for the exact same job. You’re better off as a Bank Teller in Philly than Boston. And better off as a SWE in Philly than Boston, it’s just proportionally there are far more SWE in Boston so the aggregate is wealthier
I don't think this can be generalized. Like most things in life, "it depends."
During the 2010's it made financial sense for Software Engineers to move to the San Francisco Bay Area because the local wage premium far exceeded the higher cost of living. This is less true now post-pandemic with remote work, but there's still some truth to it.
On the other hand, I've personally witnessed a lot of friends and family move away from the Bay Area to cheaper locations (NorCal, OR, WA, OK) and for them it absolutely was the right decision. These are folks in industries that didn't pay much of a premium for living in a VHCOL area. Mostly workers at Costco, Safeway/Albertsons, and even an accountant. In there case really was a "free lunch" (as you say) because their income remained about the same at 1/3 the cost of living. Whereas they were struggling just to scrape by as renters in the Bay Area, in their new locations they could buy a house in a good neighborhood with good schools, and even have extra left over to buy boats and other such things while actually having the time to enjoy them.
People don't move to LCOL because they're dumb or misinformed. All the folks I know did the math (pretty easy, not rocket science) and determined that moving made a lot more financial sense.
I feel like many people move to a cheaper area thinking they're going to save money, but then realize there's a lot of costs they didn't take into consideration.
I'm retired so the income thing isn't really relevant to us, but moving from CA to ID we found the opposite to the above to be true. Everything is less expensive here in ID. Vehicle registration, insurance, gas, groceries, dining out, auto repair, contractors and home maintenance. Taxes are lower. Even our utility bills are lower despite using more. It all adds up.
Which is why people instead of looking at just "low cost of living" they consider pictures like "getting the best bang for the buck".
For example, metro areas like Dallas and Houston has plenty of jobs along with amenities along with a relatively low COL (compare to the coasts) - and you wonder why people are moving to Texas.
On the other hand, many places in Midwestern US has an even lower COL even compare to Texas - yet people don't really move there. Why? B/c as you said, the relative lack of growth and job opportunities along with wages that are not high just ain't enough to offset that lower COL.
I live in a supposedly low cost of living city/state (Orlando, Florida) and because there is no state income tax theoretically cheaper to live in. However basics like rent and car insurance are off the chain expensive and disproportionate to most given an average income of around 31K and average two-bedroom rent right at 2K per month. We're moving to Lexington KY where the average income is 2K higher, pay just 5% income tax and renting the same two bedroom apartment (same property management company) for under $1300 versus $1900. There are many examples of cost of living not equalizing with many more options we could have chosen but are locked into a lease that we can fortunately transfer. Had we free range other options included cities like Cleveland, Kansas City, Columbus, Indianapolis, St Louis, Greenville-Spartanburg, Charlotte, Raleigh-Durham and Richmond among others.
Yeah it mainly comes down to what job you have. For the most part, people who move to the city and say the CoL is higher yet your wages arent, maybe you just didnt get a good enough job there or you didnt move in the right city for the industry that youre in
That said, for decades the lower cost areas of the country were a real bargain.
I never made over 100,000 in my entire career, my wife didn't work full-time. Yet, by the time I retired in 2007 I owned three spectacular view homes for which I paid about 350,000 for all three.
With the pandemic, there was a movement of urban folks into rural areas. That changed my community from a small town to a urban area.
I moved to Coeur d'Alene Idaho in the 70's. Couldn't sell my house when I moved out of community!! Not that I would want to live in CDA these days, but I could definitely sell my house for a tidy sum of money.
But, those small towns on my list that I would move to...with the pandemic became hot spots for "urban refugees" and the prices of property and home soared.
Not sure what the future will bring, but there will always be opportunities in low cost living areas. Arkansaw might be the new Idaho in the next decade.
With respect to Taxes, very true. States with no state income tax just tax something else, they still need the revenue..
You can stilll game the system. I you retire on SS, your SS is non-taxable incomr, so you gain nothing where there is no income tax.i If you don't drive anymore, retire in a state with high gs tax -- let someone else pay it.
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