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Hey demographer, if you can get that same job in the Midwest (and that's a big if..), I would be outta NY so fast your head would spin..especially find you're not from NY..there is no reason to be in NY..
I'm the OP. I'm also originally from the Midwest. This is why I am constantly struggling with the question of whether staying here is worth it. I know *exactly* what our income would buy in Cleveland, or Chicago, or Indianapolis. I think a lot of people who are born-and-bred NYers don't really have that perspective--or they believe the schools somehow justify it. That's an argument I absolutely don't buy. In my (admittedly boring) Midwestern hometown, many many people graduated from top-ranked public schools (or private schools that cost half what they cost here) and jetted off to Ivies. So the schools simply aren't a reason--they're an excuse.
You don't sound facetious. At all. You sound like a completely reasonable person asking completely reasonable questions. Yes, we save a lot. But as I mentioned in my original post, if we upgrade to one of the top-ranked school districts, we will liquidate that extra savings on a home in probably the $1.2-$1.4 million range--a home with taxes around $35k. Ou monthly costs will skyrocket, and we'll probably be unable to save much outside of retirement and 401(k)s. On a 1% income. Now that is some staggering math. I know we could buy something smaller, and shabbier. But am I totally superficial if I'd like a two-car garage, a kitchen that's newer than 1960, and more than two bathrooms?
It’s not a 1% income. It’s a .1% income. You are truly elite, even if it doesn’t feel like it. Be proud of yourself. My question is: would your income suffer if you moved? If you moved to the Midwest, you could get a $500K house with all the things you want in a nice area with a great school district. But if your HHI falls to $250K, it might not be worth it. If I were you, I would worry about the school district a bit less. Children with wealthy parents tend to excel, which is why schools in wealthy areas perform better. And you are wealthy. If you instill the right values in your children, they will excel whether they go to Harvard or New York University or Syracuse.
It's going to be tough to find a comparable job outside major metropolitan areas. On a relative basis, the difference may not be significant. A few other thoughts/opinions:
1) It's near impossible to find a house within commuting distance of Manhattan (and with a good school district) that doesn't have a 20k+ tax bill attached to it.
2) This may seem obvious, but in terms of a house, the best way to maximize your upside (potential wealth creation) will be to purchase something at an attractive $/sq ft. This likely means taking on some risk in the form of renovations and sweat equity. I think it's worth it. Every dollar of principal you pay down is effectively invested at that rate.
3) The negative carry of property taxes hurts, but it's not as bad as renting since you get the tax shield of mortgage interest.
4) Eventually, I think that the upward trajectory of property taxes will begin to plateau. I don't care what the assessment of the house is -- at some point, the gross dollar amount is unsustainable. The system itself - basing an annual liability on the value of 30-year illiquid asset - is mismatched. This only happens if enough people decide to take action.
5) At the end of the day, you will have more in savings than 99.9% of the planet. That doesn't justify the insane taxes by any mean. But it does give some perspective.
I don’t even know how I ended up here (not a New Yorker), but I’m always interested in cost of living threads. I’m just stunned at these figures. Is New York really that bad? I live in the Midwest (yes, I know, cheaper but still in a major city). We have a HHI of roughly $100K before any potential bonus. And our house is $250K with property taxes of $3,000 or so. We have two kids also. And we are doing great. Thriving honestly. So your income is over 6x what ours is yet your house is only 3x what ours cost.
We take a nice vacation each year, I save 10% for retirement with a 6% company match (16% total) plus an extra few grand in a Roth IRA each year. We can’t do everything we want, but we do a lot of fun things. I do know everything costs more in New York; just can’t fathom not feeling comfortable on $650K. Is this just a New York thing? Not satisfied if someone down the street has more than you? I don’t mean to sound facetious, but it just blows my mind a bit. What more are you seeking? If you’re saving almost $100,000 a year, you aren’t “uncomfortable” or “having to worry about money.” You literally save twice as much as the average American makes in a year.
Yeah, it is that bad. We had a 3 bdr. 1 bth. 1100 sq. ft. home in Peekskill, N.Y. It had a three car garage on a half acre of property. Our property taxes were close to $12,000 a year before we left in 2010. We couldn't afford or even think about having children as we needed our two incomes to survive in Westchester County as neither of us had a college education and worked in manufacturing.
We now live in Arizona and have a 4 bdr. 2 bth. 2000 sq. ft. home with a 3 car oversize garage on a little over 1/3 of an acre. Our property taxes are a little over $1,700 a year. Our neighborhood is similar to what would be considered to be upscale in Westchester County. Whereas Peekskill was far from it.
We have all of the same wonderful public services and schools that New Yorker's love to brag about to justify their astronomical taxes and costs of living. Granted there are not that many high paying jobs in our area, which didn't matter to us as we work from home. We were able to bring our $70,000 annual income with us. Fortunately for us we haven't had any debt for over 20 years. None whatsoever. If we didn't have the money to pay for it we didn't buy it. Period. I do practically all my own work both on our home and vehicles. I just could never stand having to rely on others for every little thing. Obviously that saved us a lot of money. We've got an 18 year old truck as our daily transportation that I've taken good care of and two antique cars that I bought when I was living with my parents and restored in my spare time.
Since moving to Arizona we are saving about $20,000 in living expenses. That's $20,000 to use as we see fit instead of going into the giant cesspool of corruption that is New York's state and local governments and the public employee's and teacher's unions that they are beholden to.
We too could never even fathom earning $650K and not being able to get by in Westchester County in spite of it's astronomical cost of living. We were getting by on $70K. We bought our home there in 1980 and paid it off in 15 years. Our biggest expense was of course the property taxes followed by health insurance which we paid for ourselves as we are self employed. After those two expenses there was very little left for anything else. Before we became self employed my wife and I both worked for a manufacturer that was located in Westchester County. They packed up and moved down south due to the astronomical costs of doing business in Westchester County and New York State in general.
Obviously the high paying jobs in New York City and it's metro area justify the initial purchase price of a home due to supply and demand. However nothing justifies the amount of property taxes one has to pay in order to keep that home. Renter's too must bear that burden as those taxes are passed on down to them. As a matter of fact all taxes and fees that are placed on businesses and utilities that are located in these high cost of living area's are eventually passed down to the consumers of their products. Which only exacerbates the problem, driving the middle class out or if they stay there forcing them to struggle even harder. If someone earning $650K is complaining about the cost of living, just imagine what it's like for those earning less than $100K?
I feel sorry for those that for some reason or the other are stuck there indefinitely, be it a job or family whatever. One things for certain there are a lot of other places throughout the country where you can have a much better quality of life than in the New York metro area and places like it. Since moving to Arizona it's almost like being on vacation 365 days a year as we are living amongst some of thee most spectacular scenery in the world. We often see tourists from all over the country and from all over the world here on a regular basis. We've made several cross country trips to Arizona, all by rail and have seen a lot of the country. At least for us there's no reason to go anywhere else other than Arizona. At least for us the great American southwest is where it's at. There's nothing like being able to choose where you want to live. Instead of the other way around.
New York State and Westchester County both are heavily Democratic. They rule both the state and county with an iron fist. Same for California another state with an astronomical cost of living. I guess so much for the Democrats being the party of the middle class? They certainly haven't done a God damn thing to make their lives any easier. Just more taxes and regulations which pound them into the ground even further.
Obviously the high paying jobs in New York City and it's metro area justify the initial purchase price of a home due to supply and demand.
Well, yes and no. I would fully expect NYC Metro properties and taxes to be more expensive than, say, rural Nebraska.
I think it's absolutely ridiculous that those pricesare so high that working people and working families have to travel 60 minutes, 90 minutes, sometimes even longer, each way to get to work and back...because they can't afford to live any nearer to work. Nobody should have to commute that far out of necessity. Cost of living and wages should rise and fall together, and while both are higher than average in this area, the cost of living is MUCH higher and the wages aren't high enough to match.
It’s not a 1% income. It’s a .1% income. You are truly elite, even if it doesn’t feel like it. Be proud of yourself. My question is: would your income suffer if you moved? If you moved to the Midwest, you could get a $500K house with all the things you want in a nice area with a great school district. But if your HHI falls to $250K, it might not be worth it. If I were you, I would worry about the school district a bit less. Children with wealthy parents tend to excel, which is why schools in wealthy areas perform better. And you are wealthy. If you instill the right values in your children, they will excel whether they go to Harvard or New York University or Syracuse.
its not a 0.1% income in Westchester by a long shot - and that's where he lives and who he's competing with when having to buy a house etc.
In NY as a whole, you need to make $506k to be in the 1%..I'm assuming for Westchester specifically, it's a lot higher.
This is part of what drives me crazy about our federal tax code. I'm in the highest tax bracket, because by national standards, I'm filthy rich. But adjusted for cost of living here, I'm basically average - or slightly above. I wish the tax code somehow took this into account - although it could get very complicated.
In NY as a whole, you need to make $506k to be in the 1%..I'm assuming for Westchester specifically, it's a lot higher.
This is part of what drives me crazy about our federal tax code. I'm in the highest tax bracket, because by national standards, I'm filthy rich. But adjusted for cost of living here, I'm basically average - or slightly above. I wish the tax code somehow took this into account - although it could get very complicated.
I agree, but I think those are two separate things. When it comes to finding a house, there are a lot of tradeoffs. If you are looking for a place that's completely done and has a quick commute, it's going to be very competitive and you will pay top dollar. If you are willing to spend a few more minutes on the train and take some risk with fixer upper, you can find value. You still need to be making at least $250k+
At some point, gross earnings matter. Your percentage of "take-home" pay may be higher in other parts of the country, but my guess is that you wouldn't have the ability to willingly save $7k/mo like the OP.
All that said, I think taxes in the northeast are exorbitant and a good chunk of it just goes to waste.
Yes, we save a lot. But as I mentioned in my original post, if we upgrade to one of the top-ranked school districts, we will liquidate that extra savings on a home in probably the $1.2-$1.4 million range--a home with taxes around $35k. Ou monthly costs will skyrocket, and we'll probably be unable to save much outside of retirement and 401(k)s. On a 1% income. Now that is some staggering math. I know we could buy something smaller, and shabbier. But am I totally superficial if I'd like a two-car garage, a kitchen that's newer than 1960, and more than two bathrooms?
I don't understand why you need to spend $1.2-$1.4 million to get what you want. You can buy a fantastic home with 4+ bedrooms, 3+ baths with top of the line kitchen and 2 car garage in the north-end (i.e. better part) of New Rochelle for $850K to $950K. Taxes for such a property will be around $25K. Also, you can always buy something cheaper and renovate to your liking. Full scale renovations on a 4 bedroom home with 3 baths will cost between $100K and $150K.
If New Rochelle schools are not good enough, then go to Eastchester. They have 9-10 rated schools. You will only pay $100K to $150K premium to what you would have to pay in New Rochelle. Both towns are a 35 minute ride to mid-town Manhattan on Metro-north.
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