Author Topic: Evaluating job opportunity in higher COL area -- 2x the pay, but 2x the cost?  (Read 1076 times)

EmersonsGiant

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Hoping posters who have faced this decision before can weigh in and help me gain clarity.

Current HHI: 200k
Current pay: 130k
Spouse pay:70k

My job: love what I do, meaningful work,  mostly great clients.   Company has some dysfunction,  but I am somewhat sheltered from it.  I have tons of flexibility over my schedule and working from home (even during non covid times) Very decent chance I will make 400k in 8-10 yrs.  No benefits other than 4% 401k match.  Concerned my company might be bought out at some point that could change the flexibility and reduce the future anticipated pay. 

Spouse's career is very stable. Provides low cost health insurance.  Company used to put 12% of comp into retirement but has recently eliminated that benefit.  Spouse works right next to kid's daycare,  very convenient.

Net worth is approx 650k. We live in a 500k house,  30 yr mortgage @ 3.25. Owe 350k. 150k of equity. Nice neighborhood.  Close to both our families who we see often. Lots of friends we've known for years,  but see occasionally since everyone is busy with young kids.  Save 32k/yr into retirement.  10k/yr into 529s. No debt other than mortgage.  45k in emergency funds.

Job I am considering is in Stamford CT, commuter town for people who work in NYC.  Similar homes to where we live now are 1M to 1.5M.  Hard to gauge how groceries,  gas, etc. other expenses will change.

Base pay would be 300k, with equity of company earned over time.  After 8-10 years, comp would be around 1M a year.   More stressful work but will learn a lot.  Spouse may be able to keep current job and work remotely but otherwise might be in for a small train commute to get a similar gig.  Might decide to switch gears and get into a different career.

Kid would be going to 20k/yr private school if we stay in our current town.  Will go to public if we move to CT.

Goals are for option to retire at age 50 spending 80k yr with no mortgage.  Will pay for 4 yrs undergrad for kid.  Spouse and I are 37, kid is toddler.  No more kids on way.

Help me decide! Should we stay or should we go?





Smokystache

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I have a bias in my own life for reducing hassle and time spent working. And just having a birthday (mid-40s) I continue to see more and more importance in time with family (I happen to get along well with my family and my in-laws). Based on your post you already know this but - be sure to recognize the value of things like seeing family, time available to be spent with your children (especially before age 18), ability to have control over one's working life and schedule, partner being happy with their work/life situation, etc.

And also, if things worsened at your current workplace, you could still look for other opportunities. So this isn't a "I'm choosing to stay put forever" it's a "I'm choosing not to pursue this 1 opportunity". I think there is a strong general trend in the world to always push for more, bigger, better! - but they tend to focus only on job title and salary. It sounds like you have a very reasonable shot of making $300-400k in a place you and your partner seem happy, with significant control over when/where you do your work, close to family, and with time to actually see your child grow up. I'm not messing with that situation. It sounds like your life is an index fund - where you are getting 90-95% of the life you want; but people come by and say "You should go for the 99th percentile!" and don't mention that the change could give you that ... or could drop you to 50% or less.

LWYRUP

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Yeah, I know this may sound crazy, but I am also generally in the "if it ain't broke don't fix it" camp.  You seem, by your own description, to be pretty happy with how things are going.  If you change, it could be a change for the better or a change for the worse.  I am going to assume this new job is going to be with some sort of financial fund given the pay and location.  Have you worked in that environment before?  Do you have a sense of what "more stressful" entails?  Could you balance that with kids, and for how long until you burn out? 

I can tell you there are a certain jobs in the legal industry that I would quit tomorrow to do and certain jobs that I would never do no matter how much I was paid.  I assume your industry is similar. 

I would research the culture of this place first.  People don't usually give employees $1 million without taking their pound of flesh, so find out what it is and thin about how long you would need to put up with it to get what you want and what you would do when you have it.  Also relevant to me would be how far you are moving, because of your family situation.  Will your move be 1 hour drive?  5 hour drive?  This will matter in terms of keeping up family connections. 

By the way, one way people deal with HCOL is that they don't buy "the equivalent house."  I live in an $800k split level built in the 50s.  (It is a nice, well-constructed split level, but still).  In most of the country I could buy a fancier house for half the money.  But that was what I did to live close to the city in a high performing school district without spending $1.5 million.  Sometimes I still get sore about the house, but just because of cost, not because it's not fancy enough or whatever.  I'm SURE you can find a decent place in SE Connecticut for $600-$800k (and probably a lot less if you want to go full mustache). 
« Last Edit: June 20, 2020, 01:26:40 PM by LWYRUP »

SailingOnASmallSailboat

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There are often hidden costs in a move like the one you're contemplating, some of which as a mustachian you might be immune to. But "keeping up with the Joneses" is a real thing for that area. From schools to cars to kids' activities to which restaurants (and how often) and more.

My brother lives in Fairfield, with a high powered job in NYC (now WFH with the virus - his company has said they're looking at more of that going forward). He used to spend 3 hours of his day on the train commuting. Has 3 kids, ages 11-15. No amount of money would be worth that to us.


chesebert

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Op, you only save $40k out of 200k salary? Lol you really need that $1mil a year salary to retire...

FINate

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OP, you have ~13 years until your planned retirement at 50. For $80k income in retirement you need about $2M invested. Not NW, college funds and home equity doesn't really count unless you plan to downsize by a lot.

However, your current NW is only $650k, of which $150k is home equity. So at best you have about $500k invested. By my spreadsheet math you need to save and invest a little over $60k/year for the next 13 years to hit your goal of $2M @ 50, and this assumes a steady 10% y/y stock market return all 13 years.

In short, your spending (present and future) requires that you earn a lot more to make your goals. You have an option to do so, yet I agree with others on this thread: this will come at a terrible cost to your health and your family.

Furthermore, if you're only saving $40k/year now it's unlikely that you'll save a higher percentage of a higher income in a HCOL area. Taxes, expenses associated with a $1M-$1.5M house, and lifestyle inflation will consume much of the increase.

To be blunt, I think you should reassess your expectations. I cannot figure out why anyone in retirement would need $80k/year with no mortgage and a single child with dedicated college savings. And you should be able to save a lot more than you already are.

Get your savings rate up and/or get your retirement spending down and your goal of retiring at 50 is very achievable, even without making a move to a HCOL area. IMO the decision to move should be evaluated separately and should focus on your goals for things like career development vs. work-life balance, and so on.

EmersonsGiant

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I have a bias in my own life for reducing hassle and time spent working. And just having a birthday (mid-40s) I continue to see more and more importance in time with family (I happen to get along well with my family and my in-laws). Based on your post you already know this but - be sure to recognize the value of things like seeing family, time available to be spent with your children (especially before age 18), ability to have control over one's working life and schedule, partner being happy with their work/life situation, etc.

And also, if things worsened at your current workplace, you could still look for other opportunities. So this isn't a "I'm choosing to stay put forever" it's a "I'm choosing not to pursue this 1 opportunity". I think there is a strong general trend in the world to always push for more, bigger, better! - but they tend to focus only on job title and salary. It sounds like you have a very reasonable shot of making $300-400k in a place you and your partner seem happy, with significant control over when/where you do your work, close to family, and with time to actually see your child grow up. I'm not messing with that situation. It sounds like your life is an index fund - where you are getting 90-95% of the life you want; but people come by and say "You should go for the 99th percentile!" and don't mention that the change could give you that ... or could drop you to 50% or less.

Thank you for that well reasoned response.   You are speaking to exactly what I am reluctant about: why mess with a good thing? I have 95% of what I want out of life and I am extremely appreciative.  I know life can change on a dime.

I do have some nebulous concerns about the job situation changing and not having other great options.  Every year I build my career with my current company those golden handcuffs get a little tighter and this new opportunity isn't interested in my current book, only my skills and experience, so it is a unique opportunity.

I fully admit that there is a little bit of ego involved as I approach 40 and feel like this is my shot at the "big job" that I have been building towards my entire career.   It's incredibly flattering to have been recruited for it.  I feel like... if not now, then when?

EmersonsGiant

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Yeah, I know this may sound crazy, but I am also generally in the "if it ain't broke don't fix it" camp.  You seem, by your own description, to be pretty happy with how things are going.  If you change, it could be a change for the better or a change for the worse.  I am going to assume this new job is going to be with some sort of financial fund given the pay and location.  Have you worked in that environment before?  Do you have a sense of what "more stressful" entails?  Could you balance that with kids, and for how long until you burn out? 

I can tell you there are a certain jobs in the legal industry that I would quit tomorrow to do and certain jobs that I would never do no matter how much I was paid.  I assume your industry is similar. 

I would research the culture of this place first.  People don't usually give employees $1 million without taking their pound of flesh, so find out what it is and thin about how long you would need to put up with it to get what you want and what you would do when you have it.  Also relevant to me would be how far you are moving, because of your family situation.  Will your move be 1 hour drive?  5 hour drive?  This will matter in terms of keeping up family connections. 

By the way, one way people deal with HCOL is that they don't buy "the equivalent house."  I live in an $800k split level built in the 50s.  (It is a nice, well-constructed split level, but still).  In most of the country I could buy a fancier house for half the money.  But that was what I did to live close to the city in a high performing school district without spending $1.5 million.  Sometimes I still get sore about the house, but just because of cost, not because it's not fancy enough or whatever.  I'm SURE you can find a decent place in SE Connecticut for $600-$800k (and probably a lot less if you want to go full mustache).

Thank you @LWYRUP.   The culture of the new company is of utmost importance and something I am still digging into.
 Partners can be great... or they can make life absolutely miserable.   I am very familiar with the work itself and while it has its stresses,  it can also be very rewarding.

You are absolutely correct that we don't have to buy an equivalent house... and if I take the job, we would definitely rent for a while until we understood the area and could pick off a good deal.  I was trying to use the housing market for a proxy for expenses as a whole in the area, to get a sense of whether we would really be "getting ahead".

We would be 4 hours from family... this is a big sticking point. No more weekly get togethers with grandma for my kid, but still close enough to come down for the weekend as a family.  I am also hoping once covid settles down or we get a vaccine,  we will be close enough to NYC for that to draw some weekend visitors.


EmersonsGiant

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There are often hidden costs in a move like the one you're contemplating, some of which as a mustachian you might be immune to. But "keeping up with the Joneses" is a real thing for that area. From schools to cars to kids' activities to which restaurants (and how often) and more.

My brother lives in Fairfield, with a high powered job in NYC (now WFH with the virus - his company has said they're looking at more of that going forward). He used to spend 3 hours of his day on the train commuting. Has 3 kids, ages 11-15. No amount of money would be worth that to us.

@SailingOnASmallSailboat - thanks, it is always a good reminder to avoid keeping up with the joneses.  good point.   I have extended family that grew up in Greenwich and they have been down on how...standoffish..the area can be.  I think great people can be found everywhere, but sometimes it can take a while.

It is good to know about the commute into NYC.  While my gig would be in downtown Stamford,  my spouse was considering whether he would have to train into the city to find a similar job. I would never want him to spend 3 hours commuting.

EmersonsGiant

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Op, you only save $40k out of 200k salary? Lol you really need that $1mil a year salary to retire...

@chesbert - ouch. Right in the face.

I agree our savings rate could be better.   It actually is somewhat higher...we have been saving some sinking funds for a few short term anticipated expenses like buying a car for cash. 

Currently I am driving one with 230,000 miles on it worth less than a thousand bucks,  so one of these days it's going to die on me. 

LWYRUP

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In a HCOL, the things I have found to be the most difficult to deal with are:

1.  Housing Costs.
2.  Costs for any type of personal service, but especially things like daycare, preschool, summer camps, etc.  Also for skilled labor (e.g. electrician), though for that sometimes you will get people who live 1.5 hours away and drive in, and they bump up their rates to account for commuting time. 
3.  Higher taxes.

Costs for things like groceries, amazon junk, gas, etc. are all on par with national averages.  (Basically, anything trucked or piped in from elsewhere is the same, or sometimes even cheaper if you are in the suburbs because there is an enormous variety and so more competition than a smaller city or rural area, without quite as much challenge in trucking it in and out than, say, downtown Manhattan.)  Healthcare is also the same, I think just because healthcare workers like living in big cities so they charge a premium to live other places.  In my particular county I also need to deal with like a million speeding cameras (I think my jurisdiction gives out like 50% of the camera tickets in the country or something absurd like that) and high cost heavily regulated alcohol, but that's just my own little cross to bear and not as much of an issue in SE Connecticut.  But I think you have higher property taxes so that's actually more material. 

You can defray #1 by buying a smaller house and #2 by just purchasing fewer personal services (doing more things yourself). 

HCOLs frequently have some benefits, such as good public transit, good public libraries, good public parks, well funded schools, free festivals and parades, free museum tickets available from the local library if you book in advance, etc.  So there are some corresponding benefits, though not enough IMO to outweigh the costs, at least for a family.  Living to me seems easiest in popular "secondary cities" with good economies (e.g., Columbus, Ohio).  I live where I do mostly for family and partly for maybe misguided nostalgia (I grew up here, so it's just home) and partly because I'm here now and moving with kids is hard.  But I don't actively recommend it. 
« Last Edit: June 23, 2020, 12:58:19 PM by LWYRUP »

EmersonsGiant

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OP, you have ~13 years until your planned retirement at 50. For $80k income in retirement you need about $2M invested. Not NW, college funds and home equity doesn't really count unless you plan to downsize by a lot.

However, your current NW is only $650k, of which $150k is home equity. So at best you have about $500k invested. By my spreadsheet math you need to save and invest a little over $60k/year for the next 13 years to hit your goal of $2M @ 50, and this assumes a steady 10% y/y stock market return all 13 years.

In short, your spending (present and future) requires that you earn a lot more to make your goals. You have an option to do so, yet I agree with others on this thread: this will come at a terrible cost to your health and your family.

Furthermore, if you're only saving $40k/year now it's unlikely that you'll save a higher percentage of a higher income in a HCOL area. Taxes, expenses associated with a $1M-$1.5M house, and lifestyle inflation will consume much of the increase.

To be blunt, I think you should reassess your expectations. I cannot figure out why anyone in retirement would need $80k/year with no mortgage and a single child with dedicated college savings. And you should be able to save a lot more than you already are.

Get your savings rate up and/or get your retirement spending down and your goal of retiring at 50 is very achievable, even without making a move to a HCOL area. IMO the decision to move should be evaluated separately and should focus on your goals for things like career development vs. work-life balance, and so on.

@FINate - thanks.  You bring up a great point.   I got to 80k by looking at my current spending and lopping off daycare and mortgage payments. Even though my goal age for financial independence is only 13 years away, so much will change in my stage of life that it's really hard to specifically envision what life will look like and how much it'll cost. 

More work needed.

Thanks.

MrThatsDifferent

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Stay. Everything in your life is perfectly optimized now. The changes you need to make are how you can save and invest more. Do a proper case study and let others work with you on that. Chasing that extra money will cost you so much that matters more. And by your own admission, your pay at your current role will increase substantially in 8-10 years. Youíre on track and your family is happy. Donít sacrifice that or your child being connected easily to both families if that is a source of comfort and strength. Revisit your savings now and what youíll need in retirement. And think about what your family really needs.

FINate

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@FINate - thanks.  You bring up a great point.   I got to 80k by looking at my current spending and lopping off daycare and mortgage payments. Even though my goal age for financial independence is only 13 years away, so much will change in my stage of life that it's really hard to specifically envision what life will look like and how much it'll cost. 

More work needed.

Thanks.

$80k on top of mortgage and daycare?! That's $6700/month of spending beyond housing and childcare. Utilities and food for 2 adults and a kid shouldn't be very much. Where's the money going?
« Last Edit: June 23, 2020, 01:43:40 PM by FINate »

Laura33

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You guys make a metric shit ton of money.  Something like 4x the median HHI.  You do not need more money.  If your finances aren't where you want them to be on $200K/yr and growing, the problem is on the outflow side, not the income.

You have also wisely used your metric shit ton of money to build a lifestyle that you like for a bunch of different legitimate reasons, most of which have nothing to do with money.

So really, what you are asking is whether you should trade your current metric shit ton of cash + lifestyle + area for an opportunity to make an extra metric shit ton of cash that you don't actually need, at the cost of the very lifestyle you worked so hard to build.

What the fuck are you thinking?

Look.  Money is supposed to serve you, not the other way around.  Your monetary goal should be to have sufficient money to support the life you want to lead.  Congratulations, you've done that!  When you have already achieved that goal, why give it up?  So you can start all over again, making even more money, in the hope that someday you'll once again be living the kind of life you want to live -- IOW, getting back to where you already are?  You need to separate the utility of having that extra money from the ego-stroke of making all that money -- because, trust me, that ego stroke fades, and then you need the next raise/bonus for the next hit, and the next one after that, and pretty soon you're sprinting up that hedonic treadmill as fast as you can go, and "happiness" a/k/a ego-stroking is always one more step away.

Now, if you're not living the life you want, that's another issue entirely.  If you are jazzed by the work opportunity and think the new place will help you develop skills you can't now and do more fun/engaging/exciting work and achieve longstanding career goals that are not preceded by a dollar sign, then by all means, go for it!  Or if you really dislike your current job, and you're willing to do whatever it takes to shorten your working life by several years, then again, go for it.  But that's not what I hear you saying. 

Tl;dr:  you seem happy now.  Why fuck with that? 

affordablehousing

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It sounds like you might be trying to talk yourself out of the move, but I think it really comes down to the notion of what would fulfill you the most over the next many years. You've thrived where you are, and I fully suspect you'll thrive if you make the change. There's always a way to find what you want, wherever you are, and it's not like you aren't being given the tools to buy what you'd need in CT. I would be honestly more wary of your projections of future salaries at both of these jobs. Not sure what industry you're talking about but lots of industries with quick pay escalation (banking, law, tech, meds) have lots of potential pitfalls that can snag even talented or politically savvy people. I wouldn't get too forward looking in my projections.

I would think, making a big change like that, that if you can't imagine yourself doing the job for a long time, and it's just to get you over the hump to a quick retirement, it might not be worth making the move.

Broadway2019

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OP, I think you will get better responses on bogleheads.org as that is more suited for your income level. I will be the outlier here and say DO IT! I recently was in the same situation and moved cross country to make double. I have no regrets and wish I did it sooner. I am able to save more and one thing people donít talk about enough is it sets you up for more money in the future.

Future jobs, raises, etc will all be based on the new baseline of $300k or more. I thought people were crazy to move somewhere and spend 2x house costs however with my new income, I save more then double even with the higher costs. Also, look at it as an adventure for you and your family plus a chance to explore a new area.

duyen

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DO IT.

I understand mustachianism and low stress lifestyle over money. But first you need to build that money base. If you were in your mid 40s, I might have suggested no but you still have good 5-10 years when you can (and should) maximize your earning potential.

As others pointed, definitely you need to work on your savings rate. Save aggressively, earn aggressively and reach your goals first. You can always move back to your current low stress job if things don't work out. Having your new company on your resume also will help.

Villanelle

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Op, you only save $40k out of 200k salary? Lol you really need that $1mil a year salary to retire...

@chesbert - ouch. Right in the face.

I agree our savings rate could be better.   It actually is somewhat higher...we have been saving some sinking funds for a few short term anticipated expenses like buying a car for cash. 

Currently I am driving one with 230,000 miles on it worth less than a thousand bucks,  so one of these days it's going to die on me.

Then what the heck are you spending all that money on?  You drive an old car, so evidently nearly nothing is spent on vehicles.  Where on earth is your money going?

You are asking the wrong questions.  Instead of looking at what job you should keep/take, look at the massive leaks in your budget and plug those.  Then, regardless of what you do about this job, you will be far, far better off.  You are spending $180,000 a year!  You are spending nearly $7,000 a month *in addition* to childcare and mortgage.  That's absolutely crazy!  At half that, you'd be spending much more than many people here, even those not in low COL areas. 

Track every penny set budget amounts for specific categories and **stick to them**.  Especially the categories where you waste a lot.  I'm just guessing, but for most people that is eating out, clothes, drinking, and "entertainment" (movies, tickets, admissions, activities, etc.).   And travel. And kid activities.  For that last, cutting back can feel stingy and mean, but your kids will be just as happy with cheap and free activities and courses and with training with a former Olympic gymnast, Juilliard dancer, or World Series pitcher.  And you will be teaching them a lot of great life lessons so that they are set up not to have the same insane budget that you currently do.  Financial responsibility and sound financial habits is far, far, far more of a gift than private tennis lessons, 2-3+ activities at any given time, and a traveling dance/soccer/whatever team.

And for travel, it's easy to do cheaper and simpler.  Do a smaller, basic trip every other year.  Camp (or cabin camp, do a rental RV, etc.).  If travel is your thing, you can do it cheaper and more simply.

If I'm off base on those things, then it's something else.  (Or somethingS else, because damn, that's a lot of money.)