Author Topic: CASE STUDY: Trimming my budget, allocating savings, and HCOL area v. LCOL area?!  (Read 4887 times)


  • Stubble
  • **
  • Posts: 222
Hi everyone! I stumbled across MMM a couple months ago, and voraciously read through dozens of the articles. Further clicking around led me to the forums and I have been lurking for a month reading different questions and responses. I decided to post my own case study, pose a few questions, and look for some answers Ė or at least some suggestions!


Life situation: single, recently turned 26, male, teacher at a private school a bit outside of Boston. No dependents. My girlfriend is a teacher as well; she rents an apartment with roommates a couple miles from me, is gainfully employed, and is slowly learning more about budgets, personal finances, saving, etc!

Gross Salary: $53,984

Pre-tax deductions: medical ($133.41/month); 403(b) - $224/93/month (5% of my gross Ė plus 5% school match); dental ($25.20/month)

AGI: $47,785

Income tax = $9,027/year - $752/month
State tax (5.15%) = just under $2,000/year
Other income (this is not included in my gross salary number above):
-   Stipends at school (all together = ~$530/month pretax):
                o   $1800 baseball coach
                o   $1000 improv comedy teacher
                o   $1800 golf coach
                o   $1250 summer class
                o   $500 miscellaneous tasks/duties
-   Weekly music gig: $130/month

Take home pay/month:
-   (without stipends and extra income): $3,069
-   (with stipends and extra income): closer to $3,400-$3,500 

Current expenses:
-   Rent: $800 (my portion of the 4BR apartment)
-   Non Cable utilities: ~$50
-   Cable/internet: $25
-   Gas (for car): $87
-   Car Insurance: $74 (1 speeding ticket Ė gets removed next spring)
-   Car Expenses: $27
-   Groceries: $128
-   Clothing: $13
-   Eating Out: $120 (I know!)
-   Concerts/sport events: $8
-   Alcohol (bar + liquor store): $44
-   Entertainment: $21
-   Phone: $50 (Verizon family plan)
-   Miscellaneous: $60
-   Gifts: $52
-   Trips: $292*
*I took a four week stadium tour with a buddy this summer (saw 17 different MLB games in 17 different parks Ė it was expensive, but not the norm for me, at all.)

Total monthly expenses: $1851
Monthly earnings: $3,400
Monthly net: $1,549 (just under $19,000/year)

I put $5,500 of my $19,000 net into a Roth IRA every year (see below), and have been stashing the rest. This spring I opened a VTSAX account to the tune of $10,000 (see below).

-   Roth IRA (vanguard target retirement 2050): $36,331.81
-   VTSAX: $9,939.11
-   BoA Savings: $8,024.97
-   BoA Checkings: $13,895.79
-   Public Teacher Retirement (from my 1 year as a public school teacher): $5,280
-   Car (via KBB): ~$6,000 (ten years old, no payments, 70,000 miles)

Liabilities: n/a

Specific questions:
-   Ideas/suggestions for lowering my monthly expenses? I am proud of my monthly expense sheet, given my HCOL area, but I would love to trim where I can. FWIW Ė I have looked into biking to work. Itís 22-24 miles round trip, which is a bit longer than I want. 
-   Where do you advice I put my savings/surplus? I always want 6ish months as an emergency fund (thatíd what my BoA savings is doing. But I have quite a bit of cash just sitting in my checking account. I do like seeing the number and feeling extra secure given that I can access it at any time. But I think it could be put to work better elsewhere. Of course this depends on my future goals. This brings me to:
-   Long term changes: my current relationship (weíve been dating for almost three years) is headed towards engagement/marriage/kids. My family is from the greater Boston area; hers is from Western Michigan (Grand Rapids). At this point, our landing spot is unknown, but it will definitely be one of our hometowns. Thatís why I donít want to buy right now, even though I could, soon, muster up a decent DP. Whatís interesting is the COL difference between our two cities is unbelievable. I do know that we both value being in a position where she can be a SAHM, at least for the pre-elementary school years. Iíve tried running some preliminary numbers, but itís so hard to sift through everything when we are not even married yet, never mind with children. Basically Iím trying to figure out if living in a HCOL location, with a higher salary, would better allow for a SAHM than a LCOL area with a lower salary. For what itís worth, we could get a great 3BR/1BA in Grand Rapids for $80,000-$120,000 (we could almost buy this, for cash, with a few years of hard saving). The same house in the Boston suburbs costs $300,000+. This one is tough because it is part financial, but majority personal/emotional/a joint decision. I do not plan on figuring out the answer to this here, but I really appreciate thoughts!

Thanks everyone!
« Last Edit: August 17, 2015, 03:58:26 PM by mrteacher »


  • Handlebar Stache
  • *****
  • Posts: 1424
  • Location: Metro Boston
Looks like you're in pretty good shape.
How much do you use your phone? Have you looked at any of the Verizon MVNOs?

From a purely financial perspective, estimate the Michigan earnings and expenses, and compare both savings and savings rates between cities. If you can save more in Boston, then consider staying in Boston for a while and then moving to Michigan. If you can both save more and have a higher savings rate in Michigan, it's the better financial choice overall. I have my doubts that you could have a higher savings rate in Boston.

How much do you take advantage of Boston's culture, city life, interesting people, etc.?

We have meetups on the third Saturday of every month. Next month, we're planning a hike. Consider subscribing to the list:


  • 5 O'Clock Shadow
  • *
  • Posts: 6
  • Location: SF Bay Area

Nice to see you here, mrteacher!

As for your spending, nice work. One thing you might consider is revisiting the cell plan. Not sure what your usage pattern is like, but you may have a very good chance of taking it way below $50. Mr. CalFI and I currently run 2 iPhones (no landline) at around $18-$20/mo total (Ting for basic access and rogue non-iPhone texts, iMessage for free texting, Google Hangouts for free voice, and free WiFi in place of data). If you haven't perused it yet, here's the link to IP Daley's Superguide. We are fledgling compared to it:!/msg230579/#msg230579

As for your bigger question around buying a home:

Not sure if you've had a chance to check out MMM's recent rent vs. own post or those on the same subject over at Go Curry Cracker and jlcollinsnh. Definitely not preaching one over the other, but as 3-time homeowners (2 in mega-HCOL SF Bay Area and 1 in Portland, OR) who are now likely renters for life, Mr. CalFI and I found them informative during our last round of decision making.

Keep us posted on your next moves, and great work!
« Last Edit: August 17, 2015, 04:58:00 PM by CalFIornia »


  • Stubble
  • **
  • Posts: 222
Thanks, CalFIornia and velocistar!

I am locked in to a contract on my family plan (w/4 other lines) for the next year or so, at which time I plan to explore other options. I took a hard look at Republic Wireless, but I was not sold. I'm interested to see how RW, and the like, improve/evolve in the next year+.

For the time being, renting is definitely the best option, as a move to Michigan could happen in as few as two years. Or, I could be in Boston for the next 5, 10, 15+. Having the flexibility is key, and my rent, for the area, is reasonable.

I've done some basic research on the Boston/GR split, and it's nuts. I mentioned the home price difference in my OP, and the rent difference is no different: rent for 1BRs in Boston is at least $1200+ - and more typically $1600+. In GR a comparable apartment rents for $600-$800 - half the cost! But, the teacher salaries are lower in GR, too. My $54,000 gross in Boston would be about $43-45,000 in GR. So I might save the same amount each month, but my savings rate would be a lot higher in GR, I think.

Other thoughts? Anyone had a similar decision to make? 


  • Pencil Stache
  • ****
  • Posts: 710
  • Age: 40
  • Location: Washington, DC
Since you and your GF are obviously serious, planning on marriage, and live close to each other, have you considered moving in together?  You could rent a 1 BR, save money, and have an excellent trial run for your future together.


  • Stubble
  • **
  • Posts: 222
Since you and your GF are obviously serious, planning on marriage, and live close to each other, have you considered moving in together?  You could rent a 1 BR, save money, and have an excellent trial run for your future together.

Regardless of the fact that we are both content with and interested in not living together before marriage (or at least until engagement), living together in the Boston rental market would not save us any money. I pay $800 for my share of a 4BR and she pays around $750 for her share of a 3BR. $1550 is the low end for 1BRs in Boston, and the majority are $1600+. We'd be splitting utilities two ways instead of four for me and three for her, so in the end I think it would actually cost us more, or at least the same, to live together. Finances aside, of course, we both love living with friends, and don't see the trial period as a prerequisite to marriage; however, I fully support folks who see that as an important step.


  • Handlebar Stache
  • *****
  • Posts: 1301
  • Age: 39
  • Location: Missouri
Financially I would bet you will come out ahead living in a LCOL area. You'll be surprised how much cheaper everything is in the Midwest (trust me, I went from Minnesota, which I thought was cheap, to an even cheaper area in Missouri). My wife will be staying home when we have children, and it's very doable here, even on a modest salary. We have no interest in living in an expensive area. The wages don't seem to keep up with the costs.

What you will want to think about is will you miss living in a major city like Boston, and will you mind the fact that everyone who lives on either the east coast or west coast will give you shit and look down on you for living in a flyover state.


  • Handlebar Stache
  • *****
  • Posts: 1424
  • Location: Metro Boston
Regardless of the fact that we are both content with and interested in not living together before marriage (or at least until engagement), living together in the Boston rental market would not save us any money.

How about would you be willing to have roommates after you start living together? There's substantial savings and potentially a better social life, but most people don't consider it because they want more control over their surroundings, and it's not culturally accepted. If you can get past those things, it would be to your benefit.


  • Handlebar Stache
  • *****
  • Posts: 1087
  • Age: 33
  • Location: Australia
I'd vote HCOL for a bit longer so you can keep getting the higher wages. Until your kids are actual kids (not toddlers) you won't really care if you live in a house or an apartment, many commenters on the forums have said things along the lines of it's easier having a toddler/baby in a small space. Then when you're ready for a house (perhaps when the oldest is about the start pre-primary) make the move. That puts moving at least 5 years away.
Also being a teacher is there a "commuter suburb" option that gives a combination of low housing prices and high wages. [E.g. we have a commuter suburb 75kms from the city, a lovely suburb right on the beach, where housing is very cheap because it's a dreadful commute into the city, but government wages are the same as elsewhere in the metro area.]
Every time I have crunched the numbers (in Australia) my hometown, considered HCOL (but behind Sydney and Melbourne) comes out way ahead of all the LCOL cities due to the wage differential. I think the general consensus on thee board is work in a HCOL location to benefit from high wages, then FIRE into a LCOL area freeing up home equity.


  • Stubble
  • **
  • Posts: 222
wtjbatman: I've been out to visit my girlfriend's family/friends in Michigan and I definitely noticed a difference in how much 'things' cost. Some preliminary financial projections indicate that I'd save almost as much money, and a dramatically bigger percentage of my income, in the midwest. I could not care less about people thinking that I live in a flyover state.

velocistar: I'd consider that before marriage, but I would not be interested - and I know she would not be - in sharing an apartment with friends/another couple after marriage. I do agree that the savings their would be quite nice, though!

Melody: Good thoughts. Right now it's great that both of us earn a higher wage. I'll think about the 'commuter suburb,' but nothing comes to mind right away.

I did some investigating (public school teacher pay scales can be accessed by anyone). A teacher making around $65,000 in Boston would earn $52,000-$56,000 in the Grand Rapids area. If we save aggressively in the next five years we could buy a house for cash, live mortgage free, and my girlfriend could stay at home with the kids. I know that some folks here tout the benefits of carrying a mortgage and investing the rest, but if I'm looking to keep month-to-month costs down, living mortgage free would be pretty swell, no?

Also important to mention: while I am on board with the idea of FIRE, I love, and have a deep passion for, my job. I would not work for free, but I genuinely look forward to going to work. So, I am not in a rush to get to FIRE ASAP.


  • Stubble
  • **
  • Posts: 222
A couple years back during the application process, I had apps out to a few elite private/boarding schools, but received no offers. It would definitely be pretty neat to have free housing, and ample babysitting options for the kids I eventually have. I do think that living on campus could make for a tough/odd work/life balance, as I really like the physical distance between work and home - even though I love my job!


Wow, a phone plan for fifteen bucks!