Author Topic: HCOL and salary  (Read 2580 times)

DEL

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HCOL and salary
« on: October 14, 2015, 08:52:36 PM »
I live in an area where the cost of living is relatively fair. I have always wondered if people living in HCOL locations (like DC, New York, West Coast) have proportionately high salaries - is it much higher to justify / accommodate their HCOL? Is there a way to find that out?

My wife and I are thinking of moving in the near future and that question always popped in my head. I entertain the idea of getting a higher salary (in a HCOL area) while finding a way to hack our costs down as much as possible. We would then move back to a low cost location for ER.

DaveR

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Re: HCOL and salary
« Reply #1 on: October 14, 2015, 10:05:48 PM »
In general, HCOL areas have higher median salaries. Are they "proportionately high?" Not necessarily. HCOL areas are generally housing-driven, but not completely. And salaries vary by industry, so a high paying industry in a HCOL may not be proportionately higher in a HCOL area than an LCOL area.

There are a number of COL calculators out there on the web. And there is a ton of government data (bls.gov) that will give you lots of details about prices and wages.

And yes, your plan is viable: higher salary in HCOL (with hacked expenses, transportation being a big saver) and then FIRE to LCOL. 

aspiringnomad

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Re: HCOL and salary
« Reply #2 on: October 14, 2015, 10:52:15 PM »
In general, HCOL areas have higher median salaries. Are they "proportionately high?" Not necessarily. HCOL areas are generally housing-driven, but not completely. And salaries vary by industry, so a high paying industry in a HCOL may not be proportionately higher in a HCOL area than an LCOL area.

There are a number of COL calculators out there on the web. And there is a ton of government data (bls.gov) that will give you lots of details about prices and wages.

And yes, your plan is viable: higher salary in HCOL (with hacked expenses, transportation being a big saver) and then FIRE to LCOL.

I agree with all of this, especially with housing being the big driver and transport potentially being little to no hit to your budget if you're relatively central in a HCOL area and own a bike. For housing, there are deals to be found and workarounds if you are patient and resourceful. I had a great deal in an amazing location that the landlord discounted heavily because it was not up to code (no central heat), but I gave it up pre-MMM to buy a regular, market-rate condo. It worked out okay because I've stayed in the condo a long time and it's appreciated nicely, but my advice would be to buy a foreclosure or find a rent-controlled, subsidized, or otherwise discounted rental and stick with it until FIRE. Except for housing, all other costs are pretty easy to hack. You may come out ahead regardless via salary increases unless you're already making very good money in the LCOL area. But housing makes the biggest difference in a HCOL area.

john c

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Re: HCOL and salary
« Reply #3 on: October 14, 2015, 11:42:24 PM »
The only wrench in your plan is if you have kids.  HCOL areas are bifurcated; really great areas with world-class schools, or crappy areas with abysmal schools.  You need to live in an expensive area (good schools add $200k to the price of a home in my area) or send your kids to private school.  Plus, the only way HCOL areas work for you is if both of you have extremely high paying jobs. 

Villanelle

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Re: HCOL and salary
« Reply #4 on: October 15, 2015, 12:18:05 AM »
It all depends.  And there are studies out there that rate cities by affordability, rather than COL, which tends to make more sense.  IIRC, San Diego was #2 on a recent "least affordable cities in the US" list I read.  (Google brings up a bunch of lists, all of which seem to vary slightly.)  That means it beat either NYC or San Francisco.  While housing (and some other things) are cheaper in SD than in some other cities, salaries aren't proportionate and it becomes more difficult to live in San Diego.

Of course, if you live in a city with higher COL, even if you save a smaller % of your salary, that % may still equal a higher dollar amount, so if you are planning to retire in a cheaper place, you may come out ahead.  But regarding your question, no, it is not safe to assume that salaries are proportionately higher in high COL areas.  They could be proportionately higher, lower, or about the same as median and low COL areas/salaries.

Retired To Win

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Re: HCOL and salary
« Reply #5 on: October 15, 2015, 08:57:02 AM »
I live in an area where the cost of living is relatively fair. I have always wondered if people living in HCOL locations (like DC, New York, West Coast) have proportionately high salaries - is it much higher to justify / accommodate their HCOL? Is there a way to find that out?

My wife and I are thinking of moving in the near future and that question always popped in my head. I entertain the idea of getting a higher salary (in a HCOL area) while finding a way to hack our costs down as much as possible. We would then move back to a low cost location for ER.

Check out city-data.com  Anything you want to know about a particular city, you are going to find there.

And your plan to sock it away at a job in an HCOLA area and then get the hell out is absolutely doable and WAY smart!

Good luck.

honeybbq

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Re: HCOL and salary
« Reply #6 on: October 15, 2015, 09:17:26 AM »
When I moved from the midwest to Seattle, my house was 2x as much, but I only received 1.35x the salary. YMMV.

aetherie

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Re: HCOL and salary
« Reply #7 on: October 15, 2015, 12:22:59 PM »
Datapoint: I moved to a HCOL area (outside DC) for my first job out of college. My starting salary was about 1.5x what I could have reasonably gotten back home, and rent was also about 1.5x what I had been paying.

I'm a red panda

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Re: HCOL and salary
« Reply #8 on: October 15, 2015, 12:30:33 PM »
Quote
I have always wondered if people living in HCOL locations (like DC, New York, West Coast) have proportionately high salaries

In theory, my company has a policy of paying a higher salary for the same position if it is located in New York City.
In practice, they had to aggressively recruit many of the Iowa employees, and thus the supposed percent difference doesn't necessarily exist the way it was intended.