Author Topic: HCOL vs. LCOL - Break Even Point  (Read 3020 times)

RideXC

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HCOL vs. LCOL - Break Even Point
« on: September 13, 2015, 01:56:47 PM »
First post, but I should preface this with the knowledge that I have messed around with what feels like hundreds of online COL calculators.  They all vary so much that it's hard to even trust their analysis.  So here's some specifics.

Current Job:

Orange County, CA
Very stabile company and I have very comfortable job stability.  I am considered a young "star" by executives.  They value my opinion and I have a great deal of respect for them.  It's a great job, and I love the work. 
Base Salary = 88,000/year
Bonus = 10% annually but can be as high as 20%.  Historically (I have been there 8 years) it has been between 12-15%
401k Plan they give an 8% match if I contribute at least 6% (I contribute way more than that). They offer all the great Vanguard funds.

Other benefits include High deductible health care plan with HSA, and they contribute $500/year to the HSA.

So for this job, assuming a 10% bonus (low end) and the 8% match, my true salary is just under 104k per year.

Potential Jobs:

There is a company in Nebraska (LCOL and where I am originally from) that would like me to come work for them.   They asked me for salary requirements, but I have yet to tell them (I'm stalling as I want them to first make an offer). 

My problem is that I need to be ready when that offer comes.  If I have a calculated break-even point I can be more prepared. 

The online calculators estimate that in general California is about 30% higher cost of living.  But that is largely swayed by housing (which is about 200% higher in CA, and probably closer to 300% in Orange county).  If I use the 30% value, that means my break even is around 72k. 

The company is much younger, and more global (most employees are remote).  It was in the Inc. 500 a few different times in the last few years.  I need to learn more about their benefit package yet obviously. 

When comparing the jobs, I would not move to Nebraska for equal pay.  I just feel as if the company I am with has given me a lot over the years and has plans for me to do even more - plus I love the work. 

I am looking for help from mustachians to see some different opinions.  I'm not even sure I would move if they offered me equal pay (104k).  That's crazy thought, right? 

I don't necessarily care where I live.   I mean Orange County is great, but I would move for the right job.  I do care about the job itself a great deal.  Thoughts?  Anyone else love their job so much money isnt really a motivator?

« Last Edit: September 13, 2015, 01:59:35 PM by RideXC »

pbkmaine

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Re: HCOL vs. LCOL - Break Even Point
« Reply #1 on: September 13, 2015, 02:10:31 PM »
"It's a great job, and I love the work" does not come around very often. Nor does being considered a young "star".  It seems like you are already in a great situation. There are so many people who hate their jobs. I would think long and hard before moving, unless family circumstances make it important for you to do so. Once you are FIRE, Nebraska would be a great place to live.

Cassie

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Re: HCOL vs. LCOL - Break Even Point
« Reply #2 on: September 13, 2015, 02:13:38 PM »
Loving your job & the work environment is huge!  I would stay put.

obstinate

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Re: HCOL vs. LCOL - Break Even Point
« Reply #3 on: September 13, 2015, 02:27:48 PM »
Your reluctance to leave probably reflects your belief that there is much more opportunity in your current role, which seems not unreasonable.

JLee

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Re: HCOL vs. LCOL - Break Even Point
« Reply #4 on: September 13, 2015, 02:32:41 PM »
Based on your post, I would stay.

How much money would they have to pay you for you to go without hesitation?

RideXC

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Re: HCOL vs. LCOL - Break Even Point
« Reply #5 on: September 13, 2015, 06:59:02 PM »
Based on your post, I would stay.

How much money would they have to pay you for you to go without hesitation?

That's what I'm trying to determine.  I mean most people would think I am crazy to not take it if they even offer something close to what I get now.  That's essentially a 20-30% raise. 

pbkmaine

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Re: HCOL vs. LCOL - Break Even Point
« Reply #6 on: September 13, 2015, 07:02:46 PM »
No, most people here would not. You seem to have close to an ideal work situation and those are exceedingly rare.

wordnerd

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Re: HCOL vs. LCOL - Break Even Point
« Reply #7 on: September 13, 2015, 07:05:49 PM »
Unless being near your family is very important to you, I would stay put. You sound satisfied (and well-compensated) in your current role. To your question of a "break-even point," it doesn't seem to matter since you say you wouldn't take the job even at your current compensation level. And, no, that's not crazy; it's a reflection of your values/satisfaction with your situation.

The point MMM is to optimize your happiness through financial freedom, and it seems you're happy. Don't confuse the means (maximizing savings) with the ends (being happy).

Rein1987

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Re: HCOL vs. LCOL - Break Even Point
« Reply #8 on: September 13, 2015, 07:49:31 PM »
I vote for stay.

I have switched employers a few times, and I found that staying with a good team is more important than compensation for me. In fact, my previous employer was a nightmare for me, so I was very grateful that I can find a wonderful team now.

JLee

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Re: HCOL vs. LCOL - Break Even Point
« Reply #9 on: September 14, 2015, 09:42:00 AM »
Based on your post, I would stay.

How much money would they have to pay you for you to go without hesitation?

That's what I'm trying to determine.  I mean most people would think I am crazy to not take it if they even offer something close to what I get now.  That's essentially a 20-30% raise.

Sort of, but not really.  I think that the MMM crowd is less impacted by HCOL areas, so the higher salary is more advantageous for us (e.g. I am moving to an area with a 35% higher COL but I'm renting a room in a house for $700/mo instead of renting a house for $2000).

AZDude

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Re: HCOL vs. LCOL - Break Even Point
« Reply #10 on: September 14, 2015, 11:54:42 AM »
I would suggest you stay. You like your job. That is very rare.

Just a scenario. Right now you have $0 to your name, but you have your job. CoL is 30% higher in California(seems low) than in Nebraska(I know nothing about this state).

$104K - salary per year, lets assume you are saving 50% in various places. You are on track for FI in a very rough estimate of 12 years.

With the same salary, and the lower cost of living, you would be FI in about 9 years. I think your break point is about $88K a year. Any more than that, and your FIRE date starts going down. Anything less and you are working longer. Now, again, this was really quick math with lots of assumptions, so may want to do your own calculations to know for sure.