Author Topic: Mustachians in the city - Urban living  (Read 11775 times)

fruplicity

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Mustachians in the city - Urban living
« on: March 27, 2012, 05:49:51 AM »
I'd love to start a thread for Mustachians who live in major metropolitan areas where COA tends to be way higher than most other areas of the country (unless there already is one - point me in that direction!)

What are your best tips and advice on lowering costs and living sustainably in the city? (I thought of this thread when I read about someone in Indiana renting a 4 bedroom house for $550 a month telling someone in DC that 1500/mo is too much - well duh if you live in Indiana!!! (no offense to the poster - good for them for living in such a low COA area! I just think this is amusing).

Mine are:
- rent as low as you can go in a "transitioning" neighborhood (that you still feel safe in of course) - we pay 1200/mo for 2-bdrm which is at least 300 less than people with comparable apartments elsewhere (who often scoff at our neighborhood).
- be comfortable with long-term renting because housing/condo prices/value are ridiculous (and we don't think we'll stick around long term)
- be comfortable not living the typical "city life" you see peers doing and in movies (going out all the time to fancy bars/restaurants/shows, shopping at the fancy malls/stores, etc)
- take advantage of public transpo (it amazes me how many people refuse to take public transpo - trains are usually more acceptable than buses)
- walk as much as possible

Things I could do but don't:
- get rid of (13 year old) car (all the usual excuses - job is twice as long a commute by public transpo which I try to take at least twice a month anyway, we like to take day trips, frequent visits to family 2.5 hrs away, etc)
- bike more (I do a little, not nearly enough)
- take advantage of farmer's markets/CSAs vs. grocery store (I really need to get going on this)
- live with roomates (been married for a few years but prior to marriage we did share housing with roomates = WAY cheap)

This is all I can think of right now... but I know there's more!

shedinator

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Re: Mustachians in the city - Urban living
« Reply #1 on: March 27, 2012, 06:10:31 AM »
Get by with minimal space. A married couple only REALLY needs a studio apt, or a single room in a house. Unfortunately, legislation in most places requires a minimum of 2 bedrooms for a 3 person family (max of 2 people per bedroom), but having more than the minimum required space in an area where rent is so high is usually a bad idea.
Take advantage of the larger population, and the corresponding larger variety on Craigslist.
Recognize what's too expensive locally. A lot of city businesses charge premium prices, and you can get the same thing for much less if you're willing to do some searching. People in expensive places also tend to overvalue their possessions, which can make searching on Craigslist a fun adventure.
Avoid the tourist traps. Stay away from the parts of the city that are 5% cultural education and 95% retail stores, unless you're REALLY there for the 5%.
Do stuff for free. Nearly every city has a handful of free attractions, not to mention neat stuff like street performers and public parks.

veronica mars rover

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Re: Mustachians in the city - Urban living
« Reply #2 on: March 27, 2012, 07:44:25 AM »
Gah, the forum ate my reply!

I just wanted to note that in my city, the mom & pop, "rundown" grocery store in my neighborhood gets its produce from some of the same farmers that sell at the farmer's market.  So it's actually significantly cheaper to buy produce from the grocery store than from a CSA or the farmer's market, even though it's the exact same product

velocistar237

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Re: Mustachians in the city - Urban living
« Reply #3 on: March 27, 2012, 09:50:28 AM »
Be content with your school district.
Rent out your place on AirBnB while you're gone (I haven't tried this).
If you're planning to stay, don't dismiss buying, but definitely be patient and objective. Still, renting forever is probably better.
Become a property manager.
Share internet with neighbors, if legal and practical.
Other collaborative consumption.
Keep your life as local as possible.
Second-hand stores have a lot more gems in urban areas.

palvar

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Re: Mustachians in the city - Urban living
« Reply #4 on: March 27, 2012, 10:11:56 AM »
I wish I could bike more here in Philly, but drivers/buses are so aggressive that it's really terrifying to do so.  Also, our job market is bad enough that almost all of my friends commute out of the city for work. 
/end of rant

Bakari

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Re: Mustachians in the city - Urban living
« Reply #5 on: March 27, 2012, 10:20:55 AM »
You know, I was just thinking about this two days ago, after reading a (ridiculously basic) book on FI - "Live Well on Less Than You Think" (btw, I definitely do NOT recommend it to anyone reading MMM; its actually a step backwards)

The one interesting thing I learned is that income rises for all types of jobs as cost of living rises, but it doesn't rise proportionately with COL. 
And, that the area I live in (the San Francisco - Oakland - San Jose metropolitan area) is by far the most expensive area in the country to live (probably in the world!) - about 2x the national average, and significantly more even than NYC (I had always thought we were 2nd to NYC)

We have the highest average incomes at all levels of jobs, but the COL is so high that we have one of the worst income to COL ratios.  (incidentally, the one place we think of as the most depressed and pathetic: Detroit MI, actually has one of the best income to COL ratios)

What that means (to me at least) is, that IF you can figure out how to live way below the areas average COL you can take advantage of the high average income and have the best of both worlds!

I doubt I could charge people $40/hour + $1/mile + expenses for doing stuff like hanging pictures, changing light bulbs, trimming hedges, and taking away old junk to resell, and still have a loyal customer base of repeats and referrals, if I lived anywhere else (I do actually do legit handyman work frequently, but I also get hired for stuff like that surprisingly often)

My girlfriend and I live in an RV in a small RV park, for $485 pr month (which we split 50/50.)
We spend about $150/mo ea on food, I pay $134/mo for insurance (combined, health, auto, and RV - which acts like homeowners), and $130/mo on utilities (electricity, water, internet, cell phone) - for a grand total recurring living expense of about $1000.
When I do go out to eat, that most often means a $3 super burrito w/ free chips and salsa from the fake truck about 1/2 mile from my house.

I looked into buying a house after the bubble burst, but even then, in the worst neighborhoods, when I plugged in the numbers, I would have never come out ahead compared to the rent I'm paying now. 

I'm thinking when I have a decent down-payment built up (without tapping my IRAs) I may buy a house to rent out to other people, while continuing to live in my RV.

nondualie

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Re: Mustachians in the city - Urban living
« Reply #6 on: March 27, 2012, 12:18:24 PM »
Great topic:

Here are some things we're doing -

1) chose to live close to work and on bus lines to from major areas and close to grocery store / library

2) one car, two bikes

3) take advantage of free or low-cost fun in the city (parks, tea houses, etc.)

4) take advantage of loss-leader happy hours for fun nights out on the cheap

5) generally try to alter expectations compared to "neighbors" but still dress decently by shopping loss-leader clothing and other sales

6) look for unique city-ways to earn extra income: personal trainer, dog walking, cat sitting, baby-sitting, and other misc moonlighting opportunities that are easier to do in a condo building than in the suburbs


We are relatively new to MMM, though have been longer-term savers instead of spenders anyway..the adjustment is from saving 10-15% of take-home vs. now aiming for 50% or higher.  That said, we have some improvements to do on some of the above - we could go cheaper on rent, cheaper on the car, and cut out some of the happy-hour spending..all part of the plan going forward.

BUT - it's also very true that cost-of-living doesn't map one-for-one to salary in many cases.  For example, if your rent is $1,500 in the big-city for a 1x1 and your salary is $90K (approx. median family income in Seattle) and you took a job in a smaller town with lower cost of living, you may end up further behind than ahead...until you FI anyway..because if housing costs drop 30%, but your salary also drops 30%, you're looking at a pretty big drop in your monthly savings in the rent vs. salary comparison.  Yearly rent drops by $6,000; but yearly salary drops by $30K.  $24K hit to savings, all else equal.  Plus, you may end up spending more on transportation living in a smaller town if you have to commute by car instead of bus/bike.

All of which leads to the conclusion that if you're looking for the quickest way to FI, you're probably best to live in a big city, try to minimize costs, and maximize salary...and then move to a small town once you've reached your FI goals.

It takes discipline though.  In the city, there's more pressure to dine out all the time, drink out more often, dress fancy, drive a nicer car, etc.  If you can buck that trend, you'll do well.

That's generally our plan anyway.

I'll also say that everyone needs to decide what's important to them and their family.  I'm not willing to live in a "transitionary" neighborhood since I travel every now and then and don't want my wife to be home alone in a high drug/crime area.  It's worth it to me to live smaller and pay a bit more for the peace of mind.  Others may have different tolerances..

velocistar237

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Re: Mustachians in the city - Urban living
« Reply #7 on: March 27, 2012, 12:53:21 PM »
Hang out with students.

The one interesting thing I learned is that income rises for all types of jobs as cost of living rises, but it doesn't rise proportionately with COL. 

Any idea what the break-even level of consumption looks like? I assume this is comparing median expenses.

What that means (to me at least) is, that IF you can figure out how to live way below the areas average COL you can take advantage of the high average income and have the best of both worlds!

There are ways for families to do this, but it's more difficult. I met someone from Portland, OR, who was able to afford a house because he added a separate entrance to his basement and rented it out.

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Re: Mustachians in the city - Urban living
« Reply #8 on: March 27, 2012, 12:56:51 PM »
If you live in an area that has a large ethnic neighborhood (hispanic/asian/african/whatevers) go there to shop for produce.  Often it is so much cheaper than going to the grocery store or farmer's market.  It constantly amazes me how much we can get for less than $10, probably a whole week+ worth of veggies. 

nondualie

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Re: Mustachians in the city - Urban living
« Reply #9 on: March 27, 2012, 03:06:31 PM »
I met someone from Portland, OR, who was able to afford a house because he added a separate entrance to his basement and rented it out to a semi-feral pack of hipsters.

Oh Portland..where young people go to retire..

http://www.youtube.com/watch?v=AVmq9dq6Nsg

nondualie

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Re: Mustachians in the city - Urban living
« Reply #10 on: March 27, 2012, 03:09:04 PM »
If you live in an area that has a large ethnic neighborhood (hispanic/asian/african/whatevers) go there to shop for produce.  Often it is so much cheaper than going to the grocery store or farmer's market.  It constantly amazes me how much we can get for less than $10, probably a whole week+ worth of veggies.

This is true..but the ethnic grocers aren't usually too discerning about the non-organic nature of their veggies.

That said, I get most of my spices and many of my herbs from our Chinese grocer...ginger, thai basil, peppers, etc.

I just won't buy meat there and read the labels carefully to avoid the many versions of MSG and food-additive oddities.

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Re: Mustachians in the city - Urban living
« Reply #11 on: March 27, 2012, 06:43:02 PM »
BUT - it's also very true that cost-of-living doesn't map one-for-one to salary in many cases.  For example, if your rent is $1,500 in the big-city for a 1x1 and your salary is $90K (approx. median family income in Seattle) and you took a job in a smaller town with lower cost of living, you may end up further behind than ahead...until you FI anyway..because if housing costs drop 30%, but your salary also drops 30%, you're looking at a pretty big drop in your monthly savings in the rent vs. salary comparison.  Yearly rent drops by $6,000; but yearly salary drops by $30K.  $24K hit to savings, all else equal.

All of which leads to the conclusion that if you're looking for the quickest way to FI, you're probably best to live in a big city, try to minimize costs, and maximize salary...and then move to a small town once you've reached your FI goals.

Actually, the book was saying the exact opposite.
The author summarized data looking at home price indexs (same size home compared in different regions) and median incomes in several categories (white collar, blue collar, professional, management, teachers, etc)

Now that I want to quote some numbers, I can't find the stupid thing...
but the conclusion was that, as a broad generality, if a place has 5-10% higher income, it may have 30-50% higher housing costs (buying, not renting), and even though you get a raise, your net savings rate drops.
They conclude its actually usually more cost effective to live somewhere with a lower CoL and lower home prices.

And they had lots of fancy charts and graphs to back that claim up, but, yeah, lost the book somewhere in my house :P

velocistar237

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Re: Mustachians in the city - Urban living
« Reply #12 on: March 27, 2012, 07:27:38 PM »
but the conclusion was that, as a broad generality, if a place has 5-10% higher income, it may have 30-50% higher housing costs (buying, not renting), and even though you get a raise, your net savings rate drops.
They conclude its actually usually more cost effective to live somewhere with a lower CoL and lower home prices.

That sounds right to me. I think you would still come out ahead in a low COL area, especially with a family.

lost the book somewhere in my house :P

How is that even possible? :)

nondualie

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Re: Mustachians in the city - Urban living
« Reply #13 on: March 27, 2012, 10:16:21 PM »
BUT - it's also very true that cost-of-living doesn't map one-for-one to salary in many cases.  For example, if your rent is $1,500 in the big-city for a 1x1 and your salary is $90K (approx. median family income in Seattle) and you took a job in a smaller town with lower cost of living, you may end up further behind than ahead...until you FI anyway..because if housing costs drop 30%, but your salary also drops 30%, you're looking at a pretty big drop in your monthly savings in the rent vs. salary comparison.  Yearly rent drops by $6,000; but yearly salary drops by $30K.  $24K hit to savings, all else equal.

All of which leads to the conclusion that if you're looking for the quickest way to FI, you're probably best to live in a big city, try to minimize costs, and maximize salary...and then move to a small town once you've reached your FI goals.

Actually, the book was saying the exact opposite.
The author summarized data looking at home price indexs (same size home compared in different regions) and median incomes in several categories (white collar, blue collar, professional, management, teachers, etc)

Now that I want to quote some numbers, I can't find the stupid thing...
but the conclusion was that, as a broad generality, if a place has 5-10% higher income, it may have 30-50% higher housing costs (buying, not renting), and even though you get a raise, your net savings rate drops.
They conclude its actually usually more cost effective to live somewhere with a lower CoL and lower home prices.

And they had lots of fancy charts and graphs to back that claim up, but, yeah, lost the book somewhere in my house :P

I know we're talking hypotheticals here, but if you already have a relatively high-paying job in a big city, isn't it easier to work on cutting your living expenses than to move to a new town and expect to get an equally high-paying job?

Again, I'm talking renting for 5 years until you can go FI, then moving to a smaller town and buying a place for 50% what it would cost in the city...not living long-term in the city and buying a house there. 

It's probably an exersize in futility to try to come up with a general rule here, but still.

arebelspy

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Re: Mustachians in the city - Urban living
« Reply #14 on: March 27, 2012, 10:29:03 PM »
I looked into buying a house after the bubble burst, but even then, in the worst neighborhoods, when I plugged in the numbers, I would have never come out ahead compared to the rent I'm paying now. 

Huh, weird.

I don't see how this is possible.  For example a house we just closed on (rental) a month ago has a PITI (principal, interest, taxes, and insurance) of $308/mo.  That's for a 3 bed, 2 bath, 1500ish sq.ft. place here in Vegas.  FL was hit almost as hard as us, and I know you don't need near as much space, so I don't see how getting a smaller place (say 1000 sqft, maybe 2 bedroom) where the payment would be closer to $200/mo wouldn't save you a money, even counting the fact that your rent right now is super low because you're in an RV park, that's $485/mo, over twice as much (and some of that 200-300 mortgage goes to principal, versus none of that 485).

But I must be missing something.
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velocistar237

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Re: Mustachians in the city - Urban living
« Reply #15 on: March 28, 2012, 09:02:13 AM »
But I must be missing something.

Bakari is comparing buying a house/condo in the SF bay area vs. renting a spot for an RV in the SF bay area. I'm not sure you can buy RV spots, or if you can, whether they would be cheaper. Mr. ERE never bought a spot, and he would have if it were cheaper. If Bakari moved to Las Vegas, his housing costs would go down to $200-$300 (plus other costs), but his income would go down by more than the difference. That's why he stays there. That, and if he moved to Las Vegas, then he would have to live in Las Vegas. :P

arebelspy

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Re: Mustachians in the city - Urban living
« Reply #16 on: March 28, 2012, 09:07:26 AM »
But I must be missing something.

Bakari is comparing buying a house/condo in the SF bay area vs. renting a spot for an RV in the SF bay area. I'm not sure you can buy RV spots, or if you can, whether they would be cheaper. Mr. ERE never bought a spot, and he would have if it were cheaper. If Bakari moved to Las Vegas, his housing costs would go down to $200-$300 (plus other costs), but his income would go down by more than the difference. That's why he stays there. That, and if he moved to Las Vegas, then he would have to live in Las Vegas. :P

Duh, that's what I was missing.  Bakari.  For some reason I was thinking Mike Key, who lives in Florida (thus why I mentioned FL).  Bakari is in the Bay Area, and no, it doesn't make sense to buy there.
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nondualie

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Re: Mustachians in the city - Urban living
« Reply #17 on: March 28, 2012, 10:42:19 AM »

Duh, that's what I was missing.  Bakari.  For some reason I was thinking Mike Key, who lives in Florida (thus why I mentioned FL).  Bakari is in the Bay Area, and no, it doesn't make sense to buy there.

Or in Seattle, which is where I am.  A run-down POS 2x1 house in an area where you need bars on your windows is still $175K+.  The whole market is being propped up by cash-buyers who are praying the bubble re-inflates:

http://seattlebubble.com/blog/2012/03/23/all-cash-buyers-dominating-the-low-end-of-the-market/

Or you can head out to the boonies and pay $250K for a POS cookie-cutter suburban offering and commute 1hr+ each way.

Neither of those options pencil out; so we're looking at renting a condo again at ~$1K+/mon.

Even buying a condo in the city for $200K doesn't work when you add in HOA and taxes.

velocistar237

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Re: Mustachians in the city - Urban living
« Reply #18 on: March 28, 2012, 01:24:39 PM »
Even buying a condo in the city for $200K doesn't work when you add in HOA and taxes.

I don't know about the Seattle area, but around here, it depends HOA and taxes vary a lot. Our HOA covers water and insurance, which we would pay anyway, and our tax rate comes out to 0.4% after the residential exemption. As a rule, though, I agree with you.

arebelspy

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Re: Mustachians in the city - Urban living
« Reply #19 on: March 28, 2012, 02:33:09 PM »
The whole market is being propped up by cash-buyers who are praying the bubble re-inflates:

http://seattlebubble.com/blog/2012/03/23/all-cash-buyers-dominating-the-low-end-of-the-market/


I think the author's conclusion of why there's so many cash buyers:
Quote
Whether we’re “at the bottom” or not, it definitely looks like there are a non-trivial number of cash investors who feel like it’s a good time to buy up some cheap rentals…

Is closer than yours.  But maybe not, they could be speculators.
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Bakari

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Re: Mustachians in the city - Urban living
« Reply #20 on: March 28, 2012, 04:26:11 PM »
I know we're talking hypotheticals here, but if you already have a relatively high-paying job in a big city, isn't it easier to work on cutting your living expenses than to move to a new town and expect to get an equally high-paying job?

Again, I'm talking renting for 5 years until you can go FI, then moving to a smaller town and buying a place for 50% what it would cost in the city...not living long-term in the city and buying a house there. 

It's probably an exersize in futility to try to come up with a general rule here, but still.

That makes sense.  I was just talking comparing direct apples to apples: buying a home of the same size and holding employment of the same type, in an expensive city vs a cheaper one.
Basically that is exactly what I am doing:  living in an RV to save up, until I can afford to give up work income, then buy somewhere less expensive.

I looked into buying a house after the bubble burst, but even then, in the worst neighborhoods, when I plugged in the numbers, I would have never come out ahead compared to the rent I'm paying now. 

Huh, weird.

I don't see how this is possible.  For example a house we just closed on (rental) a month ago has a PITI (principal, interest, taxes, and insurance) of $308/mo.  ...so I don't see how getting a smaller place (say 1000 sqft, maybe 2 bedroom) where the payment would be closer to $200/mo wouldn't save you a money, even counting the fact that your rent right now is super low because you're in an RV park, that's $485/mo, over twice as much (and some of that 200-300 mortgage goes to principal, versus none of that 485).

But I must be missing something.

As velocistar237 pointed out, I am in the SF Bay Area which is silly expensive.
Unless I want to live in the worst part of the city AND get a home in worse than just "fixer" condition (i.e. needing major roof or foundation work) the smallest homes are at a minimum 150k.  120k loan (80% of 150) at 3.5% is $540 monthly, more than my current rent.

But there is another thing you forgot to factor:  the down payment! 
That 20% (plus closing costs etc), and the interest it might otherwise earn, is a huge opportunity cost, in addition to the upfront cost.   
There are other (smaller) costs that homeowners have as well. 
I verified my conclusion with the free calculator at: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

But I must be missing something.

Bakari is comparing buying a house/condo in the SF bay area vs. renting a spot for an RV in the SF bay area. I'm not sure you can buy RV spots, or if you can, whether they would be cheaper. Mr. ERE never bought a spot, and he would have if it were cheaper. If Bakari moved to Las Vegas, his housing costs would go down to $200-$300 (plus other costs), but his income would go down by more than the difference. That's why he stays there. That, and if he moved to Las Vegas, then he would have to live in Las Vegas. :P

I probably would buy a spot if such an opportunity existed, but afaik it doesn't.
But especially that last part!  I've spent some time traveling, and lived in the mid-west and the east-coast.  I came back here not because of any economic decision, but because I like the weather and I like the people. 
That's the whole reason our housing market is so high:  everyone who visits wants to stay!
I am here because this is home.   At least until I become FI and buy a house out in the countryside...

madgeylou

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Re: Mustachians in the city - Urban living
« Reply #21 on: March 28, 2012, 05:13:24 PM »
but the conclusion was that, as a broad generality, if a place has 5-10% higher income, it may have 30-50% higher housing costs (buying, not renting), and even though you get a raise, your net savings rate drops.
They conclude its actually usually more cost effective to live somewhere with a lower CoL and lower home prices.

That sounds right to me. I think you would still come out ahead in a low COL area, especially with a family.

that's borne out in my experience, too. when i moved to NYC from pittsburgh, my salary went up by 50% but my rent went up by 400%!! i lived in a relatively cheap place in pittsburgh, and a moderately fancy place in NYC, but still ... i did not come out ahead financially.

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Re: Mustachians in the city - Urban living
« Reply #22 on: March 28, 2012, 06:05:13 PM »
MMM has used NYC/Manhattan as an example in the past when discussing high COL areas.  I think he spoke in less than favorable terms of my recently adopted hometown, but that is beside the point.  I tend to think that (and this is only based on my own experiences), choosing to live where you can maximize your income during your limited working years is the best way to go.  I'm married, and NYC is the first place where my wife and I have easily found jobs we both love that pay a sizable amount (relative to other markets).  We don't work in finance, fashion, or any other NYC focused industries; it just happens that the fields we are in pay really well here.  True, our expenses are higher, but our earning potential is much higher as well.  This will allow us to stash large amounts of money up until the day we have 'enough' and can leave the city for a much cheaper place to pursue whatever follows our 'working' years.

Our breakdown of costs (as a percentage of wage income) is as follows:

20%:  Taxes (Fed, State, City)

20%:  Housing (rent, utilities, ins.).  Could be much lower, but we each have a 15 minute walk to work which is a priority for both of us.

20%:  All Spending.  Half to basic needs/half to wants

40%:  'Staching (50% of take-home pay).

As you can see, there is lots of room for improvement in these numbers.  I know this and am moving in that direction.

billc

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Re: Mustachians in the city - Urban living
« Reply #23 on: March 28, 2012, 07:28:11 PM »
Depending on your attitude about work/career and frequent job switching, being in a large city offers greater opportunities to job hop (I'm thinking mostly white-collar type jobs here) - which for most people is definitely the quicker path to increasing income than riding out a job at a single firm for 10 years.

My wife and I are living just outside of DC right now (renting @ $2,000/mo for 750sf one bedroom (nice area of town)). The real trick is what the OP mentioned - what kind of neighborhood are you willing to live in? Perhaps people who shun the consumerist life can live in less desirable neighborhoods because they have fewer material items worth stealing. Provided the area is safe enough where your personal safety isn't at risk, this is the biggest key to keeping expenses low and still getting the big city income. I guess this holds until school districts come into the picture...though MMM has addressed this previously.

We're debating moving to a less expensive area in order to start having kids. The decision will ultimately depend on employment opportunities for me (doing the same calculations mentioned above - ratio of income to COL).


nondualie

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Re: Mustachians in the city - Urban living
« Reply #24 on: March 29, 2012, 10:31:07 AM »
but the conclusion was that, as a broad generality, if a place has 5-10% higher income, it may have 30-50% higher housing costs (buying, not renting), and even though you get a raise, your net savings rate drops.
They conclude its actually usually more cost effective to live somewhere with a lower CoL and lower home prices.

That sounds right to me. I think you would still come out ahead in a low COL area, especially with a family.

that's borne out in my experience, too. when i moved to NYC from pittsburgh, my salary went up by 50% but my rent went up by 400%!! i lived in a relatively cheap place in pittsburgh, and a moderately fancy place in NYC, but still ... i did not come out ahead financially.

Okay, so let's use round numbers here:

Your salary went from say $60K to $90K: an increase of $30K/yr.

Your rent went from $500/mon to $2,000/mon: an increase of $18K/yr.

You are still ahead $12K, no?  (all else held equal..which is probably not a safe assumption)


If you were in a higher income bracket:

$100K goes to $150K: $50K/yr

$750/mon goes to $3,000/mon: $27K/yr

You are up $23K/yr, yes?

On top of that, if you could find a way to live in a smaller place for say $2K/mon, you'd be up $35K/yr.  That's no small chunk of change where you're trying to ERE!

nondualie

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Re: Mustachians in the city - Urban living
« Reply #25 on: March 29, 2012, 10:35:33 AM »
Depending on your attitude about work/career and frequent job switching, being in a large city offers greater opportunities to job hop (I'm thinking mostly white-collar type jobs here) - which for most people is definitely the quicker path to increasing income than riding out a job at a single firm for 10 years.

We're debating moving to a less expensive area in order to start having kids. The decision will ultimately depend on employment opportunities for me (doing the same calculations mentioned above - ratio of income to COL).

I need to explore the job switching for sure to keep my salary moving north...

But you're spot-on with the rest.  We live in a 2x2 for ~$1700/mon (incl utilities, parking, cable) so we can be a couple blocks from my office, have one car, walk most places, have a spot for my wife to study, etc.  Do we need something that nice?  Hell no.  Within another 5 blocks, we could get a 2x1 in an older building for <$1,000/mon.  We're on month-to-month now though, so we're just biding a little time to figure out the next move for jobs/school/kids, etc.  Hope to trim some of that fat by the end of the summer.  We're still at 40% MMM each month anyway though..

billc

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Re: Mustachians in the city - Urban living
« Reply #26 on: March 29, 2012, 09:42:32 PM »
@nondualie
Don't go overboard with the job switching, but it's worth keeping your eye on the market. Be realistic about what the market is paying for your skill set and deliver beyond what you're being paid. If you had a 10 year plan to get to FI, it wouldn't be totally unreasonable to work 3-4 jobs over that time to keep your salary moving upward. A 10% raise is much easier to get by changing jobs than getting it at 1 company.

Something to consider - if you're using a 401(k) and you get employer matching, it's probably a good idea to stick around long enough to be mostly/fully vested.

To stay with the point of the thread, there are more options in an urban area for salary bumps, but also salary protection in the event a company does a layoff - it may be easier to find a new gig in a city.


nondualie

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Re: Mustachians in the city - Urban living
« Reply #27 on: March 30, 2012, 09:23:50 AM »
@billc -

That's a good point.  I'm coming up on 3 years at my current company and through hard (intelligent) work, I've moved up two pay grades and around 15% in salary despite the "recession".  Not saying that to brag, just as a point of reference.  I think from here though, I either have to jump to management in another division, or move on to another company to make the next step up.  I actually like the company I work for and the benefits (instant vesting of 401K, good company match, funded pension I'll be vested in shortly); but the office location and my current work-flow are not so inspiring...I need a new challenge; we'll see what turns up.

kaeldra

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Re: Mustachians in the city - Urban living
« Reply #28 on: March 31, 2012, 11:47:45 PM »
Take advantage of craigslist, and thrift in the nice neighborhoods/suburbs where they get nicer stuff donated :)  Also consignment stores.

Use your library system and take community classes / community college classes.

Ironically, I compared the cost of taking the bus to driving, and driving was cheaper :P ($3.50 bus fare each way)  I'll re-compare when gas goes over $5.

Haven't taken advantage myself, but I've heard that at the beginning of summer break in college towns, you can score lots of loot/furniture in the neighborhoods around campus.

madgeylou

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Re: Mustachians in the city - Urban living
« Reply #29 on: April 01, 2012, 07:57:16 AM »
Quote from: nondualie

Okay, so let's use round numbers here:

Your salary went from say $60K to $90K: an increase of $30K/yr.

Your rent went from $500/mon to $2,000/mon: an increase of $18K/yr.

You are still ahead $12K, no?  (all else held equal..which is probably not a safe assumption)

this set of numbers was about right, but, yeah, all other things were not equal. :)

besides having housing be way too high a percentage of my take home pay, which seems to make things difficult in most pay ranges, i think the other thing that really got me was taxes. being single with no dependents, making 90-100K, in new york city, they were brutal.

sol

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Re: Mustachians in the city - Urban living
« Reply #30 on: April 01, 2012, 08:15:53 AM »
taxes. being single with no dependents, making 90-100K, in new york city, they were brutal.

At tax time a few months back I added up all of our expenses for federal taxes, OASDI, insurance deductions, property and sales taxes, and realized that my wife and I paid just about $50,000 off the top of our income last year.  Painful.

It's hard to envision living on MMM's 30k/year when we currently pay much more than that in hidden expenses before even getting to housing or food or transportation.

Taylor

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Re: Mustachians in the city - Urban living
« Reply #31 on: April 03, 2012, 11:53:13 AM »
I wish I could bike more here in Philly, but drivers/buses are so aggressive that it's really terrifying to do so.  Also, our job market is bad enough that almost all of my friends commute out of the city for work. 
/end of rant

I feel for you. I lived in philly for two years while in grad school, and I biked absolutely everywhere. I found that once I stopped using the major roads I felt more comfortable (although eventually I whizzed along even busy streets). Definitely had to work up my nerve a bit!

Bakari

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Re: Mustachians in the city - Urban living
« Reply #32 on: April 04, 2012, 10:37:16 AM »
Ironically, I compared the cost of taking the bus to driving, and driving was cheaper :P ($3.50 bus fare each way)  I'll re-compare when gas goes over $5.

Are you factoring in the increased maintenance and depreciation caused by driving, or just the gas costs? 
At the standard cost of 51 cents per mile, your commute would have to be 6 miles or less in order to be cheaper than the bus at $3.50, in which case why not ride a bike and get there for free?

http://lifehacker.com/5855550/the-true-cost-of-commuting-you-could-buy-a-house-priced-15900-more-for-each-mile-you-move-closer-to-work

shedinator

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Re: Mustachians in the city - Urban living
« Reply #33 on: April 04, 2012, 11:19:26 AM »
Ironically, I compared the cost of taking the bus to driving, and driving was cheaper :P ($3.50 bus fare each way)  I'll re-compare when gas goes over $5.

Are you factoring in the increased maintenance and depreciation caused by driving, or just the gas costs? 
At the standard cost of 51 cents per mile, your commute would have to be 6 miles or less in order to be cheaper than the bus at $3.50, in which case why not ride a bike and get there for free?

http://lifehacker.com/5855550/the-true-cost-of-commuting-you-could-buy-a-house-priced-15900-more-for-each-mile-you-move-closer-to-work

I agree. I drive a car that gets great mileage, which I bought for cheap and maintain myself. Last year, total maintenance costs were less than $100. If I look at the actual cost per mile on my car last year, it was somewhere around $0.43, or $0.21 if you don't count insurance*. Even at that lower number, there's really no distance I could travel by myself that would cost less than either biking or taking public transit at $1.70/ride. At Kaeldra's cost of $3.50, I would have to be traveling over 16 miles for it to be cheaper than the bus, and I don't think our buses travel that far anyway.

*Some have argued that insurance doesn't "count" because you're paying for it whether you take the car to work or not.