Should you be "rich" by comparison?

[Evie]

I've read before that people tend to be happiest when they make more money than the median in their local area.  I wonder if this actually holds true for mustachians since MMM is all about not being consumerist monsters interested in keeping up with the jonses:)  Does it help to be "rich" by comparison to the location you live in (with the qualifier that most Americans slamming around in their BMWs and big houses are actually addled with debt).

Still, I wonder if there isn't something to the idea of choosing to live in an area you don't have to struggle to save and get by.  We live in a high cost of living area (coastal So Cal).  I have always thought it was important to stay near family even though it is horrendously expensive here.  I saw so many friends move out of So cal to Arizona during the housing boom only to discover that the cost of car insurance, food, etc, were the same or higher.  All they saved money on was rent, which was only a few hundred higher (though buying a house is much cheaper).

Now that we are looking to have kids and buy a house I wonder if we would be better off moving out of So Cal to Portland or Seattle, where we can buy a really nice house in a walkable, bikable neighborhood with transit for a fraction of the price and could more easily allow for one parent to stay home. I realize that jobs can be harder to come by in those areas, but the alternative of staying here means renting much longer, or moving a fifteen minute drive from my current work and committing to two cars and a car commute for me (looking at Santa Paula, CA which is also hotter!).  And obviously we wouldn't move until we had a job lined up for one or both of us.

I've never considered moving out of state before, but have started to toy with the idea.  What do you think?  Stick local and stay close to family even if it means we will always be cutting corners in order to live frugally?  Or move somewhere where being frugal feels easier and we can make progess faster? 

[loki]

This is worth thinking about. If we were in your case, it would depend on how close (emotionally) we were to family.

[JPinDC]

I moved from Connecticut (high COL) to the DC metro area (even worse). I love the DC area, but really struggle with the idea of moving to a lower COL area to save more.

That probably wasn't helpful advice, but (depending on your job or need for a job) you can (almost) always move back if you think it was the wrong decision. :)

[expatartist]

We have moved around a bit - for jobs and COL but mainly out of wanderlust. Some countries had a low COL and we didn't need to work much to have a decent lifestyle, so were able to pick and choose jobs which helped our careers in the long run. Other places were more expensive, and we found it harder to save. Back in the day we didn't care about saving much, but it's directing our decisions now.

Where we are now is like any major city, there's a whole range of lifestyles and salaries available. We are scaling up our savings efforts and now save save 50-75% of our take-home salaries (but we're DINKS! So it's relatively easy for us.)

If you're thinking about relocating, Penelope Trunk's got some insights: http://blog.penelopetrunk.com/2012/02/11/7-big-relocation-mistakes/

[johnintaiwan]

For me it has been a great adventure moving to a low COL area. The lifestyle is very different and I think it helps to keep your spending in check. My move was pretty drastic (from Portland, OR - Taiwan), and it is tough not seeing family and friends as much as you would like. But taking that into consideration, I am very happy with the decision and think it is instrumental in helping me reach my FIRE goal

[FIence!]

I voted "depends, there are tradeoffs," but we're still here in our low COL area. Maybe ironically to you, one of the biggest tradeoffs for us is actually being closer to family in the low cost of living area. (I liked having some physical distance from the in-laws.)

We moved from an area with an average household income of about 60,000 to one with an average household income of about 25,000, and an overall MUCH lower COL. The difference in the cost of housing alone is insane. We moved from a 2bd/1ba house that was 1,800 sf to a 2bd/1ba house with 1,200 sf. It's basically the exact same layout, just more compact. Our PITI is $1550- a month less now!

If that was the only difference, it would still be huge, but there a lot of other things that make life cheaper in an area like this. The average lifestyle is different overall, which makes life feel more luxurious and also provides fewer spending opportunities. People used to call our old house "small for two people" and wonder when we were going to "move up," or ask when we were getting new cars, or invite us to expensive dinners we felt uncomfortable about paying for. Now our (smaller!) house is average for our area, there are very few overpriced restaurants, and no one feels sorry for us for driving an "old" car. Groceries are cheaper here. There is an actual farmers market with cheap veggies and $2/dz. organic eggs instead of a yuppie market with artisan breads and overpriced quail eggs. Where we used to live, a shitty American lager would set you back $6+ in a restaurant. Now, if we do go out, it's $1 draft happy hours. $1 drafts did not exist where we used to live. Oil heat used to be the only option, and we now have gas heat which along with the slightly smaller house has slashed our heat bills to something like 1/3.

With that comes the fact that there is less culture, etc. and we definitely have a limit on how long we're willing to stay here. But it's a really great situation to be in for stashing purposes.

[MsSindy]

If that was the only difference, it would still be huge, but there a lot of other things that make life cheaper in an area like this. The average lifestyle is different overall, which makes life feel more luxurious and also provides fewer spending opportunities. People used to call our old house "small for two people" and wonder when we were going to "move up," or ask when we were getting new cars, or invite us to expensive dinners we felt uncomfortable about paying for. Now our (smaller!) house is average for our area, there are very few overpriced restaurants, and no one feels sorry for us for driving an "old" car. Groceries are cheaper here. There is an actual farmers market with cheap veggies and $2/dz. organic eggs instead of a yuppie market with artisan breads and overpriced quail eggs. Where we used to live, a shitty American lager would set you back $6+ in a restaurant. Now, if we do go out, it's $1 draft happy hours. $1 drafts did not exist where we used to live. Oil heat used to be the only option, and we now have gas heat which along with the slightly smaller house has slashed our heat bills to something like 1/3.

With that comes the fact that there is less culture, etc. and we definitely have a limit on how long we're willing to stay here. But it's a really great situation to be in for stashing purposes.

Having moved from So Calif to the East, this was also the biggest difference for us - it was the mindset of what is seen as 'normal'.  Once you move to a lower COL area, you find that there just isn't the pressure/temptation or the constant defending of a simpler lifestyle - I find more like-minded individuals in my new location.  Also, we moved away from all family (but, we don't have kids), and we just plan on trips and they are built into our overall budget.

[mom2_3Hs]

The type of move you describe is probably do-able, if you're ok with increased travel costs to visit the family.  We live in a small town in IN.  The median price for a 3 bed, 2 bath home is ~$125K...but there is no Target, no Italian restaurant, no bookstore, no Trader Joes/Earth Fare/Fresh Market, no skating rink, no mini golf, two clothing stores (Goodys and Cato)...the plus is that everything is walkable and bikeable...except for anything cultural.  People who move to our town end up driving to Indianapolis (about an hour away) almost weekly, and/or having a spouse who commutes to Indy for work. 

[soccerluvof4]

There are so many things to weigh out.

1) if your having kids ,there education and school systems.
2) cost of living vs. Income and Savings.
3) Weather
4) lifestyle
you get the idea....

As someone else mentioned to being near family. For me its was always easy to be away and go see them BUT if you want them to be involved in raising your kids etc,,, Thats a thought too.

Good Luck on whatever you decide!

[Undecided]

I think it depends partly on where on the scale you're moving from and to, as well. We left one of the highest cost of living areas (170 on a scale where 100 is the US average) for an area where the cost of living is 110 on that scale. We think it's great; we appreciate the savings, but it shares many traits that based on our limited review seem to missing from the least expensive places. We fantasizes about going to one of those places where people rave about great houses available for $150,000, but the several that we looked into just weren't worth the sacrifices, for us.

[Ayanka]

I live in what some people would call a lower 'cost of living area'. Some people would just call it a poor area. We have a lot immigrants in the neighbourhood, and a lot of places with 'for sale' on them. The area is in development, meaning it actually has a grocery store where you don't have to think whether it is save to buy things, which is, half a mile to the east, not a possibility. The advantage inhere is that all of the stores are budget stores, anything else doesn't survive here. The bad side is you have to be able to take it that you see people counting their money to buy beer or just the bare amount of groceries. Our Aldi has done a good clean up recently, but before that, it was normal to have people shouting there. I have for a while not been inthere because of that. The culture level is pretty low and going to a bar for a drink is not so easy. Bars enough, but in some you probably get both kind of cokes as easily. Restaurants are present here, but half a mile to the east, there are less and what is there, might not be what you are willing to spend time. The library is (by coincidence) on walking distance for me, but that is because it is very central, so its walking distance for most people, unless you live at the other side of the city (500 k inhabitants). If I walk on the streets at night (after dark and it gets dark soon here), I generally don't have more with me than necessary. I don't have any fancy electronics, but showing off, you might lose them. Its a good place to be in now, because I am on walking distance to about everything (don't like biking) and its 10 minutes from my work. I would however not want to live here with kids. There is one thing in watching your own back just because, there is a difference if you have to do it for your kids too.

[MayDay]

We did it.  There are some definitely trade offs, and now that we are in the lower cost area, we feel like we could never go back (and afford the kind of house we had before, major caveat!). 

We knew there were certain low cost places that were completely off the table.  Anything southern (I may possibly be sliiiiiiiiightly liberal) we wanted good schools, we wanted to be within an hour of a proper city with good hospitals (all four of us need various specialists).  So within those contraints we were willing to do it. 

We moved closer to one set of family and further from the other.  In theory that would have been a wash, except that we moved away from. The helpful involved family and towardst he uninterested non-helpful family.  Oops. 

I would move to the two cities you are considering in a heartbeat so that influences my opinion, but I say do it!

[dude]

Not sure how to answer this, but can say that I have definite plans to spend at least 3-6 months living out of country when I retire.  I've met retired Americans living in places like Costa Rica, Mexico, Panama, etc, and have heard nothing but good things.  I was told by a hotel owner in the Costa Rican town where I stayed 2 years ago that he lives "like a king" on $35k/year.  When I asked him, a bit incredulously, "Like a king?" He emphasized, "Like a KING." 

That's when my mind was definitively made up.

[tmac]

We intentionally bought a small, cheap house in a small, cheap town -- and it makes it easier for us to be happy with our frugal choices. We make about five times the average income here, but our house isn't snazzy, so no one would know that. It's been helpful because there is ZERO pressure to pretty up the house, dress up to go to the grocery store, etc. When we lived in a wealthier place, I felt that pressure and it was hard to resist. No one here looks twice at our old truck and our kids' thrifted clothes.

The only time anyone notices the difference is when they actually get into the house -- Steinway piano, high-quality furniture, etc. Granted, the fancy stuff is inherited, but we're clearly not living on the edge of poverty. You can see the confusion on their faces, and then the questions start. "What do you do for a living exactly?"

I've heard from otherwise frugal friends who live in fancy neighborhoods that they have to fight the good fight every day. Even just hanging the laundry out is a battle.

The down-side is that we have to deal with small-town Southern life. Not loving it. So we're moving to a higher COL area near where I grew up, but we're again intentionally choosing a not-swanky home in a not-swanky neighborhood. Works for us.

[meadow lark]

10 years ago moved from The Bay Area of California to Albuquerque.  Life is just easier here.  No parking issues, friendly people who will go way out of their way to help a stranger, a slower pace.  Very little emphasis on having the perfect furniture, dishes, clothes, car, etc.  This is a very poor state, so in comparison we have lots of money.

[hybrid]

I've always found real estate fascinating. I know folks who live in very high COL areas and for the life of me I just cannot appreciate their perspective. Richmond is a very affordable city to live in and my neighborhood is a real diamond in the not-at-all-very-rough. My 2400 SF brick rancher sits on 1/2 acre in a wonderfully quiet neighborhood 15 minutes from downtown. The schools are good-not-great (considered poor by Chesterfield County standards, which is to say much better than City of Richmond), the shopping not as convenient. So my home fetches perhaps 180 on today's market, which always drops jaws when I discuss real estate with folks who live in the DC and Baltimore areas. When I hear of people dropping triple that amount to live in a more desirable city (or 100K more to live in a more desirable part of Richmond), I have to shake my head because I know the salaries don't match the cost. Where is the value???

When it comes to homes, beauty truly is in the eye of the beholder. For me, most of my friends and all of my family are in Richmond, so realistically the job does not exist that would make me want to move from here. Then again, after this winter South Carolina is starting to look pretty good.....  ;-) 

[foobar]

He left off a word. He ment to say "Like a medieval king":). 

There are plusses and minuses and most of it comes down to what you want. HCOL area are great for people who get paid more and whose expenses don't increase as much as expected. Sharing a house with 5 other people doesn't inflate as much as buying a 3/2 house does in a lot of areas. Your savings rate might not be high (who cares) but your absolute number of dollars save can be (10% of 100k is a more than 15% of 50k) .

You can live in HCOL and not participate in the rat race.  You notice the one coworker who buys the 60k car not the other 9 that buy honda civics.  If you want to live the rich live, then yeah the temptation might be too much. If you want to live your life, then it doesn't matter.   

Not sure how to answer this, but can say that I have definite plans to spend at least 3-6 months living out of country when I retire.  I've met retired Americans living in places like Costa Rica, Mexico, Panama, etc, and have heard nothing but good things.  I was told by a hotel owner in the Costa Rican town where I stayed 2 years ago that he lives "like a king" on $35k/year.  When I asked him, a bit incredulously, "Like a king?" He emphasized, "Like a KING." 

That's when my mind was definitively made up.