Opting Out of Coastal Madness to Live a Low-Overhead Life

[FireLane]

I caught this on the Atlantic yesterday. It's a sensible Mustachian counterweight to the "Secret Shame of Middle-Class Americans" article that's getting so much press.

http://www.theatlantic.com/business/archive/2016/05/low-overhead-life/480612/

The author very sensibly points out that if you want to take on a job with low or unpredictable income, like freelance writing, you can do it and live very well. All you have to do is move to a LCOL area where your money goes a lot further, rather than insisting on living in a major city and competing with well-paid tech or finance workers:

I live in Shaker Heights, Ohio, about two miles from the Cleveland city limits. I chose this city purposively: It has an excellent and diverse public school system. The taxes can be high, but the housing prices are not. I bought my four-bedroom house for $175,000. Because of the low interest rates of the past decade, I converted to a 15-year mortgage at 2.1 percent interest, and have built up about $70,000 in equity. Although housing values are still not increasing—my house is worth about what I paid for it 10 years ago—that equity will, once my son goes to college, allow me to move and reduce my living expenses even further. I’ve done all this while being a single mother with joint custody (and receiving no child or spousal support) for 14 years.

The only part I disagree with is here, where the author implies that it's exploitative to move to poorer regions to take advantage of the lower costs:

So it turns out you can get richer simply by moving to where people are poorer. That is horrifying. And some might find it insensitive to praise the virtues of living a middle-class life in a region beset by deindustrialization and poverty, where the low cost of living is enabled, in part, by the difficulty so many have in scratching out a living.

I think that gets things totally backwards. What better way to help poor places could there be than for rich and middle-class people to move there and spend money in the local economy?

[Ed Mills]

Geo-arbitrage is powerful.  On two occasions, my wife and I have moved to "backwaters" in Georgia where we made the most of our teaching jobs.  In 2009 we made our first geo-arbitrage maneuver when we moved to Statenville, GA, a very rural community.  We made financial hay by having a low cost of living and two salaries based on state scale.  Overall, we really enjoyed our three years in Statenville. 

in 2014 we took teaching jobs in Douglas, GA with intention of saving our money like crazy for two years.  Because Douglas has a low cost of living, we have been able to save over $240K in our two years here.  In total, we saved a little shy of $500K in our five years of teaching in rural south Georgia. 

We currently pay $500 to rent a 2/1.5 apartment with all utilities running about $125.  I don't ever see us moving to an area with a high cost of living...the sticker shock would be too much for us!  Frugal on all, Ed       

[maizefolk]

A thousand times yes! Moved from the bay area to the midwest and my salary actually went up while the mortgage on my house costs less than I used to pay to rent a studio apartment.

[CanuckExpat]

Also for what it's worth: The Rust Belt Theory of Low-Cost High Culture:
"The joys of taking advantage of once-grand cities’ still-grand cultural opportunities."

[dougules]

You can take this a step further if you don't mind learning a different language and a different culture.  Several countries in Latin America make it fairly easy for people to live there.  Life can be a lot cheaper down there.  Medical care is way cheaper.  Buses are good, plentiful, and cheap, so you really don't need the expense of a car.   

You'll have to deal with a certain amount of culture shock moving to a different region of the US anyway.  DH moved from PA to AL, and he still regularly experiences culture shock even after years as he learns the subtleties of Southern culture.

[FireLane]

Also for what it's worth: The Rust Belt Theory of Low-Cost High Culture:
"The joys of taking advantage of once-grand cities’ still-grand cultural opportunities."

Great article. Plus, even people who don't live in those cities can take advantage of their cultural bounty. Perfect places for a Mustachian vacation, maybe?

[obstinate]

In addition to what you said, the reason it's cheaper to live in the middle is because the main expensive resource is land. You aren't exploiting anyone by giving up your share of a scarce resource in favor of a less scarce one. No one is harmed by a wealthy person moving to an LCOL location.

[athiker10]

The only part I disagree with is here, where the author implies that it's exploitative to move to poorer regions to take advantage of the lower costs:

So it turns out you can get richer simply by moving to where people are poorer. That is horrifying. And some might find it insensitive to praise the virtues of living a middle-class life in a region beset by deindustrialization and poverty, where the low cost of living is enabled, in part, by the difficulty so many have in scratching out a living.

I think that gets things totally backwards. What better way to help poor places could there be than for rich and middle-class people to move there and spend money in the local economy?

[/quote]

This is actually a fairly serious issue: gentrification and I'm seeing it happen all over my city (in addition to a general lack of affordable housing crisis). The more middle and upper class people move into a neighborhood, the more those who are most at risk economically get pushed out. It doesn't necessarily increase the benefit to the working class/working poor. Eventually the low COL that the middle class/upper class moved to take advantage of disappears.

That being said, as someone who is frugal and looking to buy an affordable (hah) apartment at some point in the next few years, my options generally fall within working poor and working class neighborhoods if I want to keep my housing cost down. So I would be part of the problem. There's no clear answer on what's best-because diverse neighborhoods are really good and for personal choices, often moving into the neighborhood makes sense personally. Just large scale it can become an issue.

[Trudie]

I live in "fly over territory," otherwise known as Iowa.  The particular town we live in is pretty hip -- lots of people in the "creative classes" -- and it is geographically very beautiful.  But our 3-4 county region outside of the main hub is poor.  If you are lucky to have a "good" job or -- as in our case two -- you're very lucky.  (This town is tough for dual career couples.)  Housing is expensive relative to incomes, but it is possible to live frugally in many other ways here.  There's also not tremendous pressure to keep up with the Joneses.  On many levels and in regard to FIRE, living here has been good for us.

But, the ugly truth is that housing is a real problem.  The people who do best here are those who bring equity with them when they move to town so they can "buy down" their cost of housing.  On the upside, we have close to zero issues with foreclosures (according to a mortgage banker friend), but I also think a remarkably high percentage of people probably own their homes outright or -- like us -- aren't heavily leveraged.  These are good things, but there is also competition for housing which bids up house prices.  Fantastic if you're a seller, horrible if you're a buyer.  Especially horrible if you're working poor.

When we FIRE we are moving from here -- seeking some different services and quality of life things that we can't get here.  We're quite confident our house will easily sell.  Someone else will bring wealth to town, and the cycle will continue... for better and for worse.  We're somewhat conflicted about this, but while we have saved a lot of money here we have also paid property taxes for many years, done most of our shopping locally, and contributed to community projects and boards.  So in the final analysis, I don't feel as if we've had a free ride....

[obstinate]

Gentrification isn't really a thing, at least according to The Weeds. There's only a tiny set of places where its really known to have ever happened in the US. At least according to vox's policy podcast, The Weeds. If you don't live in SF or NYC, it's unlikely that gentrification has happened to you.

[randymarsh]

Gentrification isn't really a thing, at least according to The Weeds. There's only a tiny set of places where its really known to have ever happened in the US. At least according to vox's policy podcast, The Weeds. If you don't live in SF or NYC, it's unlikely that gentrification has happened to you.

I'm not sure that's accurate. SF and NYC have likely seen the highest level of gentrification, but other cities have had crazy home appreciation in the last ~10-20 years. The median price of a Denver home in 2000 was 150K. Now it's 320K. Streets that used to host hookers and crack now have $1200/month studio apartments. I believe Seattle, Austin, Atlanta have seen similar.

[obstinate]

Feel free to listen and evaluate for yourself. http://www.vox.com/2015/12/18/10461912/gentrification-floating-voters I'm not denying that people think it is a problem, but based on what I've read from people who've actually studied it, it is not a real phenomenon most of the time. It is *surely* not the case that HCOL->LCOL transplants are a driving force behind gentrification anywhere.

(Note that Denver's median home price could increase tons without affecting poor residents, because it's an enormous city including many upscale and downscale neighborhoods, both urban and suburban. Just observing that the median home price in that city has gone up does not mean that gentrification has occurred, because that could as easily be explained by rising mid and high-end home prices, with static prices in poorer neighborhoods.)

[LadyMaWhiskers]

Gentrification isn't really a thing, at least according to The Weeds. There's only a tiny set of places where its really known to have ever happened in the US. At least according to vox's policy podcast, The Weeds. If you don't live in SF or NYC, it's unlikely that gentrification has happened to you.

That still puts millions of people in the crossfire. I lived in NYC 1997-2014. Gentrification had very real effects in that timeframe, although the downsides seemed less extreme than here in the SF Bay. Now I live in a ho hum suburb of SF. Actually, this area was working class until recently. Small apartment buildings sell at prices that suggest their  new owners to double-triple the rents, and the market will bear this. It's much worse than NYC, because you can't move to a more downscale neighborhood a few train stops away. There's nowhere cheaper to go! Unless you pack up and start a whole new life.

[obstinate]

This is a thread about moving to LCOL places. The issue is not whether gentrification occurs anywhere. It's whether it occurs at meaningful rates in LCOL places.

[LadyMaWhiskers]

This is a thread about moving to LCOL places. The issue is not whether gentrification occurs anywhere. It's whether it occurs at meaningful rates in LCOL places.

That's fair... I got off topic. Gentrification would seem like a non-issue in LCOL areas. The drivers for gentrification (fundamental under supply of housing/build able land) don't exist there, for the most part.

[SeaEhm]

Anyone know of any articles that rank the top LCOL places to live?

Would be interesting to see if someone created a scale that you can adjust to fit one's needs.

Moving away to a LCOL area was once an idea I thought of in the past.  However, I'd rather be poor in paradise than rich elsewhere.

[kite]

The only part I disagree with is here, where the author implies that it's exploitative to move to poorer regions to take advantage of the lower costs:

So it turns out you can get richer simply by moving to where people are poorer. That is horrifying. And some might find it insensitive to praise the virtues of living a middle-class life in a region beset by deindustrialization and poverty, where the low cost of living is enabled, in part, by the difficulty so many have in scratching out a living.

I think that gets things totally backwards. What better way to help poor places could there be than for rich and middle-class people to move there and spend money in the local economy?

[

This is actually a fairly serious issue: gentrification and I'm seeing it happen all over my city (in addition to a general lack of affordable housing crisis). The more middle and upper class people move into a neighborhood, the more those who are most at risk economically get pushed out. It doesn't necessarily increase the benefit to the working class/working poor. Eventually the low COL that the middle class/upper class moved to take advantage of disappears.

That being said, as someone who is frugal and looking to buy an affordable (hah) apartment at some point in the next few years, my options generally fall within working poor and working class neighborhoods if I want to keep my housing cost down. So I would be part of the problem. There's no clear answer on what's best-because diverse neighborhoods are really good and for personal choices, often moving into the neighborhood makes sense personally. Just large scale it can become an issue.

How is buying what you can afford being part of the problem.  Do you see yourself as NOT working class? 

[stoaX]

The only part I disagree with is here, where the author implies that it's exploitative to move to poorer regions to take advantage of the lower costs:

So it turns out you can get richer simply by moving to where people are poorer. That is horrifying. And some might find it insensitive to praise the virtues of living a middle-class life in a region beset by deindustrialization and poverty, where the low cost of living is enabled, in part, by the difficulty so many have in scratching out a living.

I think that gets things totally backwards. What better way to help poor places could there be than for rich and middle-class people to move there and spend money in the local economy?

[

This is actually a fairly serious issue: gentrification and I'm seeing it happen all over my city (in addition to a general lack of affordable housing crisis). The more middle and upper class people move into a neighborhood, the more those who are most at risk economically get pushed out. It doesn't necessarily increase the benefit to the working class/working poor. Eventually the low COL that the middle class/upper class moved to take advantage of disappears.

That being said, as someone who is frugal and looking to buy an affordable (hah) apartment at some point in the next few years, my options generally fall within working poor and working class neighborhoods if I want to keep my housing cost down. So I would be part of the problem. There's no clear answer on what's best-because diverse neighborhoods are really good and for personal choices, often moving into the neighborhood makes sense personally. Just large scale it can become an issue.

How is buying what you can afford being part of the problem.  Do you see yourself as NOT working class?

Well said Kite.  And what should be proposed to combat the problem of gentrification?  Should neighborhood committees be established to determine who should be allowed to move in and who shouldn't?  Or perhaps more housing projects for the working poor?  I fear the potential solutions would be worse than the problem.

[JenniOG2004]

I have lived in Portland, OR and Chicago, IL and now live in a small town in Indiana, so I know a little about this topic. I enjoyed both cities, and generally like the people there better, but I have discovered good people can be found anywhere if you look around. I also miss the culture of the big city, but I found that I didn't do those things daily when I lived there and the entertainment costs can really add up!

I live a nice life in Indiana on a low income and own a home that would cost six times as much in Portland.  My kids go to a nice school and we drive to Chicago to see friends if we want a big city weekend or drive to Indianapolis.  We also go to see family in Portland and now that I don't live there anymore it makes an awesome vacation!

If I won the lottery tomorrow, I would probably move back to Portland, but I did a cost benefit analysis a while ago and decided it was much better for my family to live a comfortable middle class life here than to be poor in Portland, which we would certainly be. And honestly, depending on where you live life can be pretty good! I love not having the noise and stress.

[dougules]

If I won the lottery tomorrow, I would probably move back to Portland, but I did a cost benefit analysis a while ago and decided it was much better for my family to live a comfortable middle class life here than to be poor in Portland, which we would certainly be. And honestly, depending on where you live life can be pretty good! I love not having the noise and stress.

+1, well kind of.  I would love to move back to Portland if it were cheap like it was several years ago, but I wish I could move to the Portland of back then.  I think on top of being too expensive, the cost of living is going to eventually crush what made Portland unique.  It's just going to become another hive of worker drones. 

[CU Tiger]

I live in Baltimore, which is more expensive than the small town in SC where I grew up.

But last week I was in San Francisco and Mountain View, CA. I about choked at how expensive everything was. Gas, food, adult beverages...all more (lots more) than here. The kicker was a $3.00 glass of ice tea that did not come with any free refills. No refills? Preposterous!

[maizefolk]

Everyone should spend at least one weekend in either SFO or Manhattan. It makes you really appreciate the cost of living where ever you actually call home!

[mm1970]

Everyone should spend at least one weekend in either SFO or Manhattan. It makes you really appreciate the cost of living where ever you actually call home!

Well, I live in coastal So Cal.  Visits to SFO don't make me appreciate the cost of living - because it's not terribly worse than here.  They *do* make me appreciate the lack of traffic.