Living in an expensive city has been the main way for millions to get ahead for decades. After all, most of the high paying jobs are all in expensive cities, which is why they are expensive in the first place! If you want to increase your chances of getting rich, then living in an expensive city will help you.
When asked about career advice, I always recommend people follow the money. Go to where the wealthiest, most powerful people live so you can take advantage of the most opportunities. It's also more exciting to live in a big city versus a smaller town, especially when you're under 40.
New York City has all the financial firms. San Francisco has all the tech, internet, and venture capital money. While Washington DC and the surrounding suburbs have all of our tax money to spend on massive government contracts!
I've lived in all three types of cities for extended periods of time. In my experience, I've seen massive fortunes made in multiple ways.
If you want to “get lucky,” then you might as well go where there's the most opportunity in an expensive city. Because twiddling your thumbs in a dying town, complaining why you can't get ahead doesn't make sense. We live in a free country with no state border controls.
Expensive Cities Have The Most Opportunity
The biggest push back I get for my “follow the money” advice is that such places are just so damn expensive. For example, the median rent in San Francisco is at least $3,400 a month in 2024. But the only reason why rents are so expensive is because incomes are high enough to afford such levels. If they weren't, rent would be cheaper.
Seriously, 22-year-old college graduates are getting compensation packages of between $120,000 – $180,000 at big tech firms. By the time these graduates are 30 years old, they will likely be earning in excessive of $300,000.
Then if two of them shack up, we're now talking a $600,000+ household income thanks to living in a big expensive city. They can clearly afford a big expensive house by mid-age.
The Spreading Out Of America
Further, post pandemic, more people want to live in less densely populated cities. I get it. However, the biggest career, money-making, and networking opportunities will remain in big cities. It's just a law of numbers and opportunities.
I believe big city living will come back with a vengeance. People are social creatures who want to interact and have fun again.
Only if you are already established in your career or business will big city living be less effective for you. In this case, you may want to get away because too many people are asking you for help.
The market is efficient. Capital is fluid. Everything is rational. Only an idiot with an online business would NOT try and geo-arbitrage his way to a lower cost area of the world. Oh wait, that's me.
And that's my point. Even though I can relocate to the middle of nowhere, the opportunities are too endless to leave San Francisco.
Living Expensively Makes Everything Ironically Cheaper
If you live in the most expensive city in the world, then you've only got upside in terms of savings when it's time to visit somewhere else. Everybody's happiness meter ticks up when they're saving money.
When I proposed my Adjusted NHER© formula for figuring out how much to spend on a hotel room when traveling internationally, Financial Samurai readers from the Midwest smartly pointed out that my Adjusted NHER© formula won't work for them given their cost of living is so low.
One reader comments,
“I am in a West-side (read: less expensive) suburb of Cincinnati and my NHER© works out to about $28.00/day. If I booked a hotel at that price, I’d have to bring my own sheets, mattress and can of Raid.”
This simple, yet insightful comment got me thinking along several lines:
* We live in the richest country in the world where the cost of living can also be so cheap.
* Perhaps one reason why so many Americans don't have passports (110 million out of a 320+ million population) is because with low NHERs©, many feel it is relatively expensive to travel overseas? Even if you are wealthy and have a low NHER©, your propensity to travel abroad may be negatively affected.
* Living cheaply due to circumstance or because you choose to actually makes everything else much more expensive.
* If you choose to live in an expensive city, not only will you have a high NHER©, but you'll have more opportunities to make more money.
* If you want to save on living expenses, relocate within your city. I moved three miles west in San Francisco in 2014 and ended up saving 50% on housing expenses.
Solving A Myopic Problem Through More Travel
One of the reasons why so many countries despise Americans is because we think everything should revolve around us. It's totally logical for us to expect everybody to speak English in America, but when we still expect everyone to speak English when we travel abroad, and get frustrated when they don't, we're a bunch of self-centered donkeys who lack culture and respect!
I firmly believe that if the government imposed a mandatory travel abroad year for every single American before the age of 21 (subsidies for those whose families earn below a certain amount), there would be less wars and even more productivity in America due to a greater appreciation of how good we've got it.
Once you've traveled abroad to much poorer countries, you'll realize how hilarious it is for privileged Americans to complain how lucky other people are in America.
An Experience In Angor Wat, Cambodia
I was sleeping in the van on the way back from Banteay Srey temple to my hotel in Siem Riep when I glimpsed outside the window and saw some kids walking in 100 degree heat on the side of the road.
I asked the driver where they were going, and they said they were walking home from school several kilometers away! At least they were giggling as they soldiered home.
Spend 10 minutes under the blazing Cambodian sun, and you will experience such oppressive heat that you'll think you're a vampire whose skin is burning. Now spend an hour walking in one direction and realize how good you had it growing up.
My story of feeling embarrassed biking to school at age 16 when all my friends had cars is so trivial. At least I had a bike!
Traveling Internationally Will Make You A Better Person
I swear to you, such random international observations will change you for the better. Here are some examples as to why international travel will help you:
* You'll no longer complain about the AC going out at the gym, at work, or at home.
* You'll no longer complain about having a shitty bike, or a crappy car.
* You'll no longer complain or be embarrassed about riding the bus.
* You'll cherish what you have longer.
* You'll stop whining about long work hours as it's unlikely that no matter how hard these kids try, they will never be as fortunate as you.
* You'll think twice about gorging yourself with so much food at one meal that might somewhere else feed a family of five.
* You'll naturally be much fitter because you'll be more mindful of how little other people have to eat.
* You'll stop wasting money on stupid crap, which after a short period of time you'll no longer use.
* You'll try harder to make the most of your situation because you'll be reminded that not everybody is as lucky as you.
* You'll stop thinking that everybody else is privileged and lucky because you're already so much luckier than so many other people already.
* You'll begin to focus on how you can better yourself, rather than try and bring someone else down to your level.
* You'll empathize more with people who are less fortunate.
How Living In An Expensive City Makes Things Cheaper
Let's say you own and live in an average San Francisco home that costs $1.6 million. Sounds expensive right? Not so if you analyze what everything else costs compared to your place.
- $32,000 median price car = only 2% of the total cost of the house or 10% of a $300,000 gross income.
- $30,000 bathroom creation = only 2% of the total cost of the house.
- $25,000 annual tuition for college = just 35% of the annual cost ($66,000 for mortgage, property tax, insurance, maintenance) of owning the house.
- $1,500 round-trip economy class ticket to Asia = just 2% of the annual cost of owning the house.
- $150 nightly hotel cost = only 2.5% of the monthly cost of owning the house.
Although living in an expensive city is expensive, expensive cities are expensive for a reason. They usually are some of the highest income cities in the country. You can only save so much, but your income upside is unlimited!
Why Living In A Cheap City Can Be Costly
Let's say you live in Cincinnati, Ohio in a $300,000 house. Pretty cheap right? Not really if we start to make the same cost comparisons.
- $32,000 median price car = 10.7% of the total cost of the house or 42.7% of a $75,000 gross income if we are to keep the ratio of gross income:housing cost the same at 1:4.
- $30,000 bathroom construction = 10% of the total cost of the $300,000 house.
- $25,000 annual tuition = 167% of the annual cost of owning the house ($15,000 for mortgage, property tax, insurance, maintenance).
- $1,500 round-trip economy class ticket to Asia = 10% of the annual cost of owning the house, and 120% the monthly cost ($1,250).
- $150 nightly hotel cost = 12% the monthly cost of owning the house ($1,250).
Well That's Just Silly
I know what some of you who are living in inexpensive places are thinking. What kind of stupid logic is it to spend lots of money on housing in order to feel like you're saving money on everything else?! I hear you.
But don’t forget. The reason why a median priced home costs over $1,700,000 in San Francisco in 2023 is because there are plenty of jobs that pay healthy six figure incomes.
Once you get to six figures, you have a clearer path to making over one million a year if you last long enough.
For example, the median income for a 29 year old MBA graduate from Berkeley, Stanford, Columbia, UCLA, and Harvard is around $180,000 all in. Add two of these graduates together and we're at $350000+. Fast forward five years, and it's likely they are making $250,000+ each. It’s much rarer to find $150,000 – $500,000 a year jobs in smaller cities.
Furthermore, if you end up paying off your $1.6 million house within 30 years through forced savings, you’ll end up with at least $1,400,000 in cash after commission and taxes. With the $1,400,000 in cash, you could then buy that $300,000 house in Ohio. Then you can retire in style because you've still got $1,100,000 in your pocket!
Just look at how strongly the NASDAQ has performed during the 2020 pandemic. 2021, 2023, and 2024 were more great years for the NASDAQ and the S&P 500. 2022, not so much.
It's Easy To Save Living In A Big City
Believe it or not, there are many ways to save money while living in an expensive area. You can shack up with multiple roommates, find a rent-controlled apartment, or live a little further away from downtown.
For example, just seven miles west of downtown San Francisco, you can rent a single family home in the Outer Sunset for $2,700 a month. That single family home can comfortably house three people, each paying $900 a month in rent. The sacrifice? A 45-minute commute compared to a 15 minute commute three miles west renting a similar home for $7,000 a month.
But guess what? Thanks to the work from home trend, commuting is no longer as big of a deal. As a result, many big city residents are smartly finding cheaper areas in the city to live. Buying property in or near your city that's a little further out is probably the best near-term real estate buying opportunity.
Live In Cheaper Areas Of An Expensive City
The proper geoarbitrage strategy is to first look for cheaper housing within your city. After all, you've spent years building your network, you will first look around your city to save. There's no need to relocate to Des Moines, Iowa immediately when you can save 20% – 40% relocating with your city. That's what I did in 2014 to save 40% and haven't looked back.
Finally, even though housing and other expenses might take up a greater percentage of your income living in an expensive city, you'll have a larger absolute dollar value amount to save and invest.
Your wealth will end up compounding much greater over time. Example: $20,000 net income, $5,000 housing cost = 25% of net income to housing and $15,000 left to invest vs. $5,000 net income, $500 housing cost = 10% of net income to housing and $4,500 left to invest.
Let's be honest folks. If you are out of site, you are out of mind when it comes to your career. You should come to work more in person to boost your profile. The return to office trend is back. And you want to capitalize by owning big city real estate again.
Start Life Expensively
One reason baseball players swing two bats at a time before going up to the plate is because it makes swinging with one bat easier. They'll be able to swing faster and with more force.
If you start life, or live your life in an expensive city, out of necessity you'll learn how to become frugal. Read all the comments in the linked post on how everybody saves in NYC while making less than six figures a year. Resourcefulness is a valuable life skill!
Living in an expensive city might even propel you to start a side business to generate more income. From this extra activity comes a stronger work ethic. You'll gain more knowledge that could very well open doors to exciting new things.
I'm sure people who live in inexpensive areas also feel the pressure to work long hours in order to make as much money as possible. However, at the margin, the pressure is much greater in expensive cities. Why else do you think New York City has the reputation of being a pressure cooker? “Live in New York City once, but leave before it makes you hard,” says the sunscreen speech.
What About Happpiness?
And what about my assertion that living in an expensive city will make you happier? Well, for one thing, you'll meet a lot more diversified people who will delight your mind with new perspectives.
Having attended international schools growing up, I can attest that it's infinitely more pleasurable than attending my homogeneous Northern Virginia suburban high school.
Meanwhile, once you travel to another place, you'll be happier. You'll feel instantly richer given everything is so much cheaper. My trip to Kuala Lumpur finally made me feel rich with a R3.6:$1 exchange rate.
Living in an expensive place gives you more optionality. It's kind of like having a timeshare in Kauai. You're at the top of the pyramid and can trade your timeshare for anywhere else. If you have a timeshare in Topeka, Kansas, you ain't trading up with anybody!
In fact, some of the happiest cities in America are also the most expensive. Meanwhile, some of the lowest cost cities in America are among the unhappiest. Why? Because many residents in lower-cost cities require a greater net worth multiple to be happy.
Earn Your Way To Riches
Even if you take the risk to relocate to an expensive city where jobs are plentiful, there are still no guarantees that you will succeed. It's important to network, hustle, be a good person, and develop desirable skills. Competition will always be fierce.
As a totally rational human being, you are going to make moves that enable you to succeed. You'll naturally befriend other people with similar interests in your area of expertise. If you stay long enough, you will probably also find the love of your life in your new expensive environment. He or she may also be making a healthy income.
Living in an inexpensive city is like trying to save your way to riches. It's possible, but there's only so much money you can save. Living in an expensive city is like trying to earn your way to riches. It'll take a lot more effort, but the upside is unlimited!
Related posts:
When Is The Best Time To Travel Or Live Abroad With Kids
The Cheapest International City In The World: San Francisco
Best Credit Cards For International Travel
Wealth Building Recommendations
1) Invest in the heartland of America.
Although I'm a proponent of big city living to make the most amount of money possible, there is a demographic shift towards lower cost states and cities. The internet and the pandemic have accelerated this shift.
As a result, I think investing in real estate across lower cost areas of the country is a smart idea. The investment trend should be multiple decades long. The easiest way to invest these cities is through Fundrise.
Fundrise has been around since 2012 and manages around $3 billion for 380,000+ investors. You can get started investing with as little as $10. Both are free to sign up and explore.
I've personally invested over $300,000 in Fundrise to diversify my real estate and private equity holdings. Fundrise is a long-time sponsor of Financial samurai and Financial Samurai is a six-figure investor in Fundrise funds.
2) Track your wealth better.
In order to optimize your finances, you’ve first got to track your finances. I recommend signing up for Empower’s free financial tools. With the tool, you can track your net worth, analyze your investment portfolios for excessive fees. You can also run your financials through their fantastic Retirement Planning Calculator.
Those who are on top of their finances build much greater wealth longer term than those who don’t. I’ve used Empower since 2012. It’s the best free financial app out there to manage your money.
Living In An Expensive City Can Make You Richer And Happier is a FS original post. Join 60,000+ others and sign up for my free weekly newsletter.
I googled this and your article came up. I could not agree more. I am taking an extended break from London after living there for 5 years and am back in Calgary Canada my hometown which is considerably more affordable but it feels horribly homogenous and dull, not to mention drastically cold in the winter at times… I am here for a few reasons but I cannot tell how much I can’t wait to go back!!
Evergreen article! I agree 100% about the traveling abroad requirement. I was supposed to have a study abroad summer in Singapore/HK/Asia when the last H1N1 shut down my plans. I think the cross-cultural exchanges have to continue somehow if we don’t want more Brexit events of isolation fallout.
On the idea of living in an expensive city, my sister has been in NYC for a decade now and for her fashion and art industry, I get it. But it’s now almost 2021, and I’m witnessing the IT geo-arbitrage first-hand from SF. Even one of my tennis students is a ph.D from Stanford and at least 3 SF’ers have moved into this La Jolla area near the I-5, likely because of covid. So much so that Uhaul’s are going for $3K one way!
The past 2 months before we went into Purple tier, I had been scouting for homes with a Zillow realtor in the San Diego area (closer to Encinitas and Carlsbad) so tempting with the low rates and 7-8% appreciation in real estate seemed like a good move while I sell my rental back in DC (Vienna, VA) to the Amazon crowd moving in.
However, after my 20% down offer the owner wanted a 3% markup due to another coompetiting offer just 2 days after it was listed. I decided that a 3/2 townhouse is just too much space for a single guy to maintain and weird to try to squat in suburbia during a lockdown.
The new California exodus locations now are: 1) Austin with the Elons and 2) Las Vegas with rich Cali investor money. With so much work from home opts and no foreseeable reversal even after this is over.
Q: Do you think new super-cities are going to start forming and up the cost of living in those areas? Anyone think it is a better choice to jump ship now or rent in SoCal a while longer to see if any bubbles or major legislation for a wealth tax appears? (*Hopefully, this is a good segway into another article*)
Hmm…I think you should update a section about remote work – as that’s where the economy is moving. For myself, I found your article wondering if I should buy a cheap middle class home in Georgia, or move to New York City for the “other benefits” and it didn’t answer that question.
With remote work, or running your own business remotely, it *seems* like moving outside of city is the right move on the surface. But then it’s three key functions: (a) a lack of culture and (b) if single, a lack of dating pool (c) distance to family and close friends.
Hope to see an update soon!
The post is updated for the new decade and the pandemic! For every 1 person who leaves a big city, 1.2 people will take his or her place. The opportunities are endless.
If you want to save and have less density, then move a little far away from city center. I’m saving 40% by moving 3 miles west in SF. Best near-term real estate investment opp!
I hope you’re saving more than 40% by living in a boat in the ocean 3 miles west of SF. Literally, ocean beach is the westmost part of SF and the only thing more west is the ocean.
You do know that a lot of now expensive places “San Francisco, Seattle” got hyped up housing market is mostly because of wealthy Chinese immigrants buying million to multimillion dollar houses right? Rent don’t get hyped up Crazy like that because of “income” it’s because of millionaires. And renting $4000 apartment/houses doesn’t make you a good candidate to live in these cities, as long as you’re renting you’re not wealthy enough to live there. And living on an average income of mid $100Ks would never be enough to buy a house there. So unless you’re a millionaire, you’re not wealthy enough to live in these places.
Sure.
I think you’ll enjoy this post:
Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today
Why I Failed At Early Retirement: A Love Story
This article is total nonsense. Get a solid degree in a high paying field, work in a big city at the beginning of your career, but then transfer to one of several lower cost yet great job markets around the country. I live in Dallas and am able to save 4 times what I did in New York and can invest in rental properties to accelerate my net worth creation. Good luck doing that in NYC or SF..
Only life doesn’t work anyway you’d like it. There’s more wealthy people in high COL areas and more poor people in lower COL areas for a reason. More opportunity and higher pay in wealthier areas. You don’t just “have a super high paying job in a poor place”
Life isn’t that simple.
As someone who has lived in NYC and Dallas, I would say that life does work like this: “have a super high paying job in a *low cost of living* area”
In fact, as long as you’re working remotely (which I do), you can really take advantage of this.
Moving to Denver area, much higher COL than Fort Worth, where I am moving from. If I wasn’t married and have a child I don’t think it would be a challenge at all, but figuring things out with them is proving a challenge for sure. Its interesting, all the posts I have read of yours (sporadically) have all been made with the assumption that the reader has a very high income. It is interesting, I assume everyone is making less, you assume they make more. Curious why the difference. Take care!
I absolutely LOVE this article. It’s very true that living expensively forces us into frugality as well as makes us feel much safer, happier, more likely to want to bring people into our home and socialize, take more pride in where we live…
I have been hearing endlessly about how I shouldn’t get into my townhouse in Scottsdale, AZ because it’s at the top of my budget, but I got it walking distance from work and much closer to my daughter’s school (saving on gas!), it has a community gym so I can cancel my $50 per mo gym membership, I can save money going home to eat instead of buying take-out, it’s a much bigger place than my old crummy apartment way out west so I will actually WANT to be home more, which will save me money….it really does seem to pay off!
Thanks for sharing!
“income if we are to keep the ratio of gross income:housing cost the same at 1:4.”
^this is the key problem with your logic. You assume that people in San Francisco make an average of 4x more money than those in Cincinnati.
Median household income, San Francisco: $78000
Median household income, Cincinnati: $48000
You are correct that people make more money in San Francisco, but only about 50% more on average. Compare that with the fact that San Francisco is, as you say, 4x more expensive (that’s 300%) and it’s pretty simple: the higher salary does not outweigh the cost of living.
The household income of 300K in San Francisco that you are using to make your argument is, literally, 4 times more than the 78K the average household is actually making.
I wish I could relate to anything you said in this post.
I live in the most expensive city in the world. That is Luanda. Where the cheapest hotel costs you 600 bucks a night, with dial-up internet. Or with no internet at all. (Do some Googling)
Where a plate of food can cost you 200 dollars. Where a basic internet monthly plan can cost you a thousand bucks for a caped limit of maybe 20gb.
With all that said, I manage a hotel. And my salary is 500 dollars a month. Meaning I make 6 grand a year, while the average new yorker makes the same (if not more) a month. Those below me make a third or a fourth of what I earn. With my salary, I can only live for this much until I get into an endless debt. So much for being advantageous! As you can see, not the whole world lives like you described. So be thankful.
Jesus. Move to America, bring the whole family here.
[…] You’ll get out of your bubble. I always encourage folks to travel internationally to gain perspective. Once you gain perspective on how amazing America is, you’ll no longer complain as much about […]
You say the market is efficient, yet you also agree that rich people game any system that you’ve discussed on this blog. Isn’t that a contradiction? How can we have efficient markets when they are gamed to benefit those who already have (like the 2008 bailout)?
Heads you win, tails you lose.
You’ll enjoy this post: Why Debt Welchers Are ADMIRED
[…] you think a $500,000 a year household income can be considered average if you have two kids while living in expensive cities like New York, San Francisco, Hong Kong, London, Paris, Stockholm, LA or Singapore? Why do you […]
I spent three years living in DC, for grad school and work, and can definitely say that the cost of living was a killer. Even with roommates I wasn’t able to save any money to pay off debts and get ahead.* I’ve found its much easier to save money after moving to the Twin Cities. Plus, the cost of housing is cheap compared to rent, and rental property is very affordable. There is no way you could afford a place in DC unless you’re willing to buy in some very sketchy areas.
Sure, there is less diversity in Minnesota and in other, smaller states, but it really matters if you have a lot of local connections to a place. You can’t replace a close network of friends and family who’ve known you for decades with a loose assortment of people you’ve met here and there. I’ve known some military brats who don’t understand what the word “home” really means because their family moved so much, and that is incredibly sad.
*Granted, it might have helped had I been able to land a non-contract job, but while I managed to miss the recession in the private sector I got hit after graduation when the government finally started cutting its budget in 2011. There are so many MA’s in DC that you wouldn’t even get hired to fetch coffee. All there was available was contract work, and that pays half what you’d earn as an official employee in just about any location. Still, in my experience DC is a place of extremes. You’re either doing very well or you’re just getting by, and you don’t ahead when you’re fighting just to stay in place.
[…] is still expensive compared to cities such as Seoul, Kuala Lumpur, Siem Reap, and Taipei. I’m biased towards expensive city living because that’s most of what I know best. There’s only upside when you leave an […]
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I live in Baltimore. Say what you want; if you haven’t been here before then you probably don’t know what you are taking about. I moved to the area after college with a well paying government contracting job.
I was able to payoff all of my student loans within the first year and a half out of college. I was able to do that by living frugally and focusing on them. Based on what my other friends were making in New York and Boston and what they were paying to live there, I probably would not have been able to do that.
Now I work for a startup and work from home. I’ve been able to perform Geo arbitrage: make a good salary and not have many expenses.
People my age are buying houses in the area. I personally am not going to because I see that Baltimore is a small town and only has so much potential for the startup realm. I really love my job now. My next goal is to move to a city like San Fransisco that has a larger startup culture. I would have greater job opportunities there.
Don’t get me wrong though. I will always have a special place in my heart for Baltimore. It allowed me to get my finances on track after college. I’m glad I didn’t move straight to NYC as a broke graduate because “its what you do”. Now that I feel financially secure with no student loans and a healthy emergency fund, I’d like to consider moving to a more expensive city for the greater job oppotunities and higher standard of living.
My husband and I are both Dallas transplants (from Birmingham and Minneapolis), and although neither of us thought we’d stay here forever when we came, the combination of a strong job market and low cost of living is hard to beat. Both of us are in finance with 6 figure incomes, and with no state income taxes and relatively low housing costs we have plenty of money to save and to spend. The city is surprisingly diverse and has plenty to do too, depending on your scene (concerts, the arts, professional sports).
We looked at relocating to SF last year, and we both could have probably negotiated roughly 25% raises to move laterally into similar positions. It’s my husband’s favorite city and we got engaged there, but we just couldn’t justify the hit our lifestyle and savings rate would take to make the move. I did a detailed budget and even looked at potential rental listings, but even after giving up one of our cars we’d need to decrease savings slightly and live in a MUCH less cool (yet more expensive) place to make up for the increased tax hit.
If you can make $200,000+ in Dallas, and enjoy Dallas, that is a homerun for your finances!
I wouldn’t relocate to SF then, and just visit.
I’m a social worker who lives in Missouri. I want to move to San Francisco. However, my income will only be about $10,000 more a year there, while my rent alone will likely go up that much. Other “middle ground” cities like Portland pay less than what I make here. I want very much to move, but I don’t see how I can afford it. Not every job in an expensive city pays well, not even when it requires a master’s degree.
Hi Miranda, thank you for being a social worker! We need more people like you!
Yes, moving to an expensive city as a social worker will likely be a bad move for your individual finances, unless you find someone you love who does well financially. This happens more than people think actually.
Related: How To Get A Rich Man To Be Your Boyfriend Or Husband
This is really interesting. This post got me thinking… damn you. The one point of your article that really hits home to me is seeing how others really live outside of the US. My wife and I got married in St. Lucia, and have been to Turks & Caicos and Mexico since then for vacations. While all of these places had really nice resorts, the towns showed us what it was really like in those places. People live in what most of us would consider a run-down shack with no windows, no door, and barely a roof. Yet this is their HOME.
We complain about things like a “non-modern” kitchen, so we go out and spend $60,000 of money we don’t have to upgrade it. It’s disgusting when you think about it. Maybe it’s time for us to take a step back and look at how we’re living our lives. What would one of those local St. Lucians say if they saw how we lived? Is that what we’re going for?
At risk of going on a rant here, I really do appreciate this article – it brings up some excellent thoughts I think all of your readers can benefit from. Thank you.
Howdy Chris! Thanks for reading and sharing your thoughts. You hit the nail on the head about traveling abroad. It will change you for the better. The whining and complaining will get turned down to a minimum. As a result, we’ll appreciate more, and do more with our circumstances!
I feel really blessed to have been able to see so many places overseas and across the US. It really is eye opening to see how so many people live from desperately poor to super rich. We really do have more than we realize and I’m grateful that I was always able to go to school, have clean drinking water and never went to bed hungry. Things are certainly expensive in SF and that has taught me to be disciplined with my money and to stay focused.
Living in the Bay Area doesn’t make sense if you can get a good job somewhere else. Well yes, there are thousands of people who got into the right start up and made millions, but it’s still less than 1%. If you are in IT you get paid pretty much the same everywhere in the West Coast. Like I make ~$300k no matter where I live and I could have chosen to pay $6000/mo mortgage in San Fran or $2000/mo in Portland. I chose Portland. Now I have extra $4000/mo to put in stocks (or just enjoying life!). (I have to admit I got into IT in Bay Area and lived there for 10 years, but living there with a family didn’t make any sense financially..)
+1 for sales guys. I live in Atlanta and my income is not tied to location. Networking is just a LinkedIn request (or flight to an industry event) away…
It’s more important that you pick the right (ie, high-paying) industry, than the right location. The HQ location is irrelevant. Most companies prefer their field staff to be closer to the customer anyhow.
For example: I’d venture to guess that the average income of passengers on an MD88 en route to Bentonville, AR surpasses 767’s to/from SF on most any given day.
Sam your thoughts?
I would bet that you’re right!
As a two physician family in the Midwest, there is no ROI in relocating to a higher income city for us. Actually, physician incomes are less due to increased competition in the expensive cities you mentioned along with significantly worse lifestyles. Having attended Stanford, I can attest my doctor friends in the Bay Area are NOT living as nice a lifestyle as we are. We are in our forties and are both semi-retired despite making combined gross income in excess of $700K. Since we have no debt (including mortgage) and save over 50% gross per year, money is simply not a problem for us. (It helps that we both grew up middle class and are somewhat conservative with our spending.) We travel a lot with our family and when I reflect how my day to day life would be in these major US cities, I cannot fathom ever moving. There are plenty of highly educated and successful people here, so I certainly don’t feel like I settled for less in life particularly when my peer group feels the same way I do. (Even my neighbor, a billionaire by the way, feels the same way but of course he is in a completely different league than me!)
At my last Stanford reunion, only the minority of Bay Area residents were living the lifestyles of the rich and famous. The bulk of folks in IT were just trying to get by working for the big companies or start-ups. The doctors in the group were definitely not living the glamorous life. Yes, there are outliers, but from my perspective, your analysis doesn’t apply to most physicians. For us, we would make half of what we make here in SF (working full time I might add). We would also still have a big mortgage payment along with many other expenses we do not incur at present. I fail to see how we could save as much as we do in SF. It is mathematically impossible. Once you get to financial house in order with a big cushion, the world looks a lot brighter, wherever you live!
I agree about physicians making less in big cities, and much more in less densely populated areas. Yet, there are many more physicians in more expensive areas due to choice. They believe the more expensive areas have a better lifestyle and perhaps education.
Where do you guys live? That’s the missing variable from your comprehensive comment.
For the sake of our privacy, let’s say I live in a city like Cleveland or Pittsburgh. As for financial choices physicians make, they have much to be desired. This informed opinion comes from my personal observations, reading the White Coat Investor blog, and helping some of my physician friends with their finances. For being reasonably intelligent people, most doctors just don’t understand (or care to understand) personal finance.
Many doctors I know that live in the cities you mentioned do so for family reasons, research opportunities at major academic centers, or ego. It’s certainly not for the ROI of 15 years of education after high school. Physician incomes are partly based on supply and demand. SF has some of the highest ratio’s of physicians:population in the country, especially psychiatrists! I’m not sure this translates necessarily to better health care for the general public, but it definitely translates to lower incomes and worse lifestyles for physicians.
As for education, I went to public HS and my kids go to an even better public HS (ranked top 20 in the country) or excellent private HS. I’m not sure I’d get a much better schools for them unless I sent them to boarding school at Exeter/Andover/etc.
I love you blog by the way. I’ve learned much from you. Thanks.
Every year, I read stories about interns and investment bankers commit suicide. Is the extra salaries worth it? Happiness is a state of mind. Wealth is also a state of mind to some extend.
Everybody regrets in the above story.
I read that story too. It’s sad, and I do think it’s important for young folks to push back if they are really feeling the pain, as an early death is not worth it.
But I’m not sure whether it was the job that did this young man in, or his physical and mental health. I went through the two year rigorous analyst program at GS in NYC, and yes, it was pretty painful in 1999-2000, but I felt fortunate to have a job, let alone a front-line job at GS. But, I didn’t like the environment, so I left to a new firm in SF in 2001. If I didn’t leave, I would have left banking within 5 years.
My NHER is 6.96. Spending money used to be extremely painful, but somehow the more I spend the better my life becomes.
I’ve never lived in a place over 3,000 people, but because of this article I’m going to sell a bunch of stuff and visit my friend for a week in the city, just to try and get in. I would love to earn over 15k a year, maybe they’ll be a good job in the newspaper.
The problem is always the leases though, I mean who plans to live in the same spot for a whole year?
Where do you live where your NHER is only $6.96? That’s pretty incredible. Are you happy with your current situation now? Definitely don’t need to earn much with that type of expense!
It’s worth seeing if there are opportunities in more expensive areas by crashing at your friend’s place for free and pinging people online for jobs.