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Comment by nostrademons | Hacker News Reader

That is so incredibly misleading.

The problem with these cost-of-living adjusters is that they don't consider which goods are location-dependent and which aren't. So yes, your rent will probably be double in SF what it is in Houston. However, if you make $100K, rent is only a small portion of your income. And a dollar of savings in SF is just as good as a dollar of savings in Houston.

The way COL-calculators should work is that they should take a basket of monthly expenses typical for someone in the given income bracket, index that to the given location, and then subtract that from your salary offer in the new area. It's not a straight linear sliding scale. I would much rather be making $186k in SF than $100K in Houston, because I'd only be spending about $40K in living expenses in SF vs. $25K in Houston, and $186k - $40K = $146k is much greater than $100K - $25K = $75k.

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You have to factor in taxes also:

186000 SF Income -46497 federal income tax - 8170 FICA tax - 2697 Medicare tax -15473 California state income tax -40000 Living expenses ------ 73163 Savings

100000 Houston income -21709 Federal income tax - 7650 FICA tax - 1450 Medicare tax -25000 Living expenses ------ 44191 Savings

SF still comes out on top, so I imagine the breakeven point is somewhere closer to 160K in SF.

This a million times over. I've tried to explain this so many times to my friends who insist on making sub $80k in backwater places citing cost of living "advantages". Uh, no. A BMW or iPhone will cost about the same in Tulsa as it does in New York City.

As much as I love New York, this isn't true, at least for the car. The base payment on the BMW will be the same (call it $600 if you buy) but your insurance will be higher in urban areas, you may pay as much as $300-400 a month for parking in Manhattan, and gas is probably higher as well.

So that car ends up being 20-30% more expensive in NY vs. a rural area, or even vs. say Los Angeles, where a parking space runs about $100 a month. This is why so few people living in Manhattan have cars - the net cost is well over $1,000 a month and you might as well just rent all the time.

Actually, insurance is not the killer in Manhattan. Parking is. Insurance is a very flexible cost.

Although I always assumed that living in NYC, I wouldn't have a car. Take the car insurance, gas, and depreciation costs of the car and put it towards rent and call it even.

Fine, some things cost more but my point still stands: national products are the same or almost the same cost.

For people in typical earnings ranges, the majority of your income is spent on location-dependent costs: taxes, rent, insurance, food, entertainment, etc, not on discretionary spending like BMWs* or iPhones.

*) Also, BMW's only cost you the same everywhere if you pay sticker for a new car. Used cars have significantly different prices in different zip codes.

Sounds like a great project for someone: realcostofliving.com

Just wait until the Square API comes out.

One big thing: you probably need to maintain one car per adult member of the household in Houston, but can live well with <=1 car in San Francisco proper.

With insurance, maintenance, and amortized vehicle cost, you're probably $1500/year/car minimum. More if you want a car that's a status symbol.

Cost of living calculators are probably not that misleading for people in the $100k range.

Your after-tax income in Houston on $100k salary is $73k. Your after-tax income in San Fran on $186k salary is $111k.

So taxes alone reduce the initial $86k difference to $38k.

A similarly nice apartment in San Fran will easily run you $2k/mo more than in Houston, reducing the difference to $14k.

The difference will be further reduced by other location dependent expenses: property and sales taxes, food, insurance, gas, entertainment, etc. A Big Mac in New York costs 50% more than a Big Mac in Miami.* Movie tickets in New York are about $12.50 versus $7.50 nationwide. A drink at a bar is about double in New York versus in Atlanta (where I used to live).

) http://research.stlouisfed.org/publications/review/03/11/pak..., p. 24.

*) http://jabcatmovies.com/2010/01/movie-ticket-prices-new-york...

>....if you make $100K, rent is only a small portion of your income.

I'm not sure what you are thinking here.

If you make 100K, your take home pay after taxes is ~$6,000. For any reasonable place to live in SF - your going to be between 1800 and 2500 for a two bedroom.

Thats not "a small portion of your income"

Additionally - you may have health care costs of as much as 750 per month if you have a spouse and child on your plan.

Figure as much as 400 to 600 per month for a car. 100 for cable, 150 for an unlimited family cell plan. School costs for your kid, and god-forbid you. like me, have child support to an ex.

So:

6000 Income

750 insurance

2000 rent

100 internet/tv

150 cell

100 power

1000 kids school/child support

250 other debts

600 car+insurance

== 4950

That leaves 1050 for the remainder of the month. Which is ~260 each week for expenses such as food, gas, savings, a beer with friends, date night, a bottle of wine etc...

100k is literally the bare min in SF to live moderately comfortable.

Now assuming you didn't have the school/child support, you can replace that with savings, which is great. but for a lot of people it is a 1K expense not savings.

Additionally - this doesn't account for a lot of other potential monthly expenses that are common.

I was one of the poor, unprofessional slobs who only made $100K or so in SF and NYC. I thought I was living a pretty good life, but maybe I should be ashamed that I'm not a millionaire CPA (huh?).

Here's a typical programmer bachelor situation.

I made about $6000K after tax and contributions to retirement account in SF and NYC.

car = $0

insurance = $0, paid for by employer

other debts = $0

iPhone = $80

rent = $1000 studio or share

utilities + wifi = $250

metro card/transit pass = $80

You can fudge those numbers a bit for a better apartment/room and maybe zip car or even your own beater car, and you're still usually under $2K. I didn't put food in there because that was highly variable, even for me. I saved $24,000 a year without thinking about it, and still experimented with motorcycles, snowboards, music gear, travel, etc.

You essentially have $4000 - $4500 a month to save or spend on food + whatever you want.

"rent = $1000 studio or share"

Uh huh. Now, do that when you're 35, with a wife and two kids.

I think it's easy to forget that people in other parts of the country do things like raise families. Also, most people don't generally want to live with roommates past their 20s. It gets old.

I know where you're coming from -- I live a fairly frugal lifestyle, and I'm doing fine while renting an apartment in SF with no wife and no kids. But I'm also in my 30s, and I think I'm on the extreme outer edge of tolerance for the kind of life I'm leading. My friends with children tease me all the time: they wouldn't dream of living the way that I do.

That said, I'd also be going nuts if I lived like I did when I was 25. YMMV, but probably not by much.

If you're married with kids, presumably you have a second income. The great-grandparent poster did figure in $1000/month for childcare. That $6k/month becomes $12k/month if your wife makes as much.

Anyway, my parents raised my sister and I on a single teacher's salary that was a lot less than $100K. Yes, kids do cost more than being a bachelor. However, a lot of the expenses I see batted around as justification for why you need $100K just to live today are utterly ridiculous. 90% of American households get by with much less than that.

"Anyway, my parents raised my sister and I on a single teacher's salary that was a lot less than $100K. Yes, kids do cost more than being a bachelor. However, a lot of the expenses I see batted around as justification for why you need $100K just to live today are utterly ridiculous. 90% of American households get by with much less than that."

Yes, they do. In other parts of the country.

What your parents did 20+ years ago has very little bearing on the cost of raising a family in San Francisco, today. It takes more than one spouse with a sub-$100k job. Again, $100k just isn't that much money in a place where rent on a decent one-bedroom starts at $2,000 a month.

>...Anyway, my parents raised my sister and I on a single teacher's salary that was a lot less than $100K

Sure, when? 15+ years ago?

Also, why would you assume that my SO also makes 100K? She doesnt, as a hair stylist - she makes very little comparatively.

What egregious expenses did I have in my post if anything? The ONLY luxury items I had in my list were a beer with friends and a bottle of wine.

The problem I think we are seeing here is that everyone who thinks that 100K is a lot of money is:

Not/has not been Married

Has no kids

Is under 35

Also, @JasonKester: "wearing monogrammed blazers to school"

You fail to understand that simply having a kid is going to cost you ~1500 in childcare expenses, assuming you dont have a stay at home SO to watch after the child.

Its not a status statement -- try looking up what freaking baby sitters/nannies cost for an infant, whom you cannot slap a monogrammed badge on their blazer and dump them off on the corner.

This is a common problem with YC/HN -- there are a lot of <30-somethings thinking they have it all figured out.

/lawn

But 15 years ago was only 95. I mean, that's not old... that's only....

Dear god. >_<

Well, I did say it was a bachelor's perspective.

FYI, no one is paying $1,000/month for rent in NYC... At least not anywhere reasonably close to Manhattan.

I shared a 3BR apt in Williamsburg and paid $1000, then moved into a 1BR down the street that was $1500. 12 minutes to Union Square.

I pay 1150 for a one bedroom with a one hour commute to Manhattan via subway.

One hour each way or total?!

One hour each way.

I hope you realize that most of those numbers are either entirely optional, or have been inflated to suit your tastes.

If you were willing to downgrade your lifestyle, you could surely find an apartment for $1,500/month, DSL for $20/month (and no cable tv), a prepaid phone that runs you more like $20/month (but doesn't let you throw birds at pigs), a car that costs you less than $200/month to run (and sits in your driveway instead of commuting you to work), and no other debts whatsoever.

That still leaves you with your expensive health insurance and kids wearing monogrammed blazers to school. And an extra grand for beer money.

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