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Comment by killjoywashere | Hacker News Reader

The last footnote got my attention:

> This sounds simple, but expenses for a family of three with a house in the Bay Area are no joke. It wound up being ~85% of my Google salary.

I live in the Bay area, but under exotic conditions. I would like to stay but when I do the math on the cost of staying, the numbers seem crazy to me. Like $500,000 annual to stay in this area, married with 2 kids in college. Am I don't the math wrong?

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It's not entirely clear, but I suspect the author is referring to their base salary at Google. The fact that Replit, a startup, provided a salary capable of covering his expenses (which were equal to 85% of his salary) is another clue that he's not included RSUs in the calculation.

> I would like to stay but when I do the math on the cost of staying, the numbers seem crazy to me. Like $500,000 annual to stay in this area, married with 2 kids in college.

Bay Area is definitely livable on far below $500K.

The "2 kids in college" makes your math impossible to guess because that could be anywhere from a minor footnote to the entirety of your budget if you're trying to pay full sticker price tuition in real-time with no prior savings (which almost nobody does, but it would make the math look terrifying). That's not really a feature of the Bay Area, though, because you'd carry that college line item on your personal budget wherever you moved.

California makes it more difficult in that the salary required for a home pushes you past thresholds for financial aid. You might be what’s known as “house poor” but the university sees the house as an asset that counts towards a high net worth. There are even some prestigious private universities offering “no tuition for families making less than $150k (or thereabouts)”.

(OP here)

Correct about not including RSUs in that footnote. Since I've always budgeted to live off salary and not bonus/RSUs, they weren't part of that particular calculation.

Obviously my W2 will look very different in 2022, since RSUs essentially get treated as cash grants and startup options are illiquid.

House (or medium/large condo): bought in last 3 years $1.5mm usd Mortgage (20% down): $105,000/year Property taxes: $17,000/year Maintenance: between $3600-11,000/year (including capital things like AC, roof, flooring, repainting interior, foundation amortized) Total: $133,000/year

Family: Grocery: $20,000/yr Daycare 2 kids: $48,000/yr (yes daycare is $2000/mo in SF... to START) Transportation: $8,000/yr (car payment + insurance + gas) Annual one week "really nice" vacation: $10,000 (4 round trip tickets, 2 hotel rooms, food, transport, entertainment etc) Misc costs: $10,000 Total: $96,000

Comes out to about $230k/year in raw expenses. These are pretty accurate for 2021 San Francisco 40 minutes walking distance from FiDi. Of course there's no way you'd qualify for an $8500/mo mortgage on that salary (19k/mo) so instead you'd have to settle for a 2 bedroom condo ($960,000? maybe? can you squeeze 2 adults and 2 kids into 1050 sq feet? long term?) for the four of you, sharing one car.

You might be able to pull this off on $300,000 with substantial help from family if they are local, but after taxes etc you will be struggling to save 1% of your income and not really building/maintaining an emergency fund or building savings for other projects/hobbies.

Seems kind of disingenuous to include the down payment as a cost considering, in principle, it's a transfer of one kind of wealth to another. Otherwise, your expenses line up well with my own family's expenses in the Bay Area.

Same for the monthly mortgage payment, at least the part that goes towards the principal.

> $1.5mm usd Mortgage (20% down): $105,000/year

That's way too high. https://www.bankrate.com/mortgages/mortgage-calculator/ gives ~83k/year at presumably today's interest rate (5.61%). At a quite plausible 3.5% it's ~65k.

If you put minimal effort into controlling costs this actually makes sense. But for a real-life example, my family of 3 (one kid) has expenses of about <1/3rd of that, childcare included.

That's a pretty real-life example. Are you an owner in that area that bought in the last three years? How long were you wait-listed on daycare? How close to fidi are you? If you're willing to cart your kid all the way to the sunset every day you can find cheaper daycare, or if you're renting your costs are going to be way lower.

The real killer is that if the house needs work - and it will, because the housing stock here is very old and wasn't exactly well built to begin with - the cost of the work in the bay area is 1.5x at least most other areas of the country.

The math depends largely on what sort of housing situation you are assuming. As you probably know. $1.5-$1.8MM is a small (1200-1500 sq ft.) 3bd/2bth ranch house in a San Jose suburb with mediocre schools and strip mall culture. (e.g., https://www.zillow.com/homedetails/1995-Majestic-Way-San-Jos...)

It goes up from there. Townhouses are getting close to $1.5MM now in the same area. I haven't followed prices in SF recently, but they are no better I assume. I think you'd be priced out of a small house on the peninsula at $500k/year.

If you're paying for college times 2, I don't know, $500k sounds kind of minimal with 7-10k a month mortgage if you want any sort of ability to save a meaningful amount of money.

Keep in mind you'll be paying $30k+ a year in property taxes every single year for the privilege of that house.

If you're trying to recreate the mid-west lifestyle of a 3-bedroom, 2,500 sq ft house with a big yard, new cars, in an excellent school district, then yeah, it's going to be expensive as hell.

This, if your lifestyle is completely inelastic you're gonna have a bad time. Even with double the pay you're not going to come close to the midwest in terms of house-size (without living in a really bad area/with a huge commute). If you are OK with not living in as large of a place, but having more money for physical goods (e.g. nice groceries/restaurants, gadgets and devices) and stuff that is mostly location-agnostic (vacations, investments) you might be substantially better off.

You definitely don't need $500k to rent a 3bed apartment in the South Bay. I think market rate is probably around $5.5k/mo? Call it an even $6k to include parking and utilities. Should be comfortably affordable on $200k with breathing room ($200k for a married couple with claimable dependents being roughly $146k after tax, $72k going to housing, $74k post-tax for whatever else), though not sure about kids' tuition.

Right now is a terrible time to buy a home in the South Bay (rising interest rates + RTO) so don't take all-in home ownership costs at face value.

> Am I doing the math wrong?

You’d need to show your estimated incomes and expenses and explain your retirement goals.

As a Bay Area native it seems high unless you’re paying $50k/yr for expensive colleges.

I’d expect the same to be doable with a reasonable social life and vacations for 300k (still a lot).

Many make do in the same situation for far far far less.

How long have the people doing it now on far far far less been doing it for? eg if they bought a house 10 years ago, their expenses are less. Could they do it now on the same amount?

I have no reference for the bay area living expenses, but it isn't correct to say that just because something was once doable that it still is.

All my wife's family bought houses here in the 80s. They would not be able to remotely afford to live here if they had to pay for housing at today's market rates. I think there is probably a lot of this in the Bay.

You're almost certainly doing the math wrong unless you are doing a comparison like "I live in a 3k square foot house with top schools and a 10m commute and need the exact same in the bay area".

I think you could probably make it work with half that salary, but you won’t feel particularly comfortable or financially secure.

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