All of those places have prohibitively high cost of living to make saving six months of salary very much not trivial. It's possible, but it isn't anywhere close to trivial.
I'm living quite comfortably in San Francisco and spending a fraction of what I was spending in Texas. Why?
- No car. No gas. No upkeep. No payments. No insurance. No inspections. No car.
- Roommates. I HATE living alone so this was a no-brainer. If you insist on having your own place, then yeah it's probably going to sting. If not you can often find good deals.
- Food. A tech job often provides free or free-ish food. Plus I can get reasonably-priced staples at the market on the corner of my block. The culture here makes it much less likely I'll spend $400/mo at Olive Garden, Chili's, and The Red Lobster.
- Stuff. Don't need much. When I was in Texas I lived FAR away from anyone who really shared my geeky interests. I'm surrounded by them here. I simply don't have the urge to buy so much stuff to keep me occupied. I have the stuff I need and I spend most of my time doing things with people. These things are often free. Speaking of which...
- "funcheap". SF is famous for this (as is NYC). You can ALWAYS find cool stuff to do that costs little or no money. You can also, of course, find stuff that costs a lot of money. It's your choice, day by day.
Now if I couldn't stand to live with roommates or had a family to support, this would be a whole different story. Also, "high cost of living" really means $$$/sq ft vs $$/sq ft. It IS outrageous in places, but I'm much happier in my apartment with 1 bedroom to myself than I was in a 2600 square foot house in Texas. So yes, price per square foot is going to hurt on paper, but if "size doesn't matter", you might end up paying less by actual dollars.
Your mileage may vary, of course, but I'm pretty passionate about this since I stuck around in places that weren't right for me a lot longer than I should have... simply because I let popular rhetoric convince me that only dot com millionaires could afford to live in the Bay Area. They were wrong, and I was a fool for listening to them instead of exploring it for myself. Don't make my mistakes.
They were right if you ever want to have a family. You are building no equity in rent so you will essentially have to leave and start over somewhere else to have kids. Your story is fine as long as it ends with you being single and alone without any real assets.
America is not all subdivisions and white picket fences...
>You dont need to own property to have equity and to state otherwise is a disservice.
Again, you do if you want your cost of housing to go towards building equity.
Sure, theres equity in a house, but is that everything? Do I really need to leverage a loan against my own property to live comfortably? To send any future children to a great school? Do I need to end up so underwater with a mortgage to consider myself successful? The answer to all of these is no.
Presumably, the person we are chatting about is striving to save money, they may be in stocks or bonds instead of real estate... which are sometimes, though not always a better investment. They are assets, if not real.
So, this hypothetical person will have at least six months of salary to put towards whatever they decide to when they settle down.
> They were right if you ever want to have a family.
Not entirely. "Ever" is a really strong word. If you want to have a family later in life, that should not prevent you from living in places you'd like to experience. You will likely regret being so cautious at the exact time in your life when you had the least reason to be so.
> You are building no equity in rent
If you are saving a dramatic amount of money per month and putting that money away in savings or another investment vehicle, then I would argue that you very much are. People underestimate how little "equity" they actually build up when they didn't happen to buy before or early in a real estate bubble. In reality, the closing costs of acquiring the property, maintenance, insurance, and property taxes, and the (optional but likely) 6% sales commission the realtor takes when you decide to sell all add up and chip away at effective equity. True, equity will eventually outpace these costs, but the time that takes is a function of how well the market is doing and other externalities.
There's also a cost of liquidity. $10,000 sitting in a bank account at 0.1% is arguably worth more than $10,000 of equity in a house that might take 3 months to sell.
All of this means that unless you know you're going to buy a place and stay put for a while, you'd probably be better taking the cost difference and building "liquid equity" that you can use later.
> so you will essentially have to leave and start over somewhere else to have kids.
True, but that may be a complete non-problem depending on your disposition. Personally, I don't get attached to places. They're just boxes with soft places to sleep. Relationships make it a home. In my case, in the unlikely event I decided to start a family, I could buy a house relatively close to the apartment I live in now (if I so desired). I wouldn't call that starting over. By the way, I'd be able to buy that house because I was able to save a metric crap-ton of cash while living on next to nothing with cheap rent.
> Your story is fine as long as it ends with you being single and alone without any real assets.
As I believe I have demonstrated, you have no justification for this statement; none whatsoever. It's simply not the case that a person who choses to spend one part of his or her life saving money living with roommates in a fun town will be forever "trapped" by that choice.
Also, you might not have intended it this way, but that statement was mean-spirited.
You make a big assumption with that statement. It strongly (and wrongly) assumes that the monthly payments for owning a home are the same as the rent plus whatever you would be putting into savings. There are plenty of homes in other places you can buy for $2000/mo vs spending $2000/mo on rent in SF while saving separately in either case to maintain the liquidity you are talking about.
>As I believe I have demonstrated, you have no justification for this statement; none whatsoever. It's simply not the case that a person who choses to spend one part of his or her life saving money living with roommates in a fun town will be forever "trapped" by that choice.
The point is that the numbers in his story only work for the "fun" part of the life. Life experiences are great, but it's difficult to pay for your kid's college and save for retirement when you are pouring thousands a month down the drain with nothing (other than a good time) to show for it.
That's really what I'm getting at: if you're single and don't have a family, and you're happy with roommates and not living in a palace, then you can enjoy SF and not only not go broke, but you might save a penny or two.
Now if your life situation is such that the whole "single and don't have a family" thing doesn't apply, well then it... doesn't apply :)
In my opinion, your argument is very much valid if you want to raise a family or you just prefer to have your own place. Unless you make a lot of money, you're probably better off doing that elsewhere.
More details, please? I've been trying to look for places recently and everything seems to be exorbitantly priced.
- Everyone else is looking for that, too, so you need to act fast.
- It's not a dealbreaker to live in, say, the Tenderloin in SF, but do some research and make sure you're comfortable.
- People in SF will get 10 - 60 replies per day on an apartment listing, especially if the price is reasonable for the area. Stand out and be awesome.
- The same goes for the interview.
- Have stuff like bank statements and recent credit reports handing, and have the cash to make the move. So many people make it past the screening phase but then put their roommates on hold waiting for the "check in the mail". Money talks.
This always surprises me. If you get dozens of replies the instant you put a listing on CL, isn't that a sign your price is way too low? Why not add a few hundred $ per month and maybe have to wait three days to rent it out?
Since I'm annually paying around 3% of the market price of my apartment, and you're paying X% interest annually on your mortgage (minus tax breaks, but plus maintenance costs, etc.), there is some value of X at which I'm not really losing much money by renting, right?
The roommates part seems essential. There are a number of reasons but if I had to guess:
- With roommates you can often take advantage of someone who has been living there since before some recent price spikes (especially in certain neighborhoods). If you find a place by yourself, the landlord is free to charge whatever they want unless you can find a rent controlled apartment, but those have multi-year waiting lists.
- Vacant units are often renovated so the rent can be raised.
- Economies of scale. If you live by yourself chances are you want a place with your own kitchen, bathroom, etc. These are shared spaces in a roommate situation.
- There seems to be more competition for single-residency housing. I have no data to back this up, but just from talking to people it seems that there are more people who hate living with roommates than who hate living alone.
I am not very familiar with San Francisco, so I left myself some wiggle room ("(at least in most of those cities)") but having a roommate is not a requirement for anybody making a tech salary and wanting to save money in those other cities.
Because they value different things than you do; whether that's the food, the theaters, the museums, the climate, or the social culture, or something else. Different ones of those for different people.
> It's one of the most depressing place I've been to, it's like those dystopian movies...
Other than in the generic ways that most urban environments are "like those dystopian movies" to someone whose lived most of their life in a suburban environment, I don't really see it.
As long as they don't have a family or want to build equity in a home. The justifications for the costs in this thread are so myopic that it's baffling.
Okay, you said it's trivial for an entry-level engineer to save six months living expenses. That's $12k for housing and ~$4k for food and transportation. That's the majority of the leftover money after rent, taxes, transportation, and food for a year without any savings. I'm not sure you are correctly using the term 'trivial'.
Edit: Also, you didn't even address the direct counter-point to your argument that the savings is "trivial".
As far as addressing counterpoints, I've grown tired of quibbling. I think that you can live comfortably spending 66% of your income net of taxes per year without any undue effort if you make $80k a year in SF. I think anyone who looks into it would find the same to be true. That's my last word in this conversation.
That's fine. As long as you can admit that you are just arm-chairing it and haven't actually had to live under those restrictions.
Don't eat out everyday. Bring your lunch everyday. It can be done.
EDIT: Just checked Craigslist and I can STILL find stuff for under $1000/mo in numerous places in SF. The trick seems to be looking under "rooms / shared" and also not expecting to find a place in Pac Heights ;-)