Save Money by Moving, Comments from Readers

I received a ton of comments on my post titled Americans Fleeing Nation's Big Cities, most of them disagreeing with my suggestion that a great way to save money is to simply move to a less expensive city/area of the country. Here's the first comment:

Instead of moving to a cheaper area, I have often thought that if you lived in an expensive area from a housing standpoint and are able to make enough extra money to cover most or all of those extra costs that in the end you will be ahead.

Namely, work in that environment for 20 years and then sell your house and move to a much cheaper area of the country. Now you will have built equity in that house that far exceeds the equity you would have achieved in a much cheaper area of the country and you will pocket the difference when you move.

Is there a hole in that theory?

I'm not sure -- you tell me. It's certainly worked for people who bought houses in California 20 years ago and are now moving to Montana with enough money to buy a small subdivision. But can that be replicated consistently? I'm not so sure.

Here's our next comment:

I like San Jose, California. Some people may say that this place is over priced, traffic congested and jobs are hard to come by, but I see the opposite. In fact, this has been a place of opportunity for many of us. Terms of price - it's what the market bears...if you bought a home several years ago, you made a good return within a year - as much as 25%, and though the Real Estate market seems to be softening, newer homes on the market seem to be priced reasonably (especially condos), good enough for first time buyers to "invest"..and the best part of that is, in a few years, they will still make more money in terms of their equity, than other places I can think of else where in the U.S. (I am sure there are other places though.).

As for jobs, hi-tech is here, but there are a plethora of other industries that people can get into from the government sector to private/commercial industries (retail, construction, service, etc...).San Jose may not be the fastest growing city in America, like it use to be, but it has been noted as the safest big city in America, the healthiest city, and the cleanest city...and one other thing of note.a city of TRUE DIVERSITY...if you ever heard the term a "beige soceity"..come to San Jose California...it's truly a place where the minds and cultures from around the world come together, and makes my home one of the Great American Cities of our era.

I never said that people shouldn't live in one place or another, I've simply pointed out that there's a (big) cost difference in living in say New York versus Cincinnati. Obviously, you can choose to live where you like and spend what you like -- but there are alternatives. That's all I'm saying.

Here are some thoughts from a different perspective:

It's worked for my Apex. With the big city (san francisco) salary, and getting a house, I've gone very far. The big mortgage works out to a big tax break, dropping me down to a very low bracket, such that I'm able to pay the mortgage and still put 10% into 401K. Albeit, I can't save much outside of this, but 2 years into the market I just sold my condo to move into a home with even better appreciation rates, and I'm still 6 figures richer after I paid my real estate agent, which allowed me to pay off all my debt and build my emergency fund. The mortgage on the new home will be tougher, but even at depressed appreciation rates I'm looking at 10% on a 750K value every year leveraged off a small down payment.

I love FMF's advice, but there are always exceptions, and in this case, I think it works. Would it work for a family with children? Probably not, but for a single income high wage earner in a big city, it's turning out quite well indeed, especially at a young age (I'm 30). I'm planning on putting at least 10 years into this home to ride any depressions, then I'll probably skip town and buy a nice home outright, while leveraging my equity to build up some investment property along the way and continuing to pound my max into the 401K.

My goal? Rental income and a few side streams by age 40 so I can quite corporate America, then enough investment income and side streams by 50 to get out of the rental market. I'll be too old for the hassles. 50 on? Business as a hobby and community service sounds good about now.

Why do people always tout all the money they save on taxes by having a mortgage? Don't they know that they're paying more when you look at interest plus (reduced) taxes versus (higher) taxes alone?

Yes, there are exceptions, but the real estate market we've seen the past several years is not something you can bank on. It's like using 15% return to project your retirement savings. It's just not prudent or practical.

Next is a short comment that realizes that there are trade-offs:

I enjoy the diversity and culture of the New York area, but it comes at a high cost of living.

Finally, we end with this comment, from the tourist bureau of Chicago:

I live in Chicago and have most of my life, besides living in Sydney, Australia and Minneapolis. For me, there are so many benefits of living downtown that make the increased cost of living well worth it, but different people have different needs/lifestyles. I like to see lots of plays, try lots of new restaurants, and generally feel the vibrancy of all the people the city draws. I like to walk to work and have the latest and greatest at my fingertips.

Chicago is truly, in my opinion, the most livable of America's large cities. You get the best of the urban atmosphere without sacrificing the "neighborhood feel". I grew up in the city - graduated from a city (albeit private) high school - and it exposed me to things I would not have experienced perhaps in the suburbs. I was a pretty savvy kid by the time I hit college. I can't wait to raise my kids here too.

Ok, it wasn't from the tourist bureau, but it could have been. ;-)

Personally, I agree with much of this last commenter's thoughts. I love Chicago too. However, it is expensive and, like I've said before, it's a lifestyle choice.

I've lived in towns as small as 3,000 people and cities as large as Washington, D.C. I prefer the (often unrecognized) benefits of the suburbs of a mid-sized city. It gives me and my family the lifestyle we like -- and at a much cheaper cost than living in most other places.

Comments

[a]

Chi-town is CHEAP.