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August 14, 2006


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Take this theory and apply it toward 30 million or so people who live in the northern states and will begin retiring (baby boomers) in 2011-2030 and what you have left is "de-gentrification" of many cities in the northern states with high cost of living. To quote Ross Perot in a different way, there will be a giant sucking sound of real estate owners moving from New York to places like Texas, Arizona and New Mexico.

Having lived in Texas my whole life, each year we were greeted by "winter Texans" who were usually elderly people who migrated from the northern cold to the warmer south during the winter months. With cost of living increasing daily, I don't see why anyone who is retired/retiring would want to live in places like New York, Philidelphia or Chicago. Boomers can and likely will cash out of their overpriced real estate in New York and live like kings in the south.

Had to comment on this one, speaking as one of those New Yorkers who doesn't want to move to someplace cheaper!
What about the issue of salary increases? If you live in an expensive city with higher salaries, your X% raise each year is X% of a bigger number. That adds up and eventually is more savings that grow by compounding, etc.
Not sure about doing the math to see if I could still end up richer than if I lived in Cleveland, though!

On the retirement issue mentioned by the first commenter, I know there are lots of tax reasons that make it attractive to move out of NYC, but in some ways, this is such an easy place for old people to live-- elevator buildings with doormen, delis on every corner, lots of hospitals... it's like assisted living lite!

I have to chime in on this. We are doing a startup (no self promoting link) that focuses on how to help people make better financial decisions - without ruining the quality of their lives. I don't think this advice works for most people. This isn't a judgment on the more affordable cities, (I live in Oakland instead of SF for exactly the reasons you listed) but an observation how to get people to make good decisions. If someone derives a lot of satisfaction from living in Manhattan, but needs to save money...maybe they can tolerate Brooklyn or Queens, but they aren't going to want to live in Cleveland.

I think it sets people up to feel guilty for making a reasonable, if costly decision.

2 quick comments:

Side A: 5 years ago I moved from San Jose, CA to Raleigh, NC I took a 33% pay cut to do so, but was able to afford a house in doing so.

Side B: A friend of mine still lives in San Jose, while he still can't afford a house (and is looking to move in a couple of years to do so) he has been able to max out his 401k every year because of his high salary.

Jason makes a great point. I live in Brooklyn, not Manhattan!

I'm trying to pull this trick myself. I currently live in Los Angeles, and it looks like I will be able to move to Ohio and make basically the same salary. Within a two week period I had a chance to look at new housing here and there; it truely boggles the mind how out of whack things are.

I'm trying to save money living upstate, Hudson Valley, NY and the prices of houses, condos & townhomes are unbelievably expensive! More and more people are moving up here from the city, and causing everything up here to skyrocket! I have to commute to NYC 4 hours a day to be able to afford where I'm living. I can't even save money because my commute keeps going up as well. Cities are not for single people because single people simply can't afford it on their own. I'm thinking of going down near Myrtle Beach, SC. Some housing his half the price. The only issue, is jobs. It doesn't end. I want to live where I'm happy, not miserable for a damn paycheck!

most cities today offer the same lifestyle - good restaurants, the arts, diversity - in varying degress. the difference is one's mindset. if you think you can only be hip and happening in expensive SF or NYC then you will not be happy in affordable Cleveland or say Kansas City - both of which are expanding their museums, have great cultural and sports events, all the "it" stores like Whole Foods, William Sonoma, Crate and Barrel - and are fairly tolerant political/religious places to live. i mean who can justify the average house price of $ 850,000 in SF when I can find a beautiful home with yard in a great hood in Cleveland or KC for $ 225,000!!! The only negative may be the weather, but hey, there is alway a/c and plenty of heat!

This is nuts. There is a very good reason people move to the major cities and their is a reason for the brain-drain from the rest of the country into these areas. Let's put aside the lifestyle reasons for a moment and just focus on money. The opportunities you have in places like New York or SF are infinitely greater than they are in places like Cleveland. I'm in my 20s as are most of my friends. We live in NYC. I don't know a single person who earns less than $100,000 and most people earn much much more. Its because this is the business capital of the country. I know so many people my age who earn $300K+, a couple people I know make close to or over $1MM. Absolutely serious. Just in Manhattan alone there are hundreds of thousands of people who work on Wall St. and are fairly young earning more money in 1 year than the typical person earns in a lifetime. Also, the only real cost difference is housing. Granted this is much higher than it is in Cleveland. But Manhattan is also a much better investment than Cleveland. Even in this crappy housing market, Manhattan prices are still rising. Demand for Manhattan real estate is global and actually relative to its counterpart cities like London, Tokyo, Hong Kong, etc. it is still cheap. So you pay more for housing, but its equity you're building and its growing. Meanwhile you have an infinite number of entertainment options, cultural options, you meet a remarkable variety of people. I play football in the park with guys ranging from artists/singers who live in Brooklyn to Wall Street bankers who make millions per year and live in exclusive buildings along the park. My salary relative to my peers here in Manhattan is nothing great, maybe average or slightly above, and I have over $1 million in cash and stocks put away. Would it be that easy for me to do that in Cleveland by the time I was 28? Ha! The idea is laughable.

If your goal is to just be an average person than yes maybe it makes sense to live in a place like Cleveland instead of SF or NYC. But if you're goal is to really make something of yourself, stop focusing on the pennies and look at the big picture.

You're not taking into account items that have fixed costs across the US or the ease of traveling. We made a move to a smaller city with this in mind and discovered that things like airfare are out of this world expensive. It is *cheap* to fly in and out of New York to just about everywhere. In addition, costs for goods are basically fixed across the nation. Look at prices online like at and other places. A $1000 purchase of say a television is a far larger part of your income when you live in an area with a "lower" cost of living.

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