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December 01, 2016


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In my experience the best combination is a high income in a high cost area where your actual personal costs are low. Just because your coworkers are splashing out on the high priced amenities around you doesn't mean you have to do likewise.

As an example look at the YouTube video made by a young Google engineer who earns in the low 200s per year and who lives in an RV parked on the company lot instead of paying the local median 5k/month apartment rent. Around here the big expense is rent; most other stuff isn't that much higher than flyover. If the 'free housing' approach seems too extreme, look for room rentals or (illegal) garage conversions. Or if you don't mind a long and windy commute, rents in Los Banos are much lower than San Jose. People who earn minimum wage are living in silicon valley, find out how they manage and you can do likewise.

That kid in the video is pulling down enough after taxes to add a couple of rental properties in some college town or Florida every year to his portfolio, so it won't be long before he reaches financial independence (assuming he's willing to leave the valley).


So why is living in a high cost area better than a low cost one?

I can do all the things the guy living in an RV can do, but I live in a 5 bedroom house in a nice neighborhood. I'm warm in the winter, cool in the summer, and have plenty of room for guests (which are many as we live in a tourist destination near the mountains). There's NO WAY I'd want to sacrifice my quality of living (and that of my family) by living in an RV.

Also, it's not just housing. Food and taxes are two other HUGE costs in most coasts. And if you own a car...don't get me started...

This only makes sense if your income is much higher in the high cost location than what you can earn in a low cost location. Lots of people from very low cost parts of the world aspire to working in the USA for just this reason, it's not the higher living costs they're after, it's the better opportunities. If they could earn as much staying where they are, I imagine there would be a lot less draw.

Where I work new hires fresh out of college aren't given the chance to work remotely, not right away anyway. The initial training and first decade or so are on site. And if you do start working remotely you're no longer on the executive management track, as our entire C-suite is firmly entrenched in corporate HQ and face time is critical here. Plus networking from far afield isn't quite the same.

Anyway it's all about choices. In the valley if you insist on ample space in a top school district, early retirement is hard to pull off, but if you're willing to sacrifice for the time being, you can probably net enough to be done in 10 to 15 years provided you're willing to settle into that low cost location after you're finished working.

As for costs, good point about state income taxes, for me that's double my apartment rent. But then everything else (including car) adds up to less than a quarter of my rent.

My point is about living within the USA.

You can make $200k a year in Grand Rapids, Michigan or $200k in San Francisco. Guess which one goes farther?

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