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Reasons it is easier to live in a HCOLA...

September 22nd, 2008 at 01:18 pm

Yeah, I got to go back to the one-income talks again.

I noticed something else from the direction of the discussion. I notice that if you can get your housing costs down (which we have done) in a HCOLA, you can do QUITE well.

There are a number of reasons why.

Because we grew up in such an expensive area (insane, really) we were always looking for ways to cut costs down. In college I shared a house with strangers. The $400 rent for the nice big private room in the nice neighborhood was a STEAL compared to the $1k price tag on a studio apartment on the wrong side of the tracks. (The primary renter had lived there for a long time with no rent increases, and she sublet a room to me).

Since I did have a private room and largely was gone 7am - 9pm between school and work, I never really had any roommate issues. Some of them were awesome, more of them were crazy. But even when I had time off I was generally home more during the daytime hours while they were at work. I always tended to work evenings and weekends - so it just worked. The roommates I didn't care for; I rarely encountered. Of course they were all older professionals and I was just lucky they let a college kid in. So they were pretty tame. I didn't have to try to study while there were wild parties.

& no I didn't lead deprived college years. I rarely took classes in the summer and always got August off work. I would go hang out with my friends who went away to college, on the weekends. I have very fond college memories and remember plenty of fun though I always worked very hard. My spouse and I met in college and also had many fun times together. You can work hard and not be completely deprived. I could have graduated sooner, yes, but didn't see the hurry either. My 5th year was my slowest and most fond year. I will never regret slowing down that last year before "real life" began.

Another example is when we looked into buying in San Jose it was because it was far cheaper than renting. The PITI was about 50% of the rent on the same place.

Of course, the best/easiest thing we did was move somewhere cheaper. But prices have been sky high even here, in recent years. We put a lot of money down, got a low FIXED interest rate, and all that. Before prices were sky high. It helps. We maybe bought bigger than most on these forums would, but from our perspective it was just a steal, and we know we have erased the possibility of "upgrade." I don't think we will ever move again but to downgrade our home, honestly. (Perhaps, in retirement).

So what are the benefits really? I think I may have touched on these before.

First, the wages are higher. So if you can keep your housing costs down, your wage will generally be higher than elsewhere. How many of you younger folk live in a LCOLA and have a $200k mortgage? Probably a lot of you. Since I live in a HCOLA and have a $200k mortgage, then I get to keep that much more of my paycheck. Because the wages are higher. (I think most of our friends would DIE if they knew how "small" our mortgage is. The common guess is like $300k-$400k).

Likewise, if you can manage to live off of one income, that second income is GOLD. My husband has not worked in 6 years and I have no doubt he could find a $30k - $40k job in a snap. If he were to suddenly go in search of full-time work. If he pursued a career, $60k-$80k would be pretty easy in a few years time. I know few without college degrees who make less, honestly. Imagine if an income like that was pure gravy. But those kinds of incomes are a lot harder to achieve in LCOLAs. In a HCOLA, if you don't rely on the higher incomes you more easily have a lot more to save.

Vacations - well I have mentioned this before. HCOLAs tend to be very desirable areas. We actually prefer to vacation in the state, which usually means a short drive and little expense outside of lodging. Plus our family has a cabin a near Tahoe. Reno, LA, Vegas, Oregon, etc., are all rather drivable or airfare can be found pretty cheap. Beautiful camping galore in our own backyard. This year we vacationed in Yosemite and LA (Disney and such) rather cheaply. We like to vacation elsewhere, occasionally, but we can get some pretty decent vacation fixes for pennies when the budget is tight.

College - when the discussion of college comes up you all lose me. Part of it can be the private vs. public school thing. But I have realized more and more with some of the discussions that a lot of it is our state. I try to remind myself not to gripe about our high state taxes. Our colleges are STEALS. Community college is pennies, and state colleges cost nickels and dimes. The UC system is very prestigious but extremely affordable compared to the private schools they often compete with. Plus there are a handful of excellent colleges close enough that our kids could live at home (or with relatives).

Things are changing and I am trying to be mindful and prepared. I graduated 9 years ago with under a $10k college bill for 5 years (all college costs; excludes living costs which I paid for working part-time as well. I Didn't need to borrow a dime). I am realistic and know my kids won't be so lucky. Competition for the public schools is fierce and I don't know if we can really go another 15 years without raising community college fees. (My understanding is the per unit cost has not increased in decades). But, overall, we have a pretty big advantage when it comes to education. Even if public school starts to get astronomically more expensive than they have been, it will still be relatively affordable compared to the numbers I have seen thrown around in the blogs and forums. Egads!!!! & I probably care less about private school because there are so many excellent public options here.

Oh well, there are also many downsides. Gas is more expensive here. Daycare and babysitting is sure as heck more expensive here. (I guess that's one more thing we save on though - not needing daycare). A night out feels like highway robbery.

Healthcare is definitely more expensive here. But you could argue that it is a wash. I have the wage to pay for the good insurance. So maybe in the end it is not that bad. Plus I get decent tax breaks since out health expenses are such a large percent of my income. (You can itemize health/dental costs over 7.5% of your AGI, which we are WELL above).

Yup, for all these reasons I do think we have it rather easy in some regards.

State sales taxes are high but most groceries are exempt. We don't consume much so we don't pay a lot in sales taxes. (Services are tax-exempt).

Property taxes here are actually very reasonable. Because too many would lose their homes if values kept up with real estate values. (Kind of another HCOLA edge. At least in this state. I can't believe some of the property taxes in other states). As long as you don't buy too much house, you can do pretty okay.

Insurance is sky high, but we have the income to cover it I guess.

So if you ever read my blog and my HCOLA rants, and you wonder why the heck I still live here. Well I guess these are some pretty good reasons why.

I do admit if we play the game right, we end up with a fairly large edge. Big Grin

5 Responses to “Reasons it is easier to live in a HCOLA...”

  1. debtfreeme Says:

    Re the community college costs: when I started college in fall 1992 fees were 6 per unit and capped at 60 a semester, What a steal! Then there was no cap and they went to $10 a unit the second year which was just over double what I paid the two previous semesters.

    Over the past couple of years fees per unit have ranged from $26 to $20 where they currently are. There was a study quoted in a business class I took that mentioned $20 is the limit for people stretching to afford going to college. But I think with the issues with our state budget we are going to see them rise. Even if it was only 2 or 3 dollars that would mean a full time student with 12 units would see an increase of 24 to 36 per semester which I think is totally doable. (Personal opinion)

    These fees are still among the cheapest in-state tuition and fees around. According to the American Association of Community College the average cost per year in tuition and fees for an in-state student is $2361. This is far more than students will pay in California this year in tuition and fees.

    Arizona was $71/unit
    Oregon was $60-$69 per unit
    Nevada was 61.75-64 per unit
    New York was about 2800/year

    Yep our fees are pretty low for the quality of education we receive at the CC level.

  2. Broken Arrow Says:

    Yes, I think there is one good advantage about being in a HCOLA with its respective income. For example, I think it's a lot easier to max out your 401k and Roth. Because those caps are in absolute dollar amounts, but because you're in HCOLA, the percentage contribution is actually lower in percentage. I'm in a relatively LCOLA, and I'm have a bear of a time trying to save for them.

    Plus, you can always move from HCOLA and then retire in a LCOLA... much easier than the other way anyways.

  3. monkeymama Says:

    debtfreeme - I guess I was misinformed. I thought I had read per unit cost had been $20 or something for decades.

    It is a steal.

    Good point BA!

  4. monkeymama Says:

    $2800/year is more than I paid to CA state university in 1999.

  5. Joan.of.the.Arch Says:

    Our community college is $83/credit hour.

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