I’m excited to share my first guest post EVER on Millennial Boss! I’m getting married this Friday and I started accepting guest posts so I could focus on the wedding. This first guest post is about a topic that is on my brain recently – the value of living in a low cost of living area. I just moved from a low cost of living mountain city to the super expensive Silicon Valley and it’s killing me!
Paul Andrews is a fellow millennial personal finance blogger and has great stuff over on his blog, The Code to Riches. My favorite thing about Paul’s blog is that he has in-your-face opinions about money and I appreciate the realness in his blog posts. No fluff there. Hope you like the post!
Oh, and if you want to help me by writing a guest post during this time, please reach out. Thanks!
Low Cost of Living – How I lived like a King (on a teacher’s salary)
There are lots of tips and tricks out there from lots of different bloggers about how to rake in more cash.
Most pitch great ideas about cutting back spending, how to be more frugal, how to budget correctly, etc. Some focus on the revenue increasing side of things, such as setting up a new business, how to negotiate a higher salary, etc.
And all of that information is super useful, actionable, and most importantly, can help you reach your financial goals. There’s just one small thing…
All that involves a LOT of effort.
Not that it’s bad advice! But I don’t know many (sane) people that enjoy sitting down for a couple hours, combing through what they’ve spent, and coming up with a restrictive method to make more money, i.e., budgeting.
I also don’t know many people that are comfortable just sitting down and starting a new business (though I give that two thumbs up).
No, all of that involves lots and lots of work.
And I’m simply too lazy to be bothered to do most of that (most of the time).
I keep a budget like a good little financial blogger, but for the most part, I like big wins that don’t involve that much effort.
Which leads us into what exactly I’m talking about today. The biggest win for your finances, the simplest thing to do right after you’ve graduated from college is to live somewhere with a low “Cost of Living”.
And I’m not talking about moving to the crappy part of town where your neighbors are meth-heads and police sirens are your lullaby to sleep every night.
I’m talking about places around the country where your dollar goes further than anywhere else!
But first, let’s make sure we’re on the same page…
What do I mean by Cost of Living
When talking about Cost of Living, I’m essentially talking about the amount of money it takes to live in a specific city, county, state, or country, on average.
Note that I’m NOT talking about the Consumer Price Index, which is often confused as a metric for cost of living. While the “basket of goods” that are used in the CPI are things that most people buy, it doesn’t necessarily take into consideration things like rent, state/local taxes, crime rates, governmental influences, etc.
So if CPI isn’t a good indicator of COL, is there an index for that?
Yes, dear reader there absolutely is! And if you’re willing to drop the money on it, then you too can have the report printed quarterly by The Center for Community and Economic Research. All it takes is a couple hundred bucks… yeah, right.
If you’re looking for solid numbers on cost of living, check out numbeo.com. From there, you can get a pretty solid idea of the different Costs of Living in the U.S. It’s super useful if you have a move coming up, but it’s fun to compare rent, restaurant bills, and Big Mac prices across the country.
But I digress….
What qualifies me to talk about the advantages of living in a low COL area?
Well, it’s pretty simple: When I graduated from college, I moved to the Rio Grande Valley, a roughly 200 square mile patch of land in South Texas.
And believe me, when I say south Texas, I don’t mean, just a little bit south of San Antonio. I’m talking “Literally cannot go any further in the continental United States.”
I’m talking, “ If I take the wrong turn I end up in Mexico (actually happened).” I’m talking, “Tacos for breakfast, lunch, and dinner.”
I think you get my point
The significance of the area isn’t due to its proximity to Mexico, but due to the fact that, on average, there is NOWHERE CHEAPER TO LIVE IN THE U.S. Don’t believe me? Check my sources, y’all.
10 Cheapest US Cities by Kiplinger
Texas Town is the Cheapest Place to Live
Cheapest Place to Live in America by Numbers
I had friends that were paying $600/mo. In rent, for a recent (within 5 years) build, tile floors, stainless steel appliances, 2 bedroom/2 bath, gated community.
I don’t EVER remember paying more than $2/gallon for gas, and sometimes, it got ridiculously low. Like below a buck fifty.
I remember going out to dinner and looking at the bill and swearing they made a mistake because the final number was so damn low.
The Rio Grande Valley really can be a magical place.
Why a Low COL area is your key to wealth
I was able to get relatively wealthy in a short amount of time while I was down in the RGV.
In fact, I was able to turn my net worth (assets – liabilities) positive before I was 25.
When you think about student loans, car loans, and the fact that right out of college is supposed to be your worst earning years of your life, that’s a pretty amazing accomplishment.
And the reason I was able to do that all? Very simple:
It was impossible for me NOT to save money!
Living in a place like the RGV allows you save money hand over fist. I was able to save over $1,000/mo. down there. As a teacher.
Let me repeat that: I was saving 4 figures a month on a teacher’s salary.
Now, for the skeptics among you, you might be wondering, “Yeah, sure, but you were probably an incredibly well paid teacher.”
Ha! I laugh at you.
Well-paid teacher… that’s like saying you know an anorexic sumo wrestler.
They just don’t exist.
So how did this low cost of living help me reach some serious financial strides?
1) Rent – My girlfriend and I paid just under $750 in rent. We were getting absolutely hosed. There were much nicer places in nicer areas for a hundred bucks a month cheaper. I guess what we had going for us that the other places didn’t was this…
Yeah… life was tough.
2) Food – Now, it’s been a long time since I went grocery shopping down in the RGV, but some things that comes to mind. Guacamole was $5 per pound, and made fresh every day at the grocery store. Anything that involved making tacos was dirt cheap, like 50 tortillas for a couple bucks. Queso fresco, was delicious and maybe $5-6 per pound. And going out to eat was super cheap as well. We could do a dinner for two and one several margaritas, and only pay $30 plus tax. Speaking of which…
3) No state taxes – Gotta love this about Texas. There was no state income taxes. Yeah, they’d get you on the other end of retail purchases and real estate taxes, but seeing as we were renting, we didn’t actually have to pay for that (I know the cost of real estate taxes was probably passed on to us, but you get my point…)
4) Gas – Never paid over $2 a gallon, and I seem to remember $1.30 happening a couple times. Traveling was super cheap.
There were lots of other little things that contributed to the low COL, and subsequently my ability to save a RIDICULOUS amount of money. But overall, those were the big things.
That being said, as with most things in life, there were trade-offs. Not everything was peachy keen.
If things were so great, then why did you leave?
After all, if it was the land of palm trees, free pools, and tacos/margaritas as far as the eye can see, why would we leave such a paradise?
1) Things got boring, quick – With San Antonio a mere 4 hours away, Houston 5, and Austin 5.5, there really wasn’t a ton do to where we lived. This is really a double edged sword. On one hand, it’s great that there wasn’t a ton to do; it meant I got to save up a boatload of money. On the other, it means that we lived a pretty boring area of the world, all things considered.
2) Things got depressing, just as quick – Though not everywhere, there were several parts of the Rio Grande Valley that had a very low standard of living. I mean straight up Hooverville style, well water, one electric line ran through the middle of the house Hooverville. I had students from areas where the houses were literally built from pieces of sheet metal. While that was part of why I moved down there, it was sad to know how many people lived like that.
3) The climate – You really need to take into consideration the climate of where you’re moving. For example, temperatures in the 110’s were not uncommon for summer. And while Thanksgiving this year down in the Valley was a balmy 83 degrees, if you’re from somewhere where you’re used to the cold, that heat gets old real quick.
4) The culture, sort of… – I’m not saying that the Valley had a bad culture, but it very much revolved around Mexican culture. I wasn’t lying when I said that there were days when I ate taco’s for breakfast, lunch, and dinner. Tequila was the drink of choice, Tacqui’s were the lifeblood of my students. I ran into more than one instance where fluency in Spanish would have been really beneficial, and it got a little tiring when people assumed that just because I was white that I was a teacher… which also was 100% true.
You mean it wasn’t perfect?
No, things in the RGV weren’t ideal for a young 20-something.
After two years of slaving away as a new teacher, and dealing with the heat, and the fact that I lived 3 flights away from my family, and I was gaining a TON of weight on the Taco’s and Margaritas diet, my girlfriend and I decided to pick up stakes and move to Colorado Springs, which in the grand scheme of things, really isn’t THAT expensive of a place to live.
However, I’d be lying if I said it wasn’t an adjustment.
We were paying 50% more in rent, we couldn’t get full meals for less than $30, and dammit all, gas sometimes broke $2.00! But in grade scheme of things, I think we’re happy with the move.
Colorado Springs is beautiful, people are WAY nicer than what I’m used to having grown up in the Northeast, and I finally get to take skiing back up!
And while socking money away like a fiend was nice for a couple years, it was nice to actually use the funds to pursue something I love (#bloggin).
Making that much money down in Texas allowed me to move without having a job in place, and work on the blog for a few months while I job hunted.
If I could do it all again…
I’d probably still move to the Rio Grande Valley and spend a couple years down there. Yes, I sacrificed two of the best years of my life living in an area that had ONE skyscraper…
There it is.
But doing so allowed me to get a head start on pretty much everything in life. If my girlfriend and I had ended up staying down there, we had enough money to buy a house like this:
Our Roth IRA’s are maxed out, our student loan debt is tumbling faster than the world’s faith in America to elect an appropriate leader, and we moved halfway across the country while I had no job, with absolutely no stress.
Ha, moving with no stress, that’s like an anorexic sumo… well you know.
Low Cost of Living – The Wrap Up
I’ve got mad respect for the super detail-oriented folks out there that pore over their credit card statements religiously.
I wish I was like the super coupon-ers, or had the brain/drive to start a business that made millions of dollars a year (in spite of the 4 hours of sleep per night).
Unfortunately, it’s my philosophy that when it comes to money, you really should do what is easiest/simplest in terms of reaching your financial goals.
And at the end of the day, living in a low cost of living area is a surefire way to save a ton of money without having to spend any time thinking about it.
Do you think it’s worth spending a couple years in a less than ideal location in order to save up some funds? Would you be willing to move to south Texas for a couple of years and sacrifice a super social lifestyle in order to stash money like the monopoly guy? I want to hear from you; comment below!
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Biglaw Investor says
Great to read the write up about the Rio Grande Valley. We really like Austin, which I gather is a much different place than Brownsville. 110 degrees sounds pretty hot but it really is the humidity the kills you.
Congratulations to Julie on your upcoming wedding!
Financial Samurai says
Dang, that is pretty darn south! Gotta love no state income taxes though. It’s expensive out here in San Francisco with 10% state income taxes and high property prices. That said, the income opportunities are enormous too. Everybody and their sister has a six figure job here and the potential for striking it big is there for everybody.
I think I’d be OK to visit a friend for a weekend in a “less than ideal” location as you say, but I just love the diversity and hustle and bustle of cities like NYC, SF, London, Paris, etc. SO FUN!
SF is certainly good for maximizing your pre-tax accounts. No sweat out here!
Financial Panther says
That geoarbitrage is totally where it’s at!
I’ve got so many friends who became pretty low income earners in DC and NYC, but they just refuse to go anywhere else. Menawhile, I’m out here in the Midwest, where cost of living is much lower and I feel totally fine. Even though I’m originally from a big east coast city, I don’t feel that I’m lacking things to do out here. There’s still sports and art and bars and everything you want from any decent sized city.
When I first graduated college, the hustle and bustle of a city like NYC was so appealing to me. I would spent $100s easily in a night cabbing from bar to bar all over the city, eating late night, and drinking $12 mixed drinks. Now the thought of any of those things make me shudder! I am not a city person anymore! Places like the midwest with LCOL are the way to go!
great article. Must be a bit of a mental blow when you move to a more expensive area and suddenly you’re paying more for items but it doesn’t feel like you’re getting more back in return.
I feel like I’m getting more back in return in terms of experience and the move itself allowed me to pay off a significant amount of debt. It’s still tough though to stomach the rent!
[email protected] says
This is really simple advice, but it works so well.
If you are really having trouble trying to save, trying to get by. The first thing to look is where you live, what do you buy. If you can find a way to cut down on expenses, or just straight up move to an area with a lower cost of living, you save!
Simple and easy, that’s the way I like it as well.
Yup! LCOL is an easy way to save money!
If you find a LCOL place that feels like home and has a decent availability of jobs, you’ve probably hit the jackpot, I know so many people living in SF who DON’T have six figure jobs and live in tiny expensive apartments. They just don’t want to leave the city. One of my dad’s friends was a retail store manager and he and his partner had to share an apartment with a roommate to make things work.
Can’t wait to see if I can find my LCOL mecca…
It is a beautiful place to live. Just made the drive from SF at sunrise this morning and it was GORGEOUS! I wouldn’t want to live in a tiny apartment forever though. There are many beautiful places in this world!
So… I’ve lived in Colorado most of my life- outside of living in Hawaii, Pa, CT, and FL. We’ve always owned a home but we sold our last one about 5 years ago and began the worst thing ever- renting!!! For the past 4-5 years there has been sooooo many people moving here and because of that the cost of living has went up tremendously!!! So much so that we have decided to move from the DIA area to Limon which is 1 1/2 hrs away from Denver. Our rent for a small 1200sft duplex was 1500.00 a month ( which was 800 4 years ago). Now we pay 800 a month for 1,000 acre ranch where our closest neighbor is 2 miles away. This is the life! I’m able to come closer to myself as a human being and my husband of 27 years. We smell cow manure now instead of smog- we watch bunnies hop around instead of cars flying by our house, can and freeze food instead of eating something full of preservatives or additives- eat the freshest pork, beef and chicken eggs, instead of wondering where our meats coming from and what it was injected into it and how long it’s been on a semi. Yes….. we’ve learned to give up neighbors, movie theaters, malls, smog, skis that have no stars in them- but now…. we have money and peace of mind and finally seriously, some kind of peace that has come over us.