I am 34 years old working remotely as data scientist, making $107k TC. My wife who I've been married to for 13 years is a stay-at-home mother as we have two children in grade school. Since they are in the school she is turning in our half-acre into a sustainable garden with chickens. We own our home, are financially comfortable while saving $1500 a month, and travel. We were planning a 2-month trip to Japan this upcoming summer until we realized the Olympics are held there in 2020. In the end we will shift dates around to make it work.
Aside from being active duty for 11 years which allowed me to complete through two graduate degrees without any student debt, was taking my first role after the military in a small town one and half hours from the nearest city; a small city at that. I stayed there for four years to get comfortable enough to work on my own without any oversight; soaked up all possible learning opportunities. When switching roles to my current job, I negotiated to work remotely, now I live 2500 miles from my employer. Cost of living is the same, but now I don't have to purchase airline tickets to see family.
The number one advantage I see compared to others comes from the military. I complete all tasks asigned without complaining, and get them down without bothering those above me. Doesn't matter the task, if it is assigned and needs to be completed, I do it. Sometimes these are trivial, others would say beneath them, others are writing patent paperwork with the co-founder. This mindset has worked two-fold, I touch numerous areas of the business so my skill-set is well rounded, and my bosses are happy; work gets done without their involvement.
Live below your means, take advantage of where you live, and maintain a simple life. Good things come to those who wait.
You touched on the education without student loans is a major benefit to the military. Another is the ability to buy a home with no money down and not have to pay mortgage insurance. It's easy for those in the military to feel like life is passing them by as they witness cohorts graduating earlier etc. but those benefits can make a big difference in the long run (not to mention the intangibles you brought up).
That is true, but my wife and I were also separated for half of our first three years of marriage. As I deployed and shortly after I returned she deployed. We were also stationed in Turkey where at 4 months pregnant we learned the military would not allow her to give birth there anymore. She had to fly to the US with our older daughter at 7 months pregnant by herself and stay there until she gave birth. There are many pros to the military which have benefited us, but also many stresses those outside the military never deal with.
I am substantially younger, make exactly 100k/yr live within commuting distance of a grossly overpriced city full of people I want nothing to do with (read: expensive urban area known for tech and medicine) and made 90k/yr when I bought my house. I live in an city, not a nearly rural suburb, but it's not a rich city (thank god) but it has everything I need. I'm paying a few hundred dollars a month on debt, have a similarly sized discretionary budget, am maxing out my 401k and slowly building savings. The schools aren't great but they aren't bad, not my problem yet anyway.
My buddy who is a teacher makes substantially less and has approximately the same situation but in a different slightly wealthier city and has a slightly smaller house.
The DB administrator at my last job who was in his late 20s and made about 100k had the same situation in yet a different city.
100k is not a crazy number in this area. If you are in a blue collar trade you can make 100k by putting in your years to get licensed (BS gate keeping requirements make it impossible to get licenses/certs in most trades in this state without working several years) you can commute into that rich overpriced city that shall remain nameless and make 100k.
The house across the block from me is on the market for ~200k. 150k on up seems to be the going rate for a turnkey single family house around here depending on size and condition. These aren't crazy prices. They're just not a neighborhood your snooty coworkers will approve of. My house was 150k but needed 20k of siding (screw that, next time I'm taking the week off from work, buying the staging and doing it my damn self for a fraction of the price) on day 1 and has never been updated inside.
If you want to own a home and are willing to work for it you can own a home. You just can't own one in a neighborhood where everyone is richer than you.
>Live below your means, take advantage of where you live, and maintain a simple life. Good things come to those who wait.
Fully agree here. Simple life is key. You can't drive a nice car and go out drinking all the time and all those other things that cost money. You can do a few of them but you've gotta choose.
I see that you're very adamant on keeping the location anonymous, but I am vastly curious as to what region you are referencing to. I'm thinking perhaps Baltimore-Washington Area or even Houston.
Also how trades can even make 100k -- I used to run data centers and I got tight with a master electrician who did a lot of work for us. He had to work 6 days a week but got paid damn well, and has as much work as he wanted. But it was hard work, not without risk, and six figures doesn't go far in the DC burbs. Something like 6 out of 10 of the wealthiest counties in the US are DC suburbs.
As a single with no dependants I've purchased a home at $360k and with a student loan.
It's only possible having boarders that pay rent and help with the bills.
The value has increased so much that I don't think it would be possible to own a home in my area on my salary any more.
Now I'm looking at getting married and the cost of living is going to be okay as long as we don't have kids soon. But I'm getting older and can't put that off too long.
I don't understand the housing market to know why it's like this but I'm not sure it's sustainable. People aren't going to be able to afford to have families at this rate. Also, If interest rates ever go back up I'm done.
At $1,500/mo savings rate, it would take 46 months (3.83 years) to save up for your down payment (before closing costs/lending fees, but I'm not sure if those are rolled into your mortgage)
This would leave you with a rough monthly payment (mortgage + interest + takes + insurance + HOA fees) of $1.8k-$2k (assuming 30 year mortgage at 4% interest rate)
$100k gross is roughly $76k net (before any 401k/IRA contributions)
$1.8k/mo for your mortgage * 12 months = $21.6k before any cable/water/electric/lawn/pool bills/repairs
$4.5k/mo net income remaining after your house for food, cars, insurance, etc.
You said $1.5k/mo savings which means $3k/mo for food, cars, insurance, travel, 401k contributions, repairs, going out, etc.
I guess it is do-able. $3k/mo for 2 people does not sound terrible in the slightest.
0% down with a 3.5% interest rate - you don't pay PMI with a VA loan and $0 down ($8k total in closing costs which were mainly taxes). This is the biggest aid in building wealth as we were able to save everything (minus moving costs) from the sale of our previous home.
Right now NFCU estimated our property taxes high so our mortgage is $2100. Next year our property taxes will drop due to LA exemptions that will drop our mortgage down to $1800 - 1900 range.
I have well water so no costs there, electric and gas are $150 combined a month, this is the highest we will pay due to A/C in the summer. Also no pool - lawn is being transformed into a functional space, garden of vegetables and fruits with chickens.
Plenty of places to locally travel; Japan is a little stretch for us so we will see. Walking distance from my house is local jazz/blues hall, been here since 1885. Every other Saturday from 6 - 9pm you can sit and listen to live music, get a plate of fried chicken/catfish with jambalya, greens, potato salad/colslaw, cornbread, and cake for $20 a person ($10 entry, $10 for food). Plenty of festivals which are free offering a range from Festival Acadiens et Creoles 2 hours away to Blues and BBQ in downtown New Orleans next weekend. So our costs here are around $150 for weekend family fun, some weekends we stay at home as we need a break.
All in all $3k a month is spot on which in Lousiana goes far. Plenty of culture, arts, food, and outdoor activities.
> Right now NFCU estimated our property taxes high so our mortgage is $2100. Next year our property taxes will drop due to LA exemptions that will drop our mortgage down to $1800 - 1900 range.
20% down is only for investment properties, not Single Family homes. 3.5% for FHA is the norm. 3.5% * 348k = $12,180, plus closing costs, maybe $20k in all. At 100k+ per year, you're making 6,000 per month, so you should easily be able to save enough for a 3.5% downpayment.
Does nobody understand how to buy homes on this thread?! It's pretty easy if you make >100k In My Opinion!
Plus, there are multiple downpayment assistance programs (google it) that will let you buy your first home with 0% down. Some of them have income limits, but I know some of them do not, as I qualify for one and I make >100k.
Once you hit 22% of the principle paid off, the PMI must be automatically ceased. Once you have hit 20%, even if that is ahead of schedule, you can request that it be cancelled[1].
In many cases, however, if property values have gone up, or you have done work to the property, you can get the property reassessed, and refinance into a new loan based on the newly assessed value, and get rid of the PMI even faster than that.
This is what I did on my house - between the real estate market bouncing back after the financial crisis, and some renovations I did, after two years the value of my house increased almost 50%. My credit score had also gone up, and interest rates had gone down, so I also was able to get a better interest rate.
That is a good possibility. I complete the work assigned to me while being able to get a 1.5-hour workout at the gym and my wife does a 20 to a 50 mile bike ride every day. TC might be low but my and my family's health appears far better than most of my peers. Less money, but our health is a better long term investment.
If you continue to break the site guidelines when posting here, we are going to have to ban you. Would you please review them and stick to them from now on? Specifically: no more snark, name-calling, flamebait, and ideological battle. Most importantly: be kind.
$100,000 still a lot of money. You can buy a beer in Vietnam for 20 cents. The problem in the Bay Area, where I live, is we artificially limit the amount of housing. So prices move to infinity.
I used to work for a company that had about half of its employees in India, and I was curious about the cost of living there. Looking at apartments in a major city, they were not a great deal cheaper than the US. People frequently claim lower salaries in countries other than the US are balanced by cheaper prices, but my impression is that a developed-world style apartment and car are usually comparably expensive pretty much anywhere, from London to Noida. Mathematically, cheaper rice can't make up for it if you are making enough to live in an urban area.
Similarly, a good chunk of urban housing in Canada, Australia and NZ are priced completely out of line with what median salaries in those areas could afford.
These are likely houses marketed towards "investors", aka rich people who don't need a mortgage or have a network of private lenders who specialize in providing credit for the house-flipping industry.
> These are likely houses marketed towards "investors", aka rich people who don't need a mortgage or have a network of private lenders who specialize in providing credit for the house-flipping industry.
Most international folks who want to move their money out of the country and into real property. This is particularly true of the Chinese and Vancouver, as the CCP basically owns all banks and can snap their fingers and make you poor. But they can't take land and houses in BC. Similar waves of buys have happened with Russians and a few after the new Saudi royalty started flexing their powers.
But it means a nice house in Vancouver (Kitsalano) goes for $2.4MM CAD while salaries lag behind the US. Even at US rates it would be dicey to buy a house unless you had a lump sum to hedge the risk of losing a job.
I live in the Bay Area now, but I grew up in Hamilton, New Zealand. I'm back home with greencard stuff at the moment.
On my parents relatively modest street houses are now selling for $850k. These were houses that cost $400-500k ten years ago. People simply do not make the incomes necessary to make these prices sustainable. I have one friend, of everyone I grew up with and went to University who's making north of $100k as someone in their mid-late twenties. Everyone else is making substantially less. Whereas in the Bay Area half of my friends are making $100k + (and often substantially more than that).
This is scarcity. It's caused by growing demand in population, and dwindling supply with less people building homes. The equitable solution is probably to split up land more, and let people convert houses to condos and the like.
That's going to change quite drastically quite soon. The talk around the industry and in society generally is that house prices in Aus at least are going to dip.
I would say that is a problem in any place where it is desirable to live these days. Locations I've experienced first hand: London, Sydney, Bay area, Los Angeles, Vancouver... and I'm sure there are many more where you can't buy on that salary.
Not in all desirable players. Only ones that limit construction. Meanwhile in desirable places which allow more construction, like Tokyo, housing prices have stabilized [1].
> Not in all desirable players. Only ones that limit construction.
Toronto has more construction (120) cranes than anyone else in North America (Seattle & LA second at 50), and prices are still crazy even with a building boom.
Three points. 1) The condos being built in Toronto are "luxury" apartments .. apart from space (perhaps to justify the lack thereof), many trimmings are opulent (granite counters seem standard now). 2) Toronto does restrict houses (not condos) because of the greenbelt put in place about a decade ago. 3) The transit system in Ontario and the highways are quite horrible for people living far away (e.g. above the green built).
First, to talk about the place I know best, cities in the UK outside London are pretty expensive too. The UK has a disproportionate share of the world's expensive cities, despite being a relatively middle-income country. Demand isn't rising fast, it is just impossible to build (usually due to "environmental" planning regulations). That is an unforced error.
Second, there are examples of large cities that don't have these issues. Berlin is probably one of the most well-known examples, they had a ton of public housing. They started breaking some of these buildings up, and guess what...rents are going up.
Third, it is worth getting some perspective on this. There are cities that have almost no land that have managed much higher growth. Property in Singapore, for example, is expensive by international standards but, given per capita incomes and given the population density, they have actually not done badly (particularly when you look at access instead of average price). That is equally true of China (some cities in China have gone for 0 to millions of people...this makes the growth in most Western cities look flaccid). You could even say that New York has managed this reasonably well too (there has been investment in transport infrastructure at least, which is another cause of rising prices in some cities).
It is hard to generalise about this because policy is often made locally. But I think it is also clear that part of the problem is local policy causing a problem in aggregate. That is systemic and unrelated to demand.
> The UK has a disproportionate share of the world's expensive cities, despite being a relatively middle-income country.
How is that a counter example?
> Second, there are examples of large cities that don't have these issues. Berlin is probably one of the most well-known examples,
> and guess what...rents are going up
It seems you are contradicting yourself, or it is not clear what you wanted to say.
> part of the problem is local policy causing a problem in aggregate
Definitely a problem. But I would say there's not many cities that can escape it. As for NYC, which you mentioned, in the last 10 years the average price nearly doubled [1]. While salaries didn't grow that fast.
I agree, generally, but that's ignoring geographic boundaries which are huge for cities like Seattle and San Francisco. It's not the main issue (regulation and zoning are) but it's still a big piece of it.
Isn't that around the time all the housing price dropped?
> mid-sized city in Michigan
That might not be in the list of the places where most people desire to live.
> Of course the job prospects aren’t as good as a major city, but housing isn’t a major issue.
I think this is not following my comment. The point is not to talk about where affordable places are, but about how affordable places where a lot of people want to go can be.
For many residents, building more housing and letting more people in would irreparably change the “character” of the neighborhood. This can mean more crime, traffic, and pollution.
Past a certain density automotive transportation becomes unfeasable and people will be forced to rely on public or other alternative forms of transportation like walking or riding a bike.
Reducing housing costs would mean changing the way we build cities,shifting to a European or Asian model. Whereas most Californians are very attached to their way of living.
Rising housing prices are already dramatically changing SF. If you want to let residents maintain their way of living, I don't see how thats achieved by pricing poorer residents out of the city entirely. I'm sure most residents would prefer to live in apartments in SF than move to another city entirely.
As for transport, cars are already pretty unfeasable in SF with the population as is. Whats so bad about investing more in public transit and biking?
As for crime and traffic, most larger cities in Europe are much cleaner and safer than SF. More residents means city hall has more money to play with, which it can re-invest into schools, parks, the police, public transit and other things. Cheaper accomodation makes it easier to re-house homeless people and it makes homeless shelters more affordable for the city.
>As for transport, cars are already pretty unfeasable in SF with the population as is. Whats so bad about investing more in public transit and biking?
Simple: Americans hate public transit and biking, and want to stick with cars no matter how infeasible it is. They'd rather commute two hours, each way, in gridlocked traffic than get on a train. And they don't mind becoming fat because of this lifestyle.
>As for crime and traffic, most larger cities in Europe are much cleaner and safer than SF.
That's true, but I will point out that because of Europe's use of diesel, most European cities reek of diesel fumes, and this is bad for public health there.
I'm not fond of the slippery slope argument, particularly when it comes from NIMBY's that bought their houses when markets were at a low because nobody wanted to live in these cities.
Bay area residents, Seattle residents, etc need to get over themselves and accept reality for what it is. They aren't protecting anything but their own sense of self-worth and the "theory" that bad things will happen if a 3 story apartment complex comes into the neighborhood.
The reality is, most of them want their property values insanely high, for when they are ready to sell and move to cheaper cities.
Reality is what we choose to make it through government. Higher density is not inevitable - it is a choice made by urban planning. That applies to employment as well as housing. I see no problem with a new 3 story apartment complex in my neighborhood, and I find the crime argument silly. On the other hand, if we continue to increase the density and population without corresponding improvements to infrastructure (particularly transportation), then the quality of life will decline for those who live here already. That has already been observed by those of us who have lived in the bay area for a long time. The commute time in San Jose has gone from 51.6 minutes in 2008 to 67.6 minutes this year (https://sf.curbed.com/2019/8/16/20808814/san-francisco-commu...). This was in spite of a 6.3% drop in employment in 2009.
Increasing density will actually benefit homeowners more than the status quo, because then their land becomes even more valuable. If you tear down a million dollar house and put up a four unit condo complex each costing $500K, then you essentially double the value. Holding onto a house that nobody can afford has less investment value than converting your land to higher density. The fact of the matter is that people are more motivated by preserving a lifestyle than they are by money.
Of course not everyone agrees on what an ideal lifestyle is, and some people strongly desire higher density. Ultimately voters will decide what type of growth is desirable.
Higher density is inevitable in mega-cities. Geographic boundaries are just a apart of reality. I agree that transportation is key to this expansion, but the Palo Alto's and Seattle's of the US only have way way to go and that's up.
While a lot of people complain about "NIMBY" in the bay area, it's never been clear to me why I have an obligation to rearrange the area I live in to accommodate others who want to live here. People speak about a "shortage of housing", but another way of saying this is that there is a "surplus of high paying jobs". If someone can't afford to live here, then economic forces should make it more attractive to live elsewhere. Employers should see this as well, and relocate their business elsewhere. That's what happened with Intel, and many companies are now focusing their growth outside the bay area.
Just increasing housing density without solving transportation problems will result in a seriously changed lifestyle here, and that is what many people fear. Moreover, efforts to build better transportation in the bay area have been very ineffective. The light rail in Santa Clara County is a good example of this - it crawls through downtown San Jose, has very little ridership, and recovers only a small fraction of operating costs from fares. The jobs have almost always showed up in areas where there is an existing shortage of transit and housing - e.g., Sunnyvale, Cupertino, Mountain View, and Palo Alto. At this point the only feasible solution is to turn 101 and 85 into bus-only roads. No more single occupancy vehicles. Then let the market sort out how to provide transit for employers. That would be massively disruptive to existing lifestyles, but probably the only feasible way to increase transportation throughput in the face of increased housing density.
Most of the readership on hacker news is in the tech industry, but I think the biggest problem with housing in the bay area is for non-tech workers.
It’s a lot compared to 10k/year, but not when trying to buy a decent pad in the Bay Area.
Income is extremely relative. Age, health, dependents, quality of life, location, expectations, etc etc. I had a fantastic quality of life on 10k/year many moons ago, for instance. But everything is always changing. I learned recently that the atoms that make up our bodies change in large quantities from moment to moment :-o
The “happiest man on earth” according to fmri studies led by the Dalai Lama at the Mind And Life Institute lives on $50/mo and donated all his money from book sales to helping the poor. Source: https://www.amazon.com/dp/B000SEUSXW/ref=dp-kindle-redirect?...
> The problem in the Bay Area, where I live, is we artificially limit the amount of housing. So prices move to infinity.
The article doesn't talk about people not being able to afford housing, it talks about them renting in desirable areas rather than buying elsewhere. If anything, it's about a rent/buy price spread resulting from housing inventory being taken up by investors who prefer to own and rent out rather than sell, driving up purchase prices to a greater multiple of rent prices than would otherwise be the case. Which, if viewed as problematic, is not a problem that building more housing solves. You'd have to also make it less attractive to be a landlord.
I live in London. I'm not on 100K, however my salary is higher than 90% of the UK's population.If I'd compare our family income,we are better off than 75% of the country's households.These are just the stats. All 3 of us live in a one bedroom,rented flat in a decent area. We wouldn't even get a mortgage for the flat we live in (£300K)...The neighbors bought a house next door for £1M. Only pensioners and businessmen own properties on my street,the rest are renting. So realistically,unless I start making 50% more than I do now, there's no way this will ever change. I guess I should start looking at those remote Salesforce jobs in Bay area...
90th percentile puts you on around £55k, for which you could absolutely get a mortgage on a £300k property (assuming you have a 10% deposit and your partner earns an average salary).
There are many places throughout the south, midwest and northeast with decent job markets and dirt cheap housing. The mortgage on my 1800 sq foot house is nearly a third of the cost of my tiny one bedroom back in Seattle. The cost of the entire house is a tenth of a house in the Bay Area.
I am fortunate to work remotely but when deciding where to live I wanted to be able to afford to keep this roof over my families' head even if I didn't have a Bay Area/Seattle gig. I think the biggest obstacle may be coming up with enough cash to secure the financing in the first place, and for that I am grateful to have lived and worked in a tech hub.
How does your total comp fare relative to Seattle? I’m living in downtown Seattle now working for Amazon. I’ve been here almost 8 years. My TC is north of $300K, but the mental strain this fucking company has had on me has me constantly on the edge. I’m thinking about leaving to join another FANG company or drop out of big tech all together.
My TC is significantly lower(half) but we aren't public and not a FAANG so.
Living in Seattle on two high incomes(maybe not relative to you, but still) and having no kids was amazing. Paid off about 80k of student loans in a short amount of time. However, the prospect of having a massive 500k-1m mortgage in a boom or bust town was just too much for me. Here, If the housing market flipped upside down and my house magically worth 0$ id still come out alright! It's that, plus I can afford my housing while working at Starbucks(exaggeration) that gives me peace of mind.
I will say though, if Seattle's housing market crashes I'd be back in a heartbeat. I miss the water and the mountains!
Also FWIW my company is remote first, and I get paid the same in Seattle as I do here.
Seattle is booming but I don't see that big of a bust coming, even though I kind of wish it would. I've lived here 25 years and people thought there would be a real estate bust in 2000 and again in 2008. It was only slightly down for housing in 2000 and in 2008 even some programmers lost their jobs. In my area in 2008 the 2 million dollar houses went down to 1 million for about 6 months, and then under a year later were back up to where they were. Less expensive houses didn't move as much % wise.
In 2008 it was systemically threatening, I don't see it happening this time. Yet, I'm a little bit like you, I am hoping prices will go down, because I want to buy a condo or 4 unit duplex as an investment and I've been waiting for prices to go down. For years ;-)
In Seattle there doesn't seem to be enough new housing to make prices go down on sale purchases. Unless Amazon goes down I don't see demand lessening. The only thing I see easing is apartment housing. And we need an easing so that people not in "the industry" an afford to live here. Theoretically more apts should lower prices for condos eventually. But it hasn't happened.
Not who you asked, but it's almost guaranteed to be lower. It's extremely rare to be both remote and get paid at the prevailing salary of the company. That only works for companies that generally don't allow remote, as they don't have COL-adjusted salaries to worry about.
As an Amazonian that works remote, I have the same payscale as everyone else in Seattle.
Remote work is becoming more "real" by the day, so it's certainly possible in the age of the internet to work remotely in a low cost location while making a salary competitive with a higher cost of living city like SF/NY/LA.
They don't work in the CBD though, so being in housing walking distance to major transport options isn't important (and thus can work out cheaper housing options).
I do this and I want other people to know it's possible too.
I'm putting together a list of the best places to live for remote workers with families, hoping to turn it into a little website that you can filter by schools, available internet speeds, median house price, that sort of thing.
Hopefully it will help someone out there when there's more data.
Where I live, there is a concerted effort to do the same thing. For a long time people in the area have been trying to convince the world that our region is the best. Best beaches, best food, best beer, best outdoor activities, best mix of weather, best music, best quality of life.
And then we all saw what happened to Portland, Seattle, and Austin once the word got out and everyone knew about these "secret" cool cities. So now we keep our mouths shut and enjoy our beer and beaches without all the tourists and transplants.
For now it's just the spreadsheet, (anyone can edit) but the website will be by done by Nov 11th.
That's the goal anyway, and then from there I could open source or just do weighted average input for people to rate their favorites w/ no login required.
On a team of 50 (all remote workers), I have four coworkers at my multi-national tech company who live in/around Grand Rapids. It might be more common than you think.
Problem is a lot of companies get smart and "pay by location". I've seen big cos from the Bay offering half the salary (before currency exchange) for workers in Vancouver.
Gitlab, for example. You can see the multiples in the json used for the salary calculator (eg. Vancouver 57.367 % of a SF salary): https://about.gitlab.com/salary/data.json
Enjoy life outside of work? Look, I enjoy my work and it's pretty meaningful work that affects people in real ways.
But I work to live, not live to work. My job is a means to an end, that end being to have a fulfilling life that doesn't revolve around what I do for a living.
Because of that, I find the quest to climb the corporate ladder has lost it's appeal. I'm cool staying at my current, well-paying, work from home job until I retire. I don't want to be running a company, I want to be running my life.
Amen. You could also consider starting a small business if you want to stay lower key.
Corporate ladder does seem a bit... sad? But maybe some people like it! More power to them!
Cool thing about a small business is you can create a long term sustainable lifestyle that suits you. I like the philosophy of TJ Holowaychuk with Apex (created expressjs and a million other amazing things), super cool. At one point it was referred to as a “non startup”. Love that dude :-D
Nothing wrong with building a company up to an ipo either, that could be a blast depending on the people and context.
One could also work for a medium sized company. Build mission critical software, then maintain it.
I know a guy that has done this for a few companies and then moved onto consulting for them. Makes SV money in the midwest. Works whenever he wants, 99% of time remotely, and companies will sometimes wait if he has too much going on to do work for them.
The guy is living the life. So, I want to do the same.
All of these options people are presenting are not realistic for most workers. Contracting, starting your own company, and working at the same place for the rest of your life are generally not advisable (Or even doable!).
Small town America will have $500 / month for a 2-bedroom apartment, while paying medical-doctors $200k+ / year.
But you may be the only doctor around for 10s of miles. Which is why you'd be so valuable. I'm sure there are other $100k to $200k jobs that small towns need.
No, you won't get high-tech or programming in small-town America. But there's more to life than just the tech-field. Its easy to forget because we're mostly programmers in this website.
If you consider automation to be sufficiently tech-y, there's still plenty of jobs like those around, particularly in the rust belt. The people I knew in this area lived in small towns and got paid well enough to live in neighborhoods surrounded by medical doctors.
Part of the problem is these jobs don't have the sex appeal of SV tech so they aren't on people's radar or just not considered desirable because of the nature of manufacturing work.
the sweet spot in terms of arbitrage right now is: find full time employment at a high earning job in a major metro area, move far enough from that metro area to work remote while being able to come into the office a handful of times per month.
A three hour commute is easier when you only do it twice a week, or a few times a month.
If you want to be mind-numbingly bored, sure. Despite the cost of living in a city, I (and others who enjoy city life) would much rather pay to enjoy amenities like public transit and being able to walk to a bar.
I don't think its fair to say that living outside a city has to be boring. Many value and enjoy being among nature. My ex-coworkers who live in rural areas seem to have a good time on their quads, tending their gardens that sometimes approach small farms, hiking/biking, boating on the lake in summer, ice fishing in winter, hunting, camping, etc.
Your Friday night at a bar is their Friday night around a fire with their hounds.
>Many value and enjoy being among nature. My ex-coworkers who live in rural areas seem to have a good time on their quads,
Listening to an extremely noisy engine for hours on end is not my idea of "enjoying nature".
I've lived in rural areas. They generally suck, even for nature. In America, all the wooded land is "POSTED" (no trespassing), so you can't go there, and will probably be shot if you do; you have to find a park instead. If your rural house is located near a park, great, but otherwise you're out of luck.
I actually am thankful for folks who think living outside a major metro area is "mind-numbingly" boring. That means you'll stay in the city with all the other crazy people.
"Estimates suggest that cities are responsible for 75 percent of global CO2 emissions, with transport and buildings being among the largest contributors."
But my weekly commuting is less than 5 hours total. And I live in the Seattle area. I will add before I switched jobs to one on the same side of the lakes as I live on, it was 10 hours / week ;-)
In the grand scheme of things, even $200K is not a lot of money. I made record this year (~$320K), but I end up saving it all. Can I afford to buy a home? Absolutely. Will I buy a home? Absolutely not. Let’s say I purchase an $650K home outside Seattle and commute to work. I still have a huge mortgage weighing on my shoulders and I could get wiped out if my employer let me go. Just not worth the risk.
It was walking distance from the local university + local hospital. My sister at the time was studying to be a medical doctor, so she needed to be close to those two spots.
There wasn't much else going on in the town aside from the university + hospital.
Lets just say... Buies Creek, North Carolina. I've been to smaller towns, but I'd say population of 2,942 is small for most people. EDIT: Seems like prices may have gone up in recent years: I'm seeing $800 to $1000 on Rent.com, but there's still a listing or two for $600/month. Or maybe "word of mouth" is still king there.
Buies Creek is still reasonably close to the Raleigh metropolitan area. So this is still "somewhat suburban". I've visited my cousins in Coulee City, WA (Population 562), so I know what "actually rural" looks like too.
I live in a dense urban area of ~1 million, on a tropical island. My 550 sqft apartment is ~$520. Hardwood floors, natural gas range and hot water, structure is proof against typhoons up to Category 5 (already experienced several), as well as earthquakes. Gigabit fiber optic internet @$35/month Speedtests around 550MB. Daily flights to practically every major city in Asia.
HOUSES, however, are insanely priced. The mortgage rates are low (1-3%, slightly less than 1% if you are a government employee) but the principal is stratospheric for the size of home and land you are buying.
There is a meaningful difference between Buies Creek, NC and Coulee City, WA.
Its less about population size and more about distance from the urban center. Coulee City is a 2-hour drive from a major city (Spokane), while Buies Creek is maybe a 40-minute drive from a major city (Raleigh).
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From MY perspective, both Buies Creek and Coulee City are rural.
But from the perspective of someone who lives in Coulee City, they probably think Buies Creek is suburban (since it is commute-distance from a city).
> From MY perspective, both Buies Creek and Coulee City are rural.
Yeah - for a person who is adjusted to only living in big cities then sure. However, Buies Creek is 30 minutes away from the downtown of a city. It is not rural by almost anyone else's definition.
It'd be like saying Atherton, CA is rural because it's a "smaller" town of 7k people. Ignoring that it's within a 8 million population metro and within 30-45 minutes of a 1 million population sprawling city (San Jose) and another 800k+ densely populated one (San Francisco).
> Yeah - for a person who is adjusted to only living in big cities then sure
I've never lived in any big city. Literally never. Not even close, always 20+ minutes away from the major city.
The thing is: suburbia itself is a network of smaller cities. Buies Creek has no "smaller city" near it. Buies Creek IS the city.
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To continue your Atherton example... Atherton is a suburb of ___Palo Alto___, not a suburb of San Fran. It is a brisk 4-mile bike-ride from Atherton to Palo Alto and back, you don't even need a car if you live in Atherton and commute to Palo Alto.
There's NOTHING walking or biking distance to Buies Creek, NC. Rural is more about "distance from nearest metro".
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Buies Creek NC is 40-minutes to Raleigh. This is rural by my experience. True, Buies Creek NC is "less Rural" for people who are used to 2-hour drives (Coulee City to Spokane), but a 40-minute drive away from a big city is Rural by most people's definition of Rural.
No, because its 4-miles away from Palo Alto (city of 60k).
Rural is mostly about being far away from urban centers. Buies Creek NC is 30+ miles from its nearest population center (10k+ citizens). While Atherton is 4-miles away from its nearest population center (60k+ citizens in Palo Alto).
It has a population center of 20k within 15 miles. That was only one that I looked at. I didn't even have to try for that. I know nothing about that region but at an eagle eye's glance, it's obviously a suburb. It's part of an incorporated metropolitan area. It is, therefore, a suburb. It is not rural. Atherton isn't a suburb of Palo Alto btw. Palo Alto is the suburb.
Housing in Texas is still very cheap comparatively. And salaries are $100k+ in tech. You can get a house in round Rock ( for example 1309 green terrace Dr is on the market for under $240k and it's a 2300 sqft house with a 2 car garage ) and it's an 18 minute drive from Apple and Facebook.
Look for places that other people don't want to live. There are plenty of midwestern cities with senior developer jobs paying $100k+ and a low cost of living. My two bedroom condo 20 minutes from the downtown of a major metro area was $80k.
Austin and Chicago definitely fit in that overlap. On top of that, when you compare SF to say, Cleveland, sure the median salary in SF could be 2x as high, but the median home price is close to 10x as high.
NIMBYism is going to absolutely choke the bay area over time, and newer generations of startups, VCs, and accelerators will wise up and broaden their horizons. The frequently parroted argument of "SF has the best pool of engineering talent" only goes so far.
Especially when quality engineers can move wherever they want, and Stanford and UC Berkeley aren't pumping out nearly enough CS grads to justify the absurd cost of operating for startups to stay there.
Mid 20s guy here; I lived in San Antonio a few years back for a year and spent every other night driving up to Austin, because there is basically nothing to do in downtown SA unless your only interests are drinking and food trucks.
Less sarcastically: is there an index for this kind of thing? E.g. cost of living for an equivalent neighborhood plotted against median salaries for tech jobs?
A large chunk of the midwest is like that. Housing is very cheap in the small-medium cities (and the big cities are still a lot cheaper than the coasts) and you'll usually find a few local software companies + satellite offices of bigger ones that pay in that range.
There are a few different rankings that sort of assess this.
There's a CompTIA "Tech Towns" report[1] from last year that does a good breakdown of salary + job opportunities vs CoL by city.
Anecdotally, I think it was right to rank Charlotte NC at the top. It's easy to find 100k+ salary jobs there if you have experience (avg is a bit lower though) - and median housing prices are like 230k. But the big downside is that you pretty much have to be cool with working for a bank.
There are numerous cost of living calculators[0] online, but they basically just tell you how much more or less you need to earn to maintain your standards if you move to another city (not neighborhood level). Still, they're interesting.
I'm in a mini-retirement right now and living in SF. It was surprising to learn that below like $50k you basically pay 0 in income tax in California. As a single person I can very comfortably live off $40k/year in investment income and pay no taxes right now.
Unless you get very lucky with housing living off $40k/year is pretty difficult in San Francisco. Even if you manage I would definitely not call it comfortable.
I pay $2k in rent, so $24k. That leaves $1300/month for everything else. I'm easily below that most months. (No car, no drinking, cook during the week)
I don't find SF to be any more expensive than any other "big" city outside of housing cost, especially when you factor in not needing a car to get around.
How much of that $1300/month goes to dental and medical insurance? Because with no family to support, I don't see how you aren't paying close to half that in insurance.
I only just left my job this year. I chose not to get health insurance for rest of year because it's just for myself and I don't use it. (yes, slightly risky but in good health and don't plan to stay funemployed forever)
But if I did, there's the premium tax credit, which caps premiums to some % of your annual income. For a single person, 322% above the federal poverty line is $40k with a 9.56% cap, so you'd pay no more than $318 in premiums a month and whatever you pay extra (say $182 for a $500 premium) becomes a tax credit.
It's dangerous not to have insurance in the us of course. You are one step away from being devastated because of someone hitting you in a cross walk or suddenly getting a real health issue. My property tax and house payments together are more than 4k a month in the seattle area. That high cost seems less "expensive" than my salary and house appreciation. I just calculated my house has grown 7% a year over 15 years based on estimated price and what houses sell for around me. So it's working out. But it's amazing to look at my salary compared to my costs.
Of course, on $40k/year I suppose one would be taking subsidies or medicaid instead of paying full freight. But, then I guess it could be said you can make it in SF on $0/year...
No, for a single person a gold plan for Kaiser is $500/month, so $6k a year, but yes if I have $40k in investment income then I'd qualify for a premium tax credit, in this case my premium is capped to $318/month with the rest as a tax credit.
When I check at coveredca.com, I see the cheapest plan by estimated total cost [kaiser bronze] is $18069/year. Perhaps you're younger, or assuming that you will not actually have to use any medical services or products?
We have very different views of "very comfortably" living.
For reference, the amount you have remaining every month after paying rent is close to what I end up averaging on vacation! And I definitely don't think I live a very comfortable lifestyle. (My vacations aren't even that nice - we rent budget cars, fly max economy flights, almost always stay in the bottom 25% of AirBNBs in cost, and almost always eat at $-$$ restaurants) Compared to most Americans - clearly, I spend more on vacation. Compared to my SF Bay Area peers - I spend nothing.
I was living in San Francisco on an after tax income of $500/week for most of 2010-2011. Prices are a bit higher now, but I think I could scrape by on that amount if I had to. I wouldn't want to though.
Yeah...I realize I'm in a privileged position but just pointing out that if you're in a position to F.I.R.E. that taxes in California are actually low to nil for <$50k/yr despite its reputation as a "high tax state."
>It was surprising to learn that below like $50k you basically pay 0 in income tax in California.
Not if you're a contractor without a full-time employer. In college I did freelance work, and I lost nearly 30% to taxes despite making less than $5k a year from my work. Having your social security responsibility doubled is brutal.
The original post was talking about income tax. There are plenty of other taxes on making money by working.
But, if you're living solely off investments you don't pay those. I was surprised to see that capital gains tax is zero below a certain income. It seems rather unfair, since you can choose when to sell.
Isn't short term cap gains taxed like earned income, which below $50k a year is 0 in CA? For federal if you make <$52k (w/ standard deduction) you only pay like a 11% tax rate.
I'm not familiar with how freelancing income is different than other forms of income...isn't that just a regular 1099? Are you saying you didn't receive a tax refund during tax season?
With W2 employment, you and your employer split the payroll tax responsibility. When you're self-employed, you pay both halves.
If you adjust your rates accordingly, it's a wash for everyone involved (this is one of many reasons the 1099 price per hour should be around twice the W2 price per hour).
None of this has anything to do with CA income tax.
While housing is an issue (particularly in more prosperous coastal cities), if I made over $100k per year but couldn't afford a house in the $400k range, I don't think my response would be to rent a single-family house in Stapleton. There are more affordable apartments in the Denver area that are still in a good school district.
Articles like this are starting to annoy me because I see the working poor and lower-middle class, who have very serious financial issues today lumped in with young professionals with 2010 levels of student debt trying to live the lifestyle of young professionals in the 1980s (who were largely free of student debt) to their own financial detriment.
If you have a household income of $110k and both work in SF, you are screwed. If you have a household income of $110k and live almost anywhere else in the country, you have options.
> trying to live the lifestyle of young professionals in the 1980s
I've been interested in the subject for while, but do you know of any recommended reading material about what being a YP in the 80s was like (socially, career wise, etc) and the economics of how it was possible?
I do not have any recommended reading. I had relatives that came of age in the late 70s and early 80s, so this was personal experience.
http://www.paulgraham.com/re.html suggests that young professionals being paid more was new around this time. I don't know if this is true or not. If it is true, then this would suggest that there was a sudden increase in disposable income among young professionals. Professionals were already a small fraction of workers, and social change is usually uneven, so it seems likely that in addition not all professional jobs experienced this shift at the same time.
If you suddenly give a small fraction of the population more money then they are likely to live it up because there aren't enough of them to drive the costs up in lock-step.
The issue is less about the dollar cost of housing in most places, than the opportunity cost and closing of flexibility in getting into a long term mortgage. In all but the most obnoxiously over-priced areas, if you make $100k, you should be able to buy something on a low down-payment FHA loan, and your total mortgage payment should be less than you'd pay in rent. PMI sucks, but it's not terribly difficult to refinance out of it after a handful of years.
The problem is you're tied down to a location. The market is hot now, but even so, it is not trivial to list a house, get an offer, close, and decamp from it, and it's rare that that goes quickly. If you envision moving around from job to job, rather than settling in for the long haul, a 30-year mortgage is a ball and chain.
Struggling with rent vs buy right now for this very reason. I know financially it would be better to buy, but then you lose the flexibility to go after a great opportunity in even another part of a major city.
I was in a similar position a couple years ago, and ended up buying.
If you read the article, they mention "built to rent" houses. I bought one of these, and although I do not rent it out now, I could quite easily rent it out if a better opportunity comes along that would require me to move.
I think this is a good option for people who have the cash for a down payment, are looking for a place to live, and don't want to deal with rising rents in case they do stay, while still increasing net worth every month with the mortgage payment. You might be tied down for a year or two, but it's not like being stuck somewhere for 30 years if you have the option to rent a place out.
You know that you can sell houses before you pay off your mortgage, right?
If you aren't in an area with very high housing costs (which, obviously, very many readers of this site are), it's not even that big a deal to sell your house when you need to. If your house constitutes 40% of your net worth, and you take a 5% hit on your sale price, then your net worth has declined... 2%. A good job is worth that.
Admittedly, it's different when your house is 90% of your net worth and you're barely able to afford your mortgage.
Selling isn't free. Where I live you can expect to pay 6% just to the realtors. You also have other costs like lawyers, etc.
You're also ignoring leverage. If the house is 40% of my net worth, I take a 5% hit on the sale price, and I've only paid 20% of the house then I've lost 10% of my net worth not 2%.
That's both the mother AND father working to bring home $59,039 on the average (before taxes and other costs).
Its clear you live in a rich area where $100k isn't much. But that's also why a large chunk of Americans think that "city-folk" are disconnected from reality. $100k is a lot for many people.
My sister lives in an area (in USA) where a 2-bedroom apartment is just $500/month, low crime good living conditions.
Over 80% of Americans live in an urban area[1] so it's pretty absurd to claim "city-folk" represents some elite minority. Median household income in NYC is $57,782 [2]. The idea that America is split into some wealth urban minority vs a near majority of lower income rural population that understands "reality" is complete fantasy.
It doesn't change the fact that $100k is still a lot of money, but the people for whom that a lot a money aren't on some farm in the middle of the country, they're driving your uber, greeting you at the entrance to your apartment and delivering your instacart.
The US definition of "urban" is basically anything that is not rural. Includes suburbs and small towns. People who don't consider themselves city folk and have never used Uber or heard of instacart.
The US census counts the suburbs as urban. I don't believe most people referring to "city-folk" are referring to people in the suburbs.
"To qualify as an urban area, the territory identified according to criteria must encompass at least 2,500 people, at least 1,500 of which reside outside institutional group quarters."
> That's both the mother AND father working to bring home $59,039 on the average (before taxes and other costs).
This isn't accurate. That's everyone in the household collectively working to bring home 59,039 on average. 27% of "households" are individuals. 34% of households are couples (that is to say, two people with no dependents. If they're mothers or fathers, they're empty nesters.) So only about a third of households have more than two people (presumably parents + children.)
Not sure what the median income for households with two working parents + children is.
The main thing I wanted to point out was that 59k / year "households" are typically more than one person. Maybe 2 or 3 people (if you have 2-working roommates in your house, that's 3-incomes in a single household).
IIRC, the 59k / year per house is roughly 2-working people per house (2x income streams per housing unit).
She's the only medical doctor for miles. Good luck replacing her. (Hypothetically anyway. Its an option, but my Sister is more realistically looking to live closer to friends / family and is probably going to turn down such offers)
Overall, small town doctor is a pretty good position to be in. There's lot of other ways of living rather than FANG-style tech. High-quality doctors and/or nurse practitioners make big money in small-towns.
If you're the only doctor (or one of ~5ish nurse practitioners trained for emergency care) in a 10-mile area, you're going to be a highly-valued member of that town. Period. Its not even to "cure" all diseases, but you need a highly-trained medical professional to know if the ~2-hour journey to the big city hospital 100 miles away is worthwhile.
Ex: You may have to travel 100+ miles to get to the nearest MRI or CAT-scan machine. The local doctor will provide medical advice for whether or not the trip is worthwhile based on the diagnosis of less-sophisticated tools.
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The main problem with becoming "THE Doctor" of a small town is that you have to move away from your social networks. IE: My sister would have to live very far away from the rest of her brothers / sisters / parents, and that's a tough sell from a social standpoint.
> Its clear you live in a rich area where $100k isn't much
You mean he doesn't live out in the sticks or a run-down city like Detroit (MI), Gary (IN), or Paterson (NJ). You don't need to live in a rich area for $100k to not be that much.
So even in San Francisco, the most expensive city I'm aware of, the average HOUSE brings in $96k. A single man (or woman) bringing $100k working in San Francisco is decidedly well-above average.
Bring in $100k in San Francisco, and your wife (or husband) doesn't even need to work to live like the median.
Other cities, a $100k job (with a stay-at-home wife / hosband) will be 30% to 100% higher than the median. $100k is a lot.
Households != mother + father + children, where income is presumably higher. Households include all living situations which includes households with 1 person, households with 1 person working, etc.
Great observation, but the analysis here seems wrong to me.
If you took the median income of people between 45 and 60, I bet people here would STILL be shocked at how low it is. The reason isn't a lack of taking life stage into consideration (the link has no analysis of the numbers there). It's mostly about rich folks refusing to admit they're rich relative to most people.
The census data [1] seems to indicate it was $79,781 in 2017 (in 2017 dollars, so $83,569.23 today). Not a large amount, but still 25% higher than the 66.7k number
Thank you for that correction. I had taken what Google spits out in that top box and didn't bother to look at the date of the article they were scraping from.
Instead of looking down on rural folk, consider the possibility that what people like you and me who earn 100k spend might be very different from what we need to spend.
After all, people in big cities by and large don't earn $100k either, and yet they manage to live somehow!
I don't look down at them, I grew up in a small town and spend a lot of time in rural America. Most will not get that 100k is not a lot of money in an urban area, especially if you have dependents, since that's more money than anyone they know makes.
It averages upwards. Many households have 2 working families so that they can afford the house.
I'd presume that most "single family homes" owned by a single-person would have 1-or-2 rooms rented out, providing 3+ income streams for the household.
I would have said a lot of people want, rather than a lot of people "feel entitled to". It's debatable what people are "entitled to", but we live in an age where it would be well within our technological reach to build comfortable homes for everyone. It would however be politically impractical to reallocate land and resources to make that happen, because the people who currently own most of the resources feel entitled to keeping them.
100k is about $5900 a month after taxes and modest 401k contribution.
Let's subtract some typical expenses (erring on the more expensive side)
$200 - water + electricity
$100 - high speed internet
$160 - decent wireless plan
$250 - employer subsidized health insurance
$150 - car insurance
$50 - netflix, spotify, hulu
$700 - groceries
$800 - go out to dinner twice a week (or some other activity)
$350 - car payment + gas
$1000 - savings
$1500 - median monthly mortgage payment in the USA.
$200 - home insurance.
That still leaves 400 a month while also managing to save and invest in 401k. Seems like a decent salary and way of life. Not rich by any means, but certainly comfortable.
The median mortgage payment in the USA is about 1500, but let's call it 1800
home ownership, two kids, college education, and regular travel, all while being financially comfortable and saving for retirement are what the hallmarks of the american middle class dream used to be.
A 100k household income doesn't afford you that anymore.
If you are forfeiting a large amount of equity from leaving your current job and are joining as a senior/staff engineer it's possible to negotiate a signing bonus that high
We rented while making good money because it's easier to rent. We're now buying a house. I genuinely like fixing and maintaining houses, so it makes sense for us. However, most people don't. For them, it makes a lot more sense to rent. If you're rich and have a stable source of large income, it's almost always better to rent all your stuff. Not only is rented stuff of higher quality (because you can always have new stuff), someone else takes care of it for you. This is good. My wife and I will soon sell one of our cars, and rent a car if we need it, because a rental car is certainly going to be newer than any car we own, and if it breaks, someone else will fix it. Renting is superior from a user experience perspective. If you can afford it, it is the best.
And yes, we're planning on renting out a unit in our home. It will be a very nice unit and the renter there quite lucky (as are all renters) because someone else -- me -- will take on all the risk if anything breaks.
You don't have to take on any of the risk if anything breaks by forcing them to have renter's insurance. It's something that a lot of newer apartment buildings are doing these days.
You seem to be confused as to the purpose of renter's insurance. Renter's insurance does not cover the cost to repair broken appliances or problems with the apartment that reduce habitability. Not sure where you got that idea from. Renter's insurance covers the renter's property if something in the apartment damages it. For example, if there is a fire that damages your computer, renter's insurance will pay a replacement cost, but will not pay for the repair to the apartment. That is up to the homeowner's policy the landlord pays for.
Source: have rented solely in buildings requiring renter's insurance, and have never filed a claim for things breaking in the apartment. The landlord always fixes it.
I know millennials with combined household incomes in excess of $200k who can't afford to buy, because huge student loans are required to get that kind of income if mommy and daddy aren't rich in the first place.
You certainly don't need to be drowning in student loan debt to reach that. You could go to a state school and get an excellent job. That's just poor financial decision making. Where I live you could go to UVa, VT, or maybe VCU.
You also have to factor consumerism and entitlement into the issue. I make white collar money, but live in a blue collar neighborhood. This makes housing more affordable and there is no temptation for "Keeping up with the Joneses".
It's easy to finger wag at supposed entitlement and consumerism when you completely ignore all the other factors that lead someone to decide where to live and work. As the breadwinner in my family I made the decision to live closer to where I work and pay a larger share of my income towards housing so I can spend more time with my kids and less in my car. There are plenty of other considerations far beyond your cynical take that would lead a family to live in an expensive ares: schools, services, healthcare, ability/desire to drive, child care, the list goes on. It is difficult to avoid getting rankled at this kind of imperious mindset, particularly because if you actually took the time to meet any of these so called materialists you would likely find that they just want to have a nice life with their families like everyone else. Calling it consumerism or entitlement is a cheap shot, reductionist, and in most cases doesn't reflect reality.
I hear community colleges put out there as an option to move into a 4 year state school often. I can't help but think it applies to many more states than I expected initially.
A lot of states have this, but follow the plan. Don't take random CC classes, only take ones that will transfer to schools they have agreements with. I did CC for a year and they marked the classes with an * which would transfer to the closest university.
I thought it was implied by "state school" that I meant you should attend a school in your particular state. In-state tuition for UVa is half of that. Additionally it's easy VA to get guaranteed acceptance to a state school after two years of community college.
PA, for example where I went to school, was still nearly $20k/year for tuition at the flagship state schools. I know a lot of people in-state that ended up with over $100k debt.
$100k in student loans @ 4% and a 10 year pay off period. That's over $70k net pay in Philadelphia. I'd imagine you could certainly afford to buy a home after a short period of time saving for a down payment. If the dual income household is over $200k gross then it's just poor financial decision making.
It depends a lot on the school you went to and what kind of financial aid you were able to get.
Back when I was picking a college for my CS undergrad, the choice boiled down to (numbers are rough estimates, because I don't remember the exact ones, but they are close enough and should relay the point I am trying to make):
* UCLA out of state: some financial aid for the first year, bringing the costs down to around $25k/yr. Around $35k+ each following year.
* Georgia Tech in state: without financial aid, around $9.5k/yr. With Zell Miller/HOPE scholarship (which every in-state student gets, provided they maintain a certain GPA), it brought down the tuition costs to essentially $0/yr. I still took out some loans for rent/basic necessity expenses, but those were miniscule. Like, less than the first year at UCLA kind of miniscule.
Both are well respected colleges, same program, but wildly different loan situations post-graduation. I obviously choice GT, but not everyone is in the same situation as me. The amount of loans doesn't always correlate with the kind of program you are choosing.
Just to add you could’ve done TAG (Transfer Admission Guarantee) to both GaTech and UGA from Georgia Perimeter (community college) and saved a bunch on tuition or get in via transferring to a difficult school. I went to KSU to be with my wife (girlfriend at the time) and did Information Systems. Had I known I would love software engineering I might have done CS elsewhere.
Are you still in Atlanta? If so what kind of tech do you work on?
Oh yeah, I definitely heard about TAG program before, but it is fairly tricky, as I felt that the first years at GT are the ones that shape you up and give you a very strong head-start in terms of internships and such. I've known quite a few people who went through TAG, and a lot of them struggled at GT pretty majorly after transferring, because they weren't hit with the GT intensity hammer straight to their temple when they started college. While students who went through GT from the very beginning already embraced the hammer hits to the head by that point and even started hitting themselves with it. Definitely not a hard rule though, I've met quite a few TAG transfers who were just as resilient and successful in their college career.
As for ATL, unfortunately no. I moved to Seattle right after graduation for a couple of reasons. Starting with the career opportunities and ending with the desire for a change of scenery. If you want to talk more about it, do not hesitate to reach out - me(at-sign)olegwritescode.fyi
I know people in their 20's who make 100K+ but cannot afford anything because they get starbucks in the morning, expensive lunch and dinner at a bar daily.
They could have joined the Air Force, gotten some tech-related work experience, and then used the GI Bill to pay for their university education (I used mine to pay for my Masters).
> I know millennials with combined household incomes in excess of $200k who can't afford to buy, because huge student loans are required to get that kind of income if mommy and daddy aren't rich in the first place.
Man - I'm nearly at that income just by myself. (Am millennial) I know others my age who make $300k+/yr as single income. They also cannot afford to buy a home. It has nothing to do with debt for me or them (I graduated debt free thanks to the VA). It's purely the price of homes.
I lived in Little Rock for high school and Norman, OK for college. How does KS compare? Shit you could not pay me enough to go back to Oklahoma or Arkansas.
Olathe (Southern Suburbia). Yeah, Topeka and Wichita are off the menu for me, but I'd gladly be anywhere between Lawrence and Lees Summit (on the Missouri Side) South of I-70 and North of Gardner. And while Downtown KC isn't going to stack up to the non-stop adventure of a "Big City", there's still plenty to do, and the other quality of life bonuses add up.
This is mostly a west coast problem, where housing is hugely inflated in every west coast state and city. And NYC too of course, but that's less surprising given its NYC.
Sometimes I think these articles are written as clickbait for people in the midwest, southeast, northeast, where housing is still very cheap and jobs pay well.
Sure ok, but over 6 years a starter house going from $19,000 to $30,000 in Dayton is a lot different on the affordability spectrum than an equivalent house going from $300,000 to $900,000 in Seattle.
I'm behind a paywall, so I'm sure they pick up on this, but the biggest problem I ran into when I thought I could afford a house was the down payment. You can make $100k (or less!) and quite easily afford a monthly mortgage payment, but that doesn't necessarily mean you have enough saved up for a down payment.
I agree with you on the down payment but from a slightly different POV. There are cases where even saving up to 20% to avoid PMI doesn't also help - particularly states like NJ where you could own a "modest" $300k house but still be out $10k + per year in property taxes.
In order to get mortgage + taxes down to a reasonably "affordable" amount (approx. 40% of take home spent on housing) you need to be looking at up to 40% down to offset the tax expense.
Sort of. You'd be left paying the difference of 3.5% to 20% (16.5% or $49,500) in a FHA Mortgage Insurance Premium (MIP). This means another loan that you need a 1.75% down payment for (making your downpayment ≈ 3.8% or $11,400) that adds another payment (≈ $400) in addition to the mortgage. MIPs last the entire life of the FHA loan, too.
Yes, it's effectively a higher interest rate on the entire loan, but my point was that you don't need a massive amount of cash up front to close the deal.
Down payment is only a portion of the costs to buy a loan. My 3.5% down FHA mortgage on $309K purchase price cost me about $16K. My previous 5% down conventional on $103K was around $12K.
Exactly this. Who can manage to save up 20k when they've got massive student loan bills from the education that got them that $100k+ job in the first place?
Agreed, but it's that way for a purpose no? Maybe not a whole 20%, but enough of a buffer so that you won't be underwater on a mortgage in a down housing market.
I don't mean to comment about how much a down payment should or shouldn't be, but that affording a house takes more than just money coming in (i.e. a good salary). You also need savings. This makes it hard for a lot of first time house buyers, and I think especially, young people, to buy.
Hopefully, you can save at a rate higher than the rate at which the down payment increases due to house prices generally going up.
A more accurate summary would be “People with $100K/yr may be able to rent homes in sufficiently more desirable neighborhoods than they could buy as to choose the former over the latter while being able to do either”, but it's too long and not hyperbolic enough for a headline.
Inflation and the obsession with powers of 10. Back when I was starting out in 1990 a $100K job would have to be a $200K job today. Yes, housing has inflated as well but what I'm trying to say is that our perception of using $100K as some kind of benchmark hasn't.
I think there is still a big issue with pegging home ownership as the quintessential "American dream". In a lot of ways home ownership actually leads to worse outcomes than renting, but so many people think it's the one thing everyone should do.
I'm behind the paywall but I'm wondering if this is because, just maybe, younger people understand finances better. When I wanted to buy a house, I waited until I save up the 20%. I know plenty of friends in their late 20s and early 30s who have the same attitude. Me and my wife also paid for our wedding in cash, we waited until we could afford it. You have the millennial generation looking at their parents still working and we're desperately trying to achieve financial independence so we don't suffer the same fate. I see so many articles about how bad millennials are burdened with student loan debt, but that's made us more concerned about finances than any other generation before us.
So maybe it's less than we can't afford houses with high incomes. It's that we're less willing than our parents to take on financial risk instead of renting.
The downside of saving a lot before you buy is that you still have to pay the rent while trying to save that money. Putting 20% down has advantages when making the loan (better rates mostly) so it makes sense, but saving beyond that is making your life more difficult.
I think Student Loan debt is a huge factor in buying houses later. It's really hard to save if you're paying down debt as well as paying rent. It could easily delay their entry into the housing market for a decade.
Yeah in my area I'm paying probably $200+/month more for my small apartment than I would for a house that's 2-3 times the sqft. It's frustrating to know that I'd actually be saving money + building equity of I could just buy a house today. But saving up is hard when you're also paying off student debt.
My family has told me that you should always save up the 20%, but it seems like like the FHA 3.5% is the winners choice. If I wait until I have 20% down it's going to take ages and all that money spent on apartments is going to waste.
One thing I keep telling people is that buying a house really won't save you money in the long run. I only bought a house for the space, me and my wife both work from home in the midwest and need the office space.
You'll spend more than you realize on upkeep, furnishings and the increase cost of utilities. My opinion is If you really want to save money, find a cheap cost of living area and rent. Only buy a house if you need the space and know that you'll be staying in that area for 10ish years.
I get where you are coming from, and the cost of upkeep can certainly be high, especially on older homes.
But surely the cost of
(apartment rent + other associated costs) * however many months
is going to be higher than
(cost of house + interest from mortgage + upkeep + increased utilities) - (eventual price you sell it for)
The apartment situation you will always be negative, whereas even if you only end up selling your house for the same price you bought it at, you've only paid for interest + upkeep + utilities. The interest + upkeep are certainly not insignificant, but when your rent is as high as the mortgage cost, surely buying has got to be the better option over the longterm.
Oh I agree that student loan payments hurt the ability to save. My point is more that this generation is more cautious about buying a house with very little down because we know the long term affects of large debt.
I do think that addressing the student loan issue would directly help the housing market.
too lazy to go around the paywall, but I also wondered how inflation factors into this. seems normal that "a record number of six figure earners" would rent
> “I can’t think of anyone we’ve rented to recently who didn’t make $100,000,” said Bruce McNeilage, who owns 148 rental homes around the Southeast and is building 118 more.
Well there’s your problem. Quit building unaffordable housing.
In most 'unaffordable' locations, land is way more expensive than housing.
My house, to build new, would cost 250k. The land it sits on is another 750k.
The right answer would be to demo my somewhat old house and rebuild 6 units on it. But you can't; setbacks, height restrictions, parking spot requirements etc. make that impossible. Why? Because everyone in the neighborhood already 'got theirs'.
But from a usage standpoint, my million dollar/ property neighborhood is at that price point because of the land use, not because builders don't build 'affordable housing'
Ugh.. this is so true. When I bought my house I used a rudimentary linear regression to decouple land price from home price. My realtor thought of that as unworkable black magic. I was like well, if I know the build quality and know the cost of construction, why wouldn't this work?
I think the answer was "pride of ownership, location, location, location!"
Aside from being active duty for 11 years which allowed me to complete through two graduate degrees without any student debt, was taking my first role after the military in a small town one and half hours from the nearest city; a small city at that. I stayed there for four years to get comfortable enough to work on my own without any oversight; soaked up all possible learning opportunities. When switching roles to my current job, I negotiated to work remotely, now I live 2500 miles from my employer. Cost of living is the same, but now I don't have to purchase airline tickets to see family.
The number one advantage I see compared to others comes from the military. I complete all tasks asigned without complaining, and get them down without bothering those above me. Doesn't matter the task, if it is assigned and needs to be completed, I do it. Sometimes these are trivial, others would say beneath them, others are writing patent paperwork with the co-founder. This mindset has worked two-fold, I touch numerous areas of the business so my skill-set is well rounded, and my bosses are happy; work gets done without their involvement.
Live below your means, take advantage of where you live, and maintain a simple life. Good things come to those who wait.