Item — HN Reader

Everyone excited about SF Bay salaries - please don't forget how expensive is to live here. My rent is $3K/m (half of my net salary) and that's considered "a decent rate" for 3 bedrooms.

Simple salad or a sandwich will cost you ~$15. Round-trip fare on BART - $11. So just to get to work and eat something over lunch will cost you over $600/m.

If you're offered a job here with relocation - negotiate! If possible - better reconsider. Have a family with kids? Simply forget it. Seriously, things getting awfully expensive here. Techies are moving to other states in numbers.

3 comments

If you earn 3 times as much, but wind up spending 3 times as much, you are still saving 3 times as much.

It's almost always better to get high pay in a high CoL area, than to get low pay in a low CoL area.

Working from paycheck to paycheck you don't earn 3 times as much and you don't save. Most of my friends who live here can't afford to buy a house, they rent. Almost all my friends who left SF Bay were able to buy within months. Cost of living and the housing prices in SF Bay are extremely disproportionate to salaries.

If they could buy within months, does that not imply there were in fact saving? Just their savings seemed small until moving?

A number on a bank statement is the map, not the territory. Money's value is what it can be exchanged for. Saving 3 times as much is merely keeping up.

I think the implication in the comment above yours is that you can save up at 3 times the rate, and then move to somewhere it is cheaper to live with your extra savings.

If you can build a satisfying life and career somewhere cheap, why wouldn't you just do that from the beginning?

Is it really worth it to take a crap standard of living in SF over several years for, what, $5000/year in investment income?

Parent is obviously not saving much if they have to spend 50% net on rent, $6k/month is only $72k a year, which is really tough even in a lower cost place like Seattle or Austin.

Net vs gross

Right sorry. That is still only $95k or so if you are paying Californian + federal taxes and pay toll taxes.

Almost but not quite - at high ends of salary the marginal tax rate is 38%, so $50k->$100k doesn't necessarily make you richer, it just makes Uncle Sam happier.

By my calculation it makes you 62 cents richer for every dollar you earn.

Exactly. Parent is exaggerating. Also, highest tax bracket is 37% (2018). Yeah, I'm arguing about 1%, but that's also for individuals making over 500k, or couples making over 600k.

50k to 100k income raise bumps you up 2% in tax rate from 22% to 24% (assuming individual).

If parent was talking about raise on top of what they have, then the worse affected rate of change would be the 24% rate ($82,501 to $157,500) to 32% rate ($157,501 to $200,000).

These numbers are similar, but less affected with MFJ.

Well, if your workload would be the same either way, you'd want to be in a world where there are more tax dollars than less :)

Not really - the same tax dollars buy less service and infrastructure when the workers and suppliers also need to function in high CoL areas. A $2.5bn mile of subway in New York isn't a priori better than a $600bn mile of subway in Seattle. A $59k entry level teacher in San Francisco isn't a priori better than a $33k entry level teacher in Wisconsin.

$600bn for a mile of subway in Seattle is absolutely nuts, I hoe that is a typo.

Million, sorry.

A mile of subway in New York serves more people. But I get the notion.

One thing I never see taken into account besides what you mentioned is the Cali state income tax. I live and work in a state with no state income tax and that lops off a good 7-10% in salary discrepancies before even starting to discuss housing and the like.

COLA calculators are pretty good at highlighting this. Last time I punched my numbers into one it looked as if I would have to just about double my salary to have the same QOL in Bay Area.

The one upside to Bay Area salary vs cost of living that is worth considering, especially earlier in your career, is that it significantly weakens the purchasing power of fixed cost loans like student loans and vehicles. It would probably make a lot more financial sense to take a mild hit in QOL and higher salary if one has a lot of student loans or wants a nicer car.

I'm amazed you found a 3 bedroom for just $3k. Or maybe it's just that much cheaper outside of the city. Where do you live?