6 ms·

Another way to look at it: the absolute amount of money you save matters, especially if you're young. It's better to make a lot and save a lot. And I don't th

by chubot 9y ago

Another way to look at it: the absolute amount of money you save matters, especially if you're young. It's better to make a lot and save a lot. And I don't think it's too hard to save money with a $160K salary, unless you have kids. That is, the salary to expenses ratio isn't the only thing to look at. For example, if you save 10% of your money in SF and make $150K, that's $15K a year in savings. If you save 14% of your money in Austin and make $100K, that's $14K a year in savings. Even though you went through 90% of your salary in SF and only 86% in Austin, living in SF is better, because you saved more money in absolute terms. You can move elsewhere and take advantage of that savings. If you only care about money, the ideal strategy is probably to move to SF in your 20's, make a high salary, and then move out of SF. A lot of people these days don't have kids until their 30's. (Anecdotally that seems to be what a lot of people have done in the past decade -- move out of the Bay Area when they want to have kids.) This also doesn't account for the fact that SF has more "outliers" and more choices. You might be pleasantly surprised by the kind of job you can get or the kind of money you can make in SF. In most cities (certainly not all), you probably won't be surprised. The job market is what it is. (I'm assuming something about their methodology here, feel free to correct me if I'm wrong.)

deleted 9y ago
[deleted]
yourapostasy 9y ago
> ...move out of the Bay Area when they want to have kids... This is fascinating to me, because if demographers' prognostications are to be believed, then future growth economies (on the multiple-decades-scale) are heavily represented by new middle-class families, in Asia and Africa, and to a lesser extent the Middle East and South America. So not only is the Bay Area ecosystem doubling down on its geographic centrism into a non-growth geography, it is tripling down on a bet that a non-family-oriented HQ culture (where the majority of unicorn companies consider the majority of their staff "who matter" to be located) will innovate sufficiently to penetrate and hold family-oriented heavy-growth markets of the future.
- asveikau 9y ago
  By the way, I have first hand experience that raising kids in SF is quite good apart from some financial questions. There is a lot of community in places like playgrounds etc. More so than in some other places I have been. The average kid my kids meet is far kinder and more socially aware than what I grew up with, for example. So when people say SF is geared exclusively towards childless 20 somethings, don't believe them. Of course the financial picture continues to be challenging for many people, but many would be surprised at what a great place it can be for kids.
  - chubot 9y ago
    Are your kids in school yet? I am pro-San Francisco, and don't have kids. But my neighbors do, and told me about the school lottery. While I understand the logic, it sounds awfully inconvenient. SF is already annoying to drive around, I can't imagine dropping off and picking up a kid to/from a random location in the city during rush hour. That seem like a good way to kill a lot of your day.
    - asveikau 9y ago
      Yes, the lottery sucks and creates traffic problems. Even if you don't have kids, make note of days when there is no school, your work commute will be much easier on those.
loeg 9y ago
Your numbers are just not in the right ballpark. The pay gap between SF and Austin is not as large as your figures, and the COLA gap is far larger. I think an Austin engineer making the average $110k can save more even in absolute terms than the SF engineer making the average $134k. The median rent for a SF 1BR is $3370, or $40,440/yr[0]. The median rent for an Austin 1BR is $1150, or only $13,800/yr[1]. Rent alone ($26,640) has already consumed the entire difference between the $134k and $110k salary. Next, factor in local taxes. California has income tax; on $134k of single income, that's another $9,450. Texas has none. Federal taxes will also be higher for the nominally higher SF wage. There are other COLA factors this simple analysis doesn't even consider. But Austin comes out far ahead on rent and income tax alone. [0]: https://sf.curbed.com/2017/6/20/15841068/rent-report-sf-2017-map https://sf.curbed.com/2017/6/20/15841068/rent-report-sf-2017... [1]: https://austin.curbed.com/2016/4/28/11532748/austin-rent-cost-neighborhood-map-median https://austin.curbed.com/2016/4/28/11532748/austin-rent-cos... [2]: https://smartasset.com/taxes/california-tax-calculator https://smartasset.com/taxes/california-tax-calculator
- komaromy 9y ago
  If the goal is saving money in your 20s, having a 1BR is kind of absurd. You can live in a multi-bedroom apartment/house in SF for much less than that.
  - loeg 9y ago
    Having a 1BR as a young, single professional with a six figure salary isn't totally absurd, even if you're trying to save some money. And costs in Austin scale down with lifestyle, too.
    - megaman22 9y ago
      I'd say it's absurd to be living in shared space like a college student in your mid to late twenties, especially if you're pulling down six figures. Move somewhere else, where half that income will buy you a house with 2000 sqft and an acre or two of land...
jordanb 9y ago
I've heard this argument before and it's predicated on a set of assumptions about savings rate that may not hold true. It's easy to come up with a plausible set of numbers where the absolute savings are better in Austin even allowing for it being a greater percentage of income. Beyond that though, I would submit two other caveats: 1. If you were to become involuntarily unemployed in San Francisco for any length of time then you will find your burn rate is still the SF burn rate and not the Austin burn rate. 2. Spending your twenties in a Gold Rush town with the intent to move to some other more rooted town later means you don't put any roots (professional or otherwise) down in that other town. You may find yourself with no connections and no relevant experience when it's time to move back to Grand Rapids.
- shostack 9y ago
  1. Short of an economic downturn (which would likely impact Austin as well), if you lose a job in SF, depending on your field that is not super concerning given the available jobs and steep competition. So yes you might have a higher burn rate, but presumably you have less risk in the form of more available jobs. 2. Roots are subjective and depending on your line of work may not be as important to have locally vs. distributed. That's just professionally speaking. Personally, not everyone needs that same kind of community connection. These obviously vary based on quite a few factors, but I don't think it is really black and white.
- econner 9y ago
  But hopefully you struck gold. Or you just stay in SF I guess.
miranda_rights 9y ago
Is this before/after taxes? The problem is if you live in SF vs Austin, the sales taxes are similar but California's income tax will take 10-15k off the top. After that, you have to think about cost of rent. I'm currently debating between moving to SF vs Austin and would end up spending ~30k a year for rent and utilities. For a similar, or slightly nicer, place in Austin, I'd spend ~12k. The difference there, ignoring cost of living of other things, is ~30k. Beyond that, (based on my anecdotal offers in both cities), the differences in salaries between the 2 cities are smaller than 50% (closer to 30% before tax, which seems to match the data in the article, if not still larger). By that point, you have approximately the same amount of money left over in either city. Granted, in Austin, you'd probably need a car unless you live/work downtown or near the campus so there are trade-offs but I don't think it's as simple as directly comparing percentages. Even after all this, I'm definitely considering moving to SF since I think it'd be better for my career in the long term but I'm not fooling myself about the money I'd be making. Seattle seems to be the sweet spot for that (no income tax, good tech, cheaper housing than SF). EDIT: sales tax -> income tax
- Jesus_Jones 9y ago
  Seattle has a sales tax, I think you mean no income tax is what we have in Washington state. But there's discussion of having a capital gains tax, so we can reduce the regressive sales taxes on poor folks. It's a scary time, better stay in SF :-)
  - seanmcdirmid 9y ago
    California has a capital gains tax, I think.
    - hkmurakami 9y ago
      California treats capital gains as ordinary income.
      - seanmcdirmid 9y ago

by chubot 9y ago

deleted 9y ago

[deleted]

yourapostasy 9y ago

> ...move out of the Bay Area when they want to have kids... This is fascinating to me, because if demographers' prognostications are to be believed, then future growth economies (on the multiple-decades-scale) are heavily represented by new middle-class families, in Asia and Africa, and to a lesser extent the Middle East and South America. So not only is the Bay Area ecosystem doubling down on its geographic centrism into a non-growth geography, it is tripling down on a bet that a non-family-oriented HQ culture (where the majority of unicorn companies consider the majority of their staff "who matter" to be located) will innovate sufficiently to penetrate and hold family-oriented heavy-growth markets of the future.

asveikau 9y ago
By the way, I have first hand experience that raising kids in SF is quite good apart from some financial questions. There is a lot of community in places like playgrounds etc. More so than in some other places I have been. The average kid my kids meet is far kinder and more socially aware than what I grew up with, for example. So when people say SF is geared exclusively towards childless 20 somethings, don't believe them. Of course the financial picture continues to be challenging for many people, but many would be surprised at what a great place it can be for kids.
- chubot 9y ago
  Are your kids in school yet? I am pro-San Francisco, and don't have kids. But my neighbors do, and told me about the school lottery. While I understand the logic, it sounds awfully inconvenient. SF is already annoying to drive around, I can't imagine dropping off and picking up a kid to/from a random location in the city during rush hour. That seem like a good way to kill a lot of your day.
  - asveikau 9y ago
    Yes, the lottery sucks and creates traffic problems. Even if you don't have kids, make note of days when there is no school, your work commute will be much easier on those.

loeg 9y ago

Your numbers are just not in the right ballpark. The pay gap between SF and Austin is not as large as your figures, and the COLA gap is far larger. I think an Austin engineer making the average $110k can save more even in absolute terms than the SF engineer making the average $134k. The median rent for a SF 1BR is $3370, or $40,440/yr[0]. The median rent for an Austin 1BR is $1150, or only $13,800/yr[1]. Rent alone ($26,640) has already consumed the entire difference between the $134k and $110k salary. Next, factor in local taxes. California has income tax; on $134k of single income, that's another $9,450. Texas has none. Federal taxes will also be higher for the nominally higher SF wage. There are other COLA factors this simple analysis doesn't even consider. But Austin comes out far ahead on rent and income tax alone. [0]: https://sf.curbed.com/2017/6/20/15841068/rent-report-sf-2017-map https://sf.curbed.com/2017/6/20/15841068/rent-report-sf-2017... [1]: https://austin.curbed.com/2016/4/28/11532748/austin-rent-cost-neighborhood-map-median https://austin.curbed.com/2016/4/28/11532748/austin-rent-cos... [2]: https://smartasset.com/taxes/california-tax-calculator https://smartasset.com/taxes/california-tax-calculator

komaromy 9y ago
If the goal is saving money in your 20s, having a 1BR is kind of absurd. You can live in a multi-bedroom apartment/house in SF for much less than that.
- loeg 9y ago
  Having a 1BR as a young, single professional with a six figure salary isn't totally absurd, even if you're trying to save some money. And costs in Austin scale down with lifestyle, too.
  - megaman22 9y ago
    I'd say it's absurd to be living in shared space like a college student in your mid to late twenties, especially if you're pulling down six figures. Move somewhere else, where half that income will buy you a house with 2000 sqft and an acre or two of land...

jordanb 9y ago

I've heard this argument before and it's predicated on a set of assumptions about savings rate that may not hold true. It's easy to come up with a plausible set of numbers where the absolute savings are better in Austin even allowing for it being a greater percentage of income. Beyond that though, I would submit two other caveats: 1. If you were to become involuntarily unemployed in San Francisco for any length of time then you will find your burn rate is still the SF burn rate and not the Austin burn rate. 2. Spending your twenties in a Gold Rush town with the intent to move to some other more rooted town later means you don't put any roots (professional or otherwise) down in that other town. You may find yourself with no connections and no relevant experience when it's time to move back to Grand Rapids.

shostack 9y ago
1. Short of an economic downturn (which would likely impact Austin as well), if you lose a job in SF, depending on your field that is not super concerning given the available jobs and steep competition. So yes you might have a higher burn rate, but presumably you have less risk in the form of more available jobs. 2. Roots are subjective and depending on your line of work may not be as important to have locally vs. distributed. That's just professionally speaking. Personally, not everyone needs that same kind of community connection. These obviously vary based on quite a few factors, but I don't think it is really black and white.
econner 9y ago
But hopefully you struck gold. Or you just stay in SF I guess.

miranda_rights 9y ago

Is this before/after taxes? The problem is if you live in SF vs Austin, the sales taxes are similar but California's income tax will take 10-15k off the top. After that, you have to think about cost of rent. I'm currently debating between moving to SF vs Austin and would end up spending ~30k a year for rent and utilities. For a similar, or slightly nicer, place in Austin, I'd spend ~12k. The difference there, ignoring cost of living of other things, is ~30k. Beyond that, (based on my anecdotal offers in both cities), the differences in salaries between the 2 cities are smaller than 50% (closer to 30% before tax, which seems to match the data in the article, if not still larger). By that point, you have approximately the same amount of money left over in either city. Granted, in Austin, you'd probably need a car unless you live/work downtown or near the campus so there are trade-offs but I don't think it's as simple as directly comparing percentages. Even after all this, I'm definitely considering moving to SF since I think it'd be better for my career in the long term but I'm not fooling myself about the money I'd be making. Seattle seems to be the sweet spot for that (no income tax, good tech, cheaper housing than SF). EDIT: sales tax -> income tax

Jesus_Jones 9y ago
Seattle has a sales tax, I think you mean no income tax is what we have in Washington state. But there's discussion of having a capital gains tax, so we can reduce the regressive sales taxes on poor folks. It's a scary time, better stay in SF :-)
- seanmcdirmid 9y ago
  California has a capital gains tax, I think.
  - hkmurakami 9y ago
    California treats capital gains as ordinary income.
    - seanmcdirmid 9y ago