5 ms·

You forgot cost of living. Converting your numbers from Seattle to San Francisco: $203,000 with a base of $148,400. I don't know what the extra $55,000 is. An

by burfog 8y ago

You forgot cost of living. Converting your numbers from Seattle to San Francisco: $203,000 with a base of $148,400. I don't know what the extra $55,000 is. An expected bonus? Some rough guess regarding future value of stock options? Retirement fund matching? You didn't make the distinction for your friends. Where I am, your standard of living can be had for $90,160 with a base of $65,910. The needed pay drops by about 38%, yet the likely salary drops by only 17%, meaning you'd be better off. It's like my dollars are almost 50% better than your dollars. That is typical. Pay is generally higher in costly places, but it usually falls far short of the change in living costs.

humanrebar 8y ago
> It's like my dollars are almost 50% better than your dollars. Only if you're living paycheck to paycheck. It doesn't make sense to adjust your savings rate (or loan repayment rate) by cost of living. To illustrate, assuming you're living off of your base (a single 20-something can probably do better though), you're comparing saving a $39k bonus or a $24k bonus. That's over a 50% difference in savings rate. That's not to say you should take the higher paying job. There are other considerations besides money, obviously.
- burfog 8y ago
  Remember that the needed salary and the typical salary don't change at the same rate. Going from his place to mine, that equalizes things for roughly a 20% savings rate. Somebody earning $200,000 in San Francisco who moved to Seattle would gain an extra $33,558 in disposable income, despite income dropping to $142,858. This is because costs drop to $176,414. To equalize the savings in dollars, the rate would need to be 59%. Is that person in San Francisco going to save 59% of their income? If not, they'd be better off in Seattle. Of course, Seattle itself is not cheap, and you can do much better. And yes, there are other considerations, like being able to afford 3500-square-foot house on 5 acres of land and still get to work in under 20 minutes. The cost of living has, baked into it, a sort of normal-for-the-area lifestyle. It is simply expected that less-urban people will have larger houses on larger lots.

by burfog 8y ago

humanrebar 8y ago

> It's like my dollars are almost 50% better than your dollars. Only if you're living paycheck to paycheck. It doesn't make sense to adjust your savings rate (or loan repayment rate) by cost of living. To illustrate, assuming you're living off of your base (a single 20-something can probably do better though), you're comparing saving a $39k bonus or a $24k bonus. That's over a 50% difference in savings rate. That's not to say you should take the higher paying job. There are other considerations besides money, obviously.

burfog 8y ago
Remember that the needed salary and the typical salary don't change at the same rate. Going from his place to mine, that equalizes things for roughly a 20% savings rate. Somebody earning $200,000 in San Francisco who moved to Seattle would gain an extra $33,558 in disposable income, despite income dropping to $142,858. This is because costs drop to $176,414. To equalize the savings in dollars, the rate would need to be 59%. Is that person in San Francisco going to save 59% of their income? If not, they'd be better off in Seattle. Of course, Seattle itself is not cheap, and you can do much better. And yes, there are other considerations, like being able to afford 3500-square-foot house on 5 acres of land and still get to work in under 20 minutes. The cost of living has, baked into it, a sort of normal-for-the-area lifestyle. It is simply expected that less-urban people will have larger houses on larger lots.