4 ms·

Geez. Hard to believe that SFO experience trumps making $70K/yr in a middle-tier city, living in your own house and paying less for its mortgage.

by genwin 12y ago

baddox 12y ago
Most people like the technology/startup scene and the culture of the city (for me, it's only the former). But even if you ignore that, the relevant financial statistic is your disposable income, not the percentage of your pay that goes to rent. At $70k a year, you should take home roughly $70k / 12 * 0.65 = $3.8k each month. At $120k a year (rough estimate for a Facebook engineer, so correct me if this part is unrealistic), you should take home roughly $120k / 12 * 0.65 = $6.5k each month. If you're paying $3k each month on rent (which is quite generous if you're living by yourself), that leaves you with $3.5k each month. That means that your $70k job only leaves you $300 a month for rent, in order to have the same amount of money left over. That's really pushing it, considering it's only half of the median USA apartment rental, and considering I paid $400 a month for a modest apartment 4 years ago in Springfield, MO, which as I understand it is in one of the cheapest areas in the country. Obviously there are other effects here that I'm missing. My 65% take home portion could be completely wrong. Food prices are almost surely higher in SF (of course, most startups and tech companies provide some free meals).
- genwin 12y ago
  Good analysis. Big difference is in the middle-tier city you're buying the house at say $1K / month mortgage, rather than renting. And your house is 2000 sq. ft. with a yard and garage, instead of a 1 bedroom apartment. Less disposable income but your standard of living is subjectively higher.
  - baddox 12y ago
    Good points. Home equity is a big deal changer. I am so remote from even thinking about buying a home that I can't estimate the utility difference equity would make. Having lots of space is obviously a major difference, but is very subjective. Many people who live in a city probably wouldn't want to maintain a yard or a larger house or need to drive everywhere. I definitely prefer the space.
- TheSilverHammer 12y ago
  Bear in mind that your effective tax rate is very different at $120k than at $70k.

Geez. Hard to believe that SFO experience trumps making $70K/yr in a middle-tier city, living in your own house and paying less for its mortgage.

by genwin 12y ago

Geez. Hard to believe that SFO experience trumps making $70K/yr in a middle-tier city, living in your own house and paying less for its mortgage.

baddox 12y ago

Most people like the technology/startup scene and the culture of the city (for me, it's only the former). But even if you ignore that, the relevant financial statistic is your disposable income, not the percentage of your pay that goes to rent. At $70k a year, you should take home roughly $70k / 12 * 0.65 = $3.8k each month. At $120k a year (rough estimate for a Facebook engineer, so correct me if this part is unrealistic), you should take home roughly $120k / 12 * 0.65 = $6.5k each month. If you're paying $3k each month on rent (which is quite generous if you're living by yourself), that leaves you with $3.5k each month. That means that your $70k job only leaves you $300 a month for rent, in order to have the same amount of money left over. That's really pushing it, considering it's only half of the median USA apartment rental, and considering I paid $400 a month for a modest apartment 4 years ago in Springfield, MO, which as I understand it is in one of the cheapest areas in the country. Obviously there are other effects here that I'm missing. My 65% take home portion could be completely wrong. Food prices are almost surely higher in SF (of course, most startups and tech companies provide some free meals).

genwin 12y ago
Good analysis. Big difference is in the middle-tier city you're buying the house at say $1K / month mortgage, rather than renting. And your house is 2000 sq. ft. with a yard and garage, instead of a 1 bedroom apartment. Less disposable income but your standard of living is subjectively higher.
- baddox 12y ago
  Good points. Home equity is a big deal changer. I am so remote from even thinking about buying a home that I can't estimate the utility difference equity would make. Having lots of space is obviously a major difference, but is very subjective. Many people who live in a city probably wouldn't want to maintain a yard or a larger house or need to drive everywhere. I definitely prefer the space.
TheSilverHammer 12y ago
Bear in mind that your effective tax rate is very different at $120k than at $70k.