moneycentral.msn.com/articles/smartbuy/basics/6600.asp?package=moneymonday
C=P&E=10&N=C12 The Basics Hidden costs of big-city living Living in New York or San Francisco can be exciting, but how much are you paying for your urban thrills? There are cheaper ways of having it all -- at least part of the time. I grew up in Manhattan and spent 33 years paying way too much to live there. Until recently, my idea of a fab real estate deal was my last apartment. I rented a so-called one-bedroom (400 square feet) on the top floor of a five-story (no elevator) building in a drug-infested (but very trendy) neighborhood for $1,100 a month. In the last couple of years, thankfully, Ive gained some perspective. First, I moved to San Francisco, one of the few cities in the world more expensive than New York. Second, Ive watched several close friends say adieu to their overinflated overhead and find far more affordable places to live. As a New Yorker, I simply accepted that I had to pay a high price for the ceaseless excitement of living in the Center of the Universe. And now I pay even more in San Francisco for a delicious quality of life and access to excellent mountain biking. But lately I've started to wonder just how much the cultural advantages of big-city life are really worth. They pay about a third of what we pay each month, and under the local first-time homebuyer program, they only had to put down $4,000. With two months of rent here, I sobbed to my partner-in-housing, we could BUY an entire HOUSE in Fitchburg! But I want to buy a house there -- and then take it apart, brick by brick, and transport it to San Francisco. And therein lies the rub of picking an affordable place to live. Run the numbers If it's cultural opportunities, how often do you really take advantage of them? Are you paying $60 a ticket for the symphony PLUS an extra $50,000 a year in higher living costs just to hear live music five times a year? For that kind of money, you could fly in every couple of months and make a weekend of it. If it's mountain biking, are there smaller, less-expensive cities or towns with great mountain biking trails? To consider some of these economic and lifestyle factors, check out MSNs HomeAdvisor 43 Compare Cities tool. HomeAdvisor helps you analyze cost-of-living stats in just about every city around the country, including housing costs, crime rates, health-care costs, school ratings and how much money you need to live there. For example, according to HomeAdvisor, someone earning $50,000 in San Francisco needs to earn $23,000 in Fitchburg to afford the same lifestyle. Naturally, jobs in a place like Fitchburg tend to pay a lot less, as well. But if you earn a living in a way that's more or less independent of where you live -- as a free-lance writer, say -- then what you earn will go a lot further in Fitchburg. My friend Anne and her husband are both full-time grad students, so Fitchburg was an easy choice for them. First they rented an apartment there, but Anne comes from a real estate-savvy family, and said to me, I hated to watch even that little bit of rent money go down the drain. For more than 30 years, Annes mother has bought inexpensive properties, renovated them, rented them out and watched her small investments grow into mega-equity. If their house grows to be worth $100,000 in five years (a likely prospect, if Boston pursues its plan to construct a high-speed commuter rail line to Fitchburg), thats a $16,000 profit on their initial $4,000 investment. Moreover, with their downstairs tenant paying half the mortgage, Anne and Todd have now freed up enough money every month to start paying back their student loans already! Valuing the intangibles But dollars and cents are only one aspect of affordable. Thats why you have to do a serious cost-benefit analysis, over both the long and short term. My friends Katy and Eric both took substantial pay cuts to move from Boston to Baltimore. The reason was a good one, professionally speaking: Eric landed a dream job as a law professor. And even with their income loss, Baltimore was far more affordable: Their five-bedroom fixer-upper was only $130,000. Not that its going to appreciate much, given that Baltimores crime rate (for both violent and property crimes) is twice that of Bostons. On the other hand, their combined salaries buy a lot more in Baltimore than they would elsewhere. Instead of corporate suits and a fat mortgage, Katy and Eric now invest more in what they love to do: travel abroad, visit friends around the country, indulge their penchant for the occasional comic-book convention. When the time comes, theyll also be able to afford to send their kids to private schools. One important consideration if your "dream town" takes you to another state: taxes. Someone looking to escape the frigid winters of Fairbanks, Alaska, by moving to Hawaii would see his tax burden double, for instance. You can compare average state and local taxes on the Tax Foundations Web site (use the link at left). But I have to say, for most it's not just the economics of affordability, but the quality of life that's paramount. Housing is slightly cheaper, but property crime is higher. And they now have the added expense of driving and maintaining a car. No, but theyve gained immensely, Alfred says, in terms of sanity. This is the life theyve always wanted: The sunshine, the palm trees, the beaches -- the whole nine! Its certainly not an easy decision, weighing ones financial considerations with ones desire to be near close friends, family and good brew pubs. So I logged on to HomeAdvisor to choose the absolute best city for myself (a nifty option). I pulled out the stops and made a regular Christmas wish list out of it: cheap housing, perfect air, great schools, excellent weather, no crime you know, Brigadoon. But I cant keep paying $2,400 a month and eating beans with my beloved in San Francisco, either. Resources 44 Read/Post comments on the Your Money message board 45 Find a problem in this article? Search MSN Money 47 tips Go 48 Try MSN Internet Software for FREE!
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