7 September 2007 2 Comments Print This Post  Email This Post

For the past six months I have been putting together a plan to leave San Francisco in order to set myself up for a brighter future. I wrote about my move to the Houston suburb of Sugar Land, TX before. The other day I was happy to stumble upon someone who talked about the exact same thing. It was good to know that I’m not the only crazy person who would make such a drastic change in my life. My girlfriend first found this article about Getting Ahead in a Starter City. Its posted on several other well known finance sites as well. Basically the author, Erin Burt writes about moving from the San Francisco suburb of Palo Alto to Baltimore, MD in order to get a solid financial footing. She makes great points and an interesting analysis in her column.

The Idea of a Starter City

I like this idea of calling it a starter city. Remember, life is full of choices and the world is a big place. You are never obligated to stay in any one place. Here is Erin’s words:

And you don’t have to make a long-term commitment, either. Three to five years may be all it takes to pay off your student loans, jump-start your savings and build the foundation to your career. Your starter city may even allow you to buy a home and build up equity, making it easier for you to buy a place in your dream location when you’re ready to move. But be warned: You may enjoy the lifestyle of your starter city and the money you save so much that you may not want to leave.

Remember that the move is purely financial at first. If you end up loving the place and the lifestyle, then stay. If not, pack up and leave. For me, I’m afraid I might actually enjoy a 3000 sqft home, a nice car, a large stock and real estate portfolio, and a solid business all with little or no bank payments. But if somehow, some way I want to go back to tiny 100 year old houses and broken down streets in exchange for mild weather and excellent culture, I can always come back. At that time, even if I do come back, I would have much more money saved up than if I had never moved.

Salary Differential

She also goes into researching salaries in different places, which is great because the common misconception is that the major metropolitan cities pay a lot more so it balances out the costs of living. That is hardly the case. While income is usually higher in these big cities, it is no where close to being enough to balance out the high costs of living. Here’s how she puts it:

Sure, with a higher cost of living comes a higher salary. But your extra pay may hardly keep pace with your expenses. For example, an entry-level accountant in San Francisco makes about $47,886 per year, according to the experts at Salary.com. In Austin, Texas, however, he’d make about $37,800 to start. That’s 21% less than his West Coast counterpart. However, housing prices in Austin are about 79% lower than in San Fran, and the overall cost of living there is nearly half. So even on $10,000 less, his living costs are dramatically lower, enabling him to live much more comfortably.

It was nice how she used Austin TX as an example even though she is moving to Baltimore. Austin is close to where I’m moving. The numbers speak for themselves.

What It Comes Down To

The bottom line when it comes to this type of move, is your values and wants in life. For me, its worth the move because I value a comfortable future. I want to have enough to live off of, retire early and eventually use my money to help others. To me that is better than just working hard all my life to maintain a mediocre lifestyle, while looking forward to a mediocre retirement. A good friend of mine has trouble leaving San Francisco even though he knows the numbers clearly show a real difference of millions of dollars in opportunity cost over the years. This is because he values the comfort of familiarity, family, friends, culture and weather. Hopefully he comes around and at least give the idea a shot. All in all, there is no clear answer to whether or not anyone should move. It’s a personal choice and it comes down to what you want. This is the absolute best way that I know of to save more and invest more.