Just make sure you don't live in those cities proper :P

You can do it there too. I'd guess the average entry-level programmer in SF makes 80k a year. 2000/mo on rent (which is honestly a pretty nice place if you're sharing) leaves you with 20k to play with while still saving netting about 20k after taxes.

Of course, if you live in the valley, you could save more, but the point is to illustrate that many (single, no dependents) tech workers can live in SF and still save.

I don't see how the numbers work out that well.

http://www.payrollforamerica.com/calculators/California-payr...

suggests the numbers are: $13.4k to feds, $5k social security, $1.1k medicare, $5k california, $800 CA SDI

Leaving you with $54,725.

$24k to housing and $20k to savings would leave you with just over $10k to eat, shop, pay for transportation, etc. So, don't try to have a car. Even carless, though, it seems much easier / more likely / more realistic to do it the other way around - $20k on food/entertainment/shopping/etc and $10k to savings.

Granted. I was too generous on the housing budget, but too conservative on tax expenses.

Your math implies 64k after taxes, which is only 20% and is completely wrong.

The effective tax rate in Cali after federal and state is closer to 40%. That leaves 48k after taxes. Take out the 24k you blew on the 2k/mo apt and you're down to 24k and you haven't even put food on your plate or paid for transportation costs.

Take out 4k for food assuming you don't eat at nice restaurants. Take out 2k for a train pass and maybe another 0.5k for other transportation when the train isn't adequate. You are now down to 17.5k and you haven't saved anything or done anything 'to play'.

There is a reason the poverty level is around 70k in that area. 80k looks good on paper but in reality it's crap. It's about parity with a 37k salary in Austin, TX. http://www.bestplaces.net/cost-of-living/san-francisco-ca/au...

I don't think it'll be 40% for someone making 80k per year. The effective federal rate on the first 80k is around 20%. The CA rate should be 9-10%. Maybe another 5% for soc sec. But I also made a very generous assumption re: apartment spend. I think my point stands.

> I don't think it'll be 40% for someone making 80k per year.

It won't.

At 2013 rates, on $80k of total income for an individual ($73,900 in income subject to income tax with the $6,100 standard deduction, but no other deductions/credits):

  Effective federal income tax on total income: 18.0%
  Effective CA income tax rate on total income: 5.72%
  SS+Medicare: 7.65%
  California State Disability Insurance tax: 1.00%
  Total effective income and payroll tax rate: 32.4%

No, it doesn't still stand. You just adjusted from your initial 20% up to 35%, which essentially eliminates most of the 'savings' money you mentioned in your post. Also, the apartment assumption isn't that generous. If you want to live in SF by yourself, that's what you will pay for a decent apt.

> If you want to live in SF by yourself

Oh, sorry, I thought we were talking about someone who is making the bare minimum effort to save money. My mistake.

That doesn't even make sense. If someone is making the bare minimum effort, then they would probably live by themselves. Are you sure you thought that message through?

No, if you live by yourself in SF, you are not making any realistic effort to save money, because you have not attempted to optimize your largest expense.

OK, I'm done talking about this shifted scenario from what we started talking about. When you want to talk about how hard it is to save money in SF if you actually make any serious effort, I'm happy to resume.

Read your own message. You said you said the following:

>I thought we were talking about someone who is making the bare minimum effort to save money

Do you know what the bare minimum effort means? You are the one suggesting bare minimum effort now.

Living on your own is making zero effort. "Minimum effort" as a mathematical expression could even be negative (i.e. actively trying to rid yourself of money), but as a colloquialism typically means "appreciable," "reasonable," or "realistic." If you're not a native speaker, I can see how that might have confused you. If you are, then you're just being difficult.

You literally said the exact opposite of the point you were implying throughout the rest of the discussion. We were talking about ways to live cheaply. Then YOU were the one that changed positions and said we were talking about someone making the minimum effort to save money, which as you rightly pointed out could mean someone not saving money at all. What is the point of discussing someone who doesn't save in a thread about saving money?

A native English speaker would not make the mistake of using a colloquialism that means the opposite of the literal definition when the very disagreement is about the effort it takes to save money. You can live by yourself in the bay area and still save money. Remember, you were the one that quoted $2k/mo for rent.

This native English speaker believes there was absolutely nothing wrong with anything he said, and that you have been deliberately obtuse.

Well your anecdotal evidence really helps. The point is that what he said means two exactly opposite things depending on how reasonable you think it is to live by yourself.

No, they would have at least one roommate. Not bothering to find a roommate is the zero-effort case.

What? It's much, much cheaper to live with other people than by oneself.

I was under the (perhaps false) impression that living costs were so much higher in these places as to make saving just as tough as working anywhere else on a lower salary?

If I'm wrong about that I really need to go get an American Visa from somewhere...

I would say the difference is more that people who live in these places mistake their wants for needs at a higher rate than elsewhere. It is not terribly difficult to save in SF. See my other comments in this thread.

All of those places have prohibitively high cost of living to make saving six months of salary very much not trivial. It's possible, but it isn't anywhere close to trivial.

Nope. That's why the no dependents part is essential. If you are single and willing to live with roommates, you will be able to navigate the "high cost of living" pretty successfully.

I'm living quite comfortably in San Francisco and spending a fraction of what I was spending in Texas. Why?

- No car. No gas. No upkeep. No payments. No insurance. No inspections. No car.

- Roommates. I HATE living alone so this was a no-brainer. If you insist on having your own place, then yeah it's probably going to sting. If not you can often find good deals.

- Food. A tech job often provides free or free-ish food. Plus I can get reasonably-priced staples at the market on the corner of my block. The culture here makes it much less likely I'll spend $400/mo at Olive Garden, Chili's, and The Red Lobster.

- Stuff. Don't need much. When I was in Texas I lived FAR away from anyone who really shared my geeky interests. I'm surrounded by them here. I simply don't have the urge to buy so much stuff to keep me occupied. I have the stuff I need and I spend most of my time doing things with people. These things are often free. Speaking of which...

- "funcheap". SF is famous for this (as is NYC). You can ALWAYS find cool stuff to do that costs little or no money. You can also, of course, find stuff that costs a lot of money. It's your choice, day by day.

Now if I couldn't stand to live with roommates or had a family to support, this would be a whole different story. Also, "high cost of living" really means $$$/sq ft vs $$/sq ft. It IS outrageous in places, but I'm much happier in my apartment with 1 bedroom to myself than I was in a 2600 square foot house in Texas. So yes, price per square foot is going to hurt on paper, but if "size doesn't matter", you might end up paying less by actual dollars.

Your mileage may vary, of course, but I'm pretty passionate about this since I stuck around in places that weren't right for me a lot longer than I should have... simply because I let popular rhetoric convince me that only dot com millionaires could afford to live in the Bay Area. They were wrong, and I was a fool for listening to them instead of exploring it for myself. Don't make my mistakes.

Honestly I think roommates isn't a requirement (at least in most of those cities) either.

um, what? With tiny 400 square foot apartments going for 2500 in San Francisco... how can you possibly say that?

Yeah, I agree with this. A key point of my post is "if you're willing to live with roommates you can find good deals". Of course you still have to find them. I spent over a week glued to Craigslist looking for a combination of the right price, right location, and right people. Yes I got lucky, but not "win the lottery" lucky. I ran across several that were good potentials.

The roommates part seems essential. There are a number of reasons but if I had to guess:

- With roommates you can often take advantage of someone who has been living there since before some recent price spikes (especially in certain neighborhoods). If you find a place by yourself, the landlord is free to charge whatever they want unless you can find a rent controlled apartment, but those have multi-year waiting lists.

- Vacant units are often renovated so the rent can be raised.

- Economies of scale. If you live by yourself chances are you want a place with your own kitchen, bathroom, etc. These are shared spaces in a roommate situation.

- There seems to be more competition for single-residency housing. I have no data to back this up, but just from talking to people it seems that there are more people who hate living with roommates than who hate living alone.

That's a one bedroom or studio. As the number of bedrooms goes up, the price per room goes down.

His point is that it only becomes feasible when you are living with roommates. My point is that San Francisco is unique in that regard.

San Fransisco perhaps isn't going to work well for somebody who wants to live on their own and save money, but they are the outlier there. It is trivial in Seattle, and not hard in NYC if you don't insist on Manhattan. I know people who do it in Boston and Chicago (until recently anyway, and technically he was making "ethanol engineer" money, not "tech" money... I digress though.)

I am not very familiar with San Francisco, so I left myself some wiggle room ("(at least in most of those cities)") but having a roommate is not a requirement for anybody making a tech salary and wanting to save money in those other cities.

Why would anyone want to live in SF with that kind of prices is beyond me.

The prices are because so many people want to live in SF.

But why would they want to live there? It's one of the most depressing place I've been to, it's like those dystopian movies...

> But why would they want to live there?

Because they value different things than you do; whether that's the food, the theaters, the museums, the climate, or the social culture, or something else. Different ones of those for different people.

> It's one of the most depressing place I've been to, it's like those dystopian movies...

Other than in the generic ways that most urban environments are "like those dystopian movies" to someone whose lived most of their life in a suburban environment, I don't really see it.

Yeah. Nobody wants to be in SF. It's way too crowded.

>They were wrong, and I was a fool for listening to them instead of exploring it for myself. Don't make my mistakes.

They were right if you ever want to have a family. You are building no equity in rent so you will essentially have to leave and start over somewhere else to have kids. Your story is fine as long as it ends with you being single and alone without any real assets.

There is no "starting over" when renting, it's just a cost of living. Plus, equity only matters if you sell, in which case you have the same kind of uprooting as a renter, only maybe (maybe) with some profit to show for your time in the previous residence.

It doesn't always make sense financially to buy a home, in fact several times in the last decade it was a really bad idea. Not to mention if you are young you should travel, find what makes you happy, not have all your assets and yourself tied up in a semi-illiquid investment that could leave you underwater.

Presumably, the person we are chatting about is striving to save money, they may be in stocks or bonds instead of real estate... which are sometimes, though not always a better investment. They are assets, if not real.

So, this hypothetical person will have at least six months of salary to put towards whatever they decide to when they settle down.

This is what gets me. The whole building equity thing by equating it to property. I have equity, but I invested it elsewhere. I still rent. You dont need to own property to have equity and to state otherwise is a disservice.

America is not all subdivisions and white picket fences...

You are confusing what the point of building equity in a home is. It's not solely an investment vehicle like stocks, bonds, options, commodities, etc. By building equity in a home, you are also eliminating your cost of rent.

>You dont need to own property to have equity and to state otherwise is a disservice.

Again, you do if you want your cost of housing to go towards building equity.

You're not eliminating your cost of rent, you're (maybe) lowering it. Whatever percentage of your housing costs go towards interest, property taxes, HOA fees, homeowner's insurance, mortgage insurance, etc. are not going towards equity. Especially early on in a mortgage, the vast majority of your housing expenses are not going towards equity. Your analysis is only correct late in a mortgage. Early in a mortgage it's entirely possible to be paying more in non-equity expenses than you would be if you were renting.

What you don't seem to be getting is that if you are renting, ALL of it is going towards non-equity expenses. A monthly house-payment of $2000 is still better than rent of $2000 even if 90% is going towards interest/insurance overhead.

Ok, thats fine, but I dont spend anywhere near that amount, and I live in downtown Boston, one of the highest cost of living areas on the east coast. So, what I don't spend on a mortgage, I put into my savings and other equity assets. There is no world in which I live in that I could spend the same on a mortgage as I do in rent. I still end up financially on top renting over owning in this city. Sure, I can move, but I love the quality of life I have here, and I wont change it anytime soon.

Sure, theres equity in a house, but is that everything? Do I really need to leverage a loan against my own property to live comfortably? To send any future children to a great school? Do I need to end up so underwater with a mortgage to consider myself successful? The answer to all of these is no.

I'm not an expert on real estate, but some of what I've read suggests that your statement is an oversimplification, assuming you have a mortgage and are paying interest on it.

Since I'm annually paying around 3% of the market price of my apartment, and you're paying X% interest annually on your mortgage (minus tax breaks, but plus maintenance costs, etc.), there is some value of X at which I'm not really losing much money by renting, right?

http://patrick.net/housing/crash1.html

I understand where you're coming from, but I've had over a decade of experience owning and managing both personal and rental real estate so I wanted to chime in.

> They were right if you ever want to have a family.

Not entirely. "Ever" is a really strong word. If you want to have a family later in life, that should not prevent you from living in places you'd like to experience. You will likely regret being so cautious at the exact time in your life when you had the least reason to be so.

> You are building no equity in rent

If you are saving a dramatic amount of money per month and putting that money away in savings or another investment vehicle, then I would argue that you very much are. People underestimate how little "equity" they actually build up when they didn't happen to buy before or early in a real estate bubble. In reality, the closing costs of acquiring the property, maintenance, insurance, and property taxes, and the (optional but likely) 6% sales commission the realtor takes when you decide to sell all add up and chip away at effective equity. True, equity will eventually outpace these costs, but the time that takes is a function of how well the market is doing and other externalities.

There's also a cost of liquidity. $10,000 sitting in a bank account at 0.1% is arguably worth more than $10,000 of equity in a house that might take 3 months to sell.

All of this means that unless you know you're going to buy a place and stay put for a while, you'd probably be better taking the cost difference and building "liquid equity" that you can use later.

> so you will essentially have to leave and start over somewhere else to have kids.

True, but that may be a complete non-problem depending on your disposition. Personally, I don't get attached to places. They're just boxes with soft places to sleep. Relationships make it a home. In my case, in the unlikely event I decided to start a family, I could buy a house relatively close to the apartment I live in now (if I so desired). I wouldn't call that starting over. By the way, I'd be able to buy that house because I was able to save a metric crap-ton of cash while living on next to nothing with cheap rent.

> Your story is fine as long as it ends with you being single and alone without any real assets.

As I believe I have demonstrated, you have no justification for this statement; none whatsoever. It's simply not the case that a person who choses to spend one part of his or her life saving money living with roommates in a fun town will be forever "trapped" by that choice.

Also, you might not have intended it this way, but that statement was mean-spirited.

>There's also a cost of liquidity. $10,000 sitting in a bank account at 0.1% is arguably worth more than $10,000 of equity in a house that might take 3 months to sell.

You make a big assumption with that statement. It strongly (and wrongly) assumes that the monthly payments for owning a home are the same as the rent plus whatever you would be putting into savings. There are plenty of homes in other places you can buy for $2000/mo vs spending $2000/mo on rent in SF while saving separately in either case to maintain the liquidity you are talking about.

>As I believe I have demonstrated, you have no justification for this statement; none whatsoever. It's simply not the case that a person who choses to spend one part of his or her life saving money living with roommates in a fun town will be forever "trapped" by that choice.

The point is that the numbers in his story only work for the "fun" part of the life. Life experiences are great, but it's difficult to pay for your kid's college and save for retirement when you are pouring thousands a month down the drain with nothing (other than a good time) to show for it.

I don't spend anywhere CLOSE to $2000/mo on rent, and I live in a pretty nice place in the middle of SF.

That's really what I'm getting at: if you're single and don't have a family, and you're happy with roommates and not living in a palace, then you can enjoy SF and not only not go broke, but you might save a penny or two.

Now if your life situation is such that the whole "single and don't have a family" thing doesn't apply, well then it... doesn't apply :)

In my opinion, your argument is very much valid if you want to raise a family or you just prefer to have your own place. Unless you make a lot of money, you're probably better off doing that elsewhere.

>I don't spend anywhere CLOSE to $2000/mo on rent, and I live in a pretty nice place in the middle of SF.

More details, please? I've been trying to look for places recently and everything seems to be exorbitantly priced.

I explained it elsewhere, but the short version is "watch Craigslist like a hawk until you find what you want". Let's say you find a place that's $900 - $1100 / month. Sounds reasonable, but remember:

- Everyone else is looking for that, too, so you need to act fast.

- It's not a dealbreaker to live in, say, the Tenderloin in SF, but do some research and make sure you're comfortable.

- People in SF will get 10 - 60 replies per day on an apartment listing, especially if the price is reasonable for the area. Stand out and be awesome.

- The same goes for the interview.

- Have stuff like bank statements and recent credit reports handing, and have the cash to make the move. So many people make it past the screening phase but then put their roommates on hold waiting for the "check in the mail". Money talks.

> People in SF will get 10 - 60 replies per day on an apartment listing

This always surprises me. If you get dozens of replies the instant you put a listing on CL, isn't that a sign your price is way too low? Why not add a few hundred $ per month and maybe have to wait three days to rent it out?

I know the cost of living at least in SF, and it is my contention that most entry level engineers should be able to save six months expenses per year trivially. Of course, if you eat out every night and blow all your money on booze, partying, and the most upscale apartment you can find, it would be harder. But a person who is making any real effort would not find it difficult.

>But a person who is making any real effort would not find it difficult.

As long as they don't have a family or want to build equity in a home. The justifications for the costs in this thread are so myopic that it's baffling.

I guess if you plan on remaining an entry-level engineer for your whole life, it would indeed be difficult to afford a home in SF. (This bit about family and house is known as "shifting the goal-post," btw. We're talking about the ability of a single engineer to save six months' living expenses.)

Assuming a promotion is known as "shifting the goal-post" too. You are essentially saying you are correct as long as you make more money than the original amount specified.

Okay, you said it's trivial for an entry-level engineer to save six months living expenses. That's $12k for housing and ~$4k for food and transportation. That's the majority of the leftover money after rent, taxes, transportation, and food for a year without any savings. I'm not sure you are correctly using the term 'trivial'.

No, it is not, because I am not assuming a promotion to prove my point re: whether you can save money in SF as a single engineer. You can. That's it.

No offense, but I'm strongly inclined to believe that you are not making it by on 80k a year in SF, and if you made that little money at one point, it was not for an extended enough period of time for you to properly understand what it afforded you. Your estimates seem to be nothing more than back of the napkin calculations missing major components like half of the taxes. Your numbers fit to someone making 100k+.

Edit: Also, you didn't even address the direct counter-point to your argument that the savings is "trivial".

It does not offend me that you assume I make more money than I'm arguing over, and you are not wrong. I also lived in a $500/mo room in an apartment with two others when I made that much money, so I was saving like a boss. Travel was actually a larger expense than housing.

As far as addressing counterpoints, I've grown tired of quibbling. I think that you can live comfortably spending 66% of your income net of taxes per year without any undue effort if you make $80k a year in SF. I think anyone who looks into it would find the same to be true. That's my last word in this conversation.

>As far as addressing counterpoints, I've grown tired of quibbling. I think that you can live comfortably spending 66% of your income net of taxes per year without any undue effort if you make $80k a year in SF. I think anyone who looks into it would find the same to be true. That's my last word in this conversation.

That's fine. As long as you can admit that you are just arm-chairing it and haven't actually had to live under those restrictions.

I didn't ever claim otherwise.

I dunno why people always say NY is expensive... have you ever lived there? Live in NJ, rent a basement somewhere in Queens, or heck you can rent an apartment in Chinatown for $800/month. I know people who rent an entire floor, and then sub-rent it to their friends, so they end up paying $0.00 for rent.

Don't eat out everyday. Bring your lunch everyday. It can be done.

Why is chinatown so cheap? How livable are those apartments?.

I would think a Manhattan Chinatown full apt for anything less than 2K would be a unicorn. However the parent is right about Jersey and Queens. Also places on the Metro North or LIRR. It's entirely possible to live near NYC and work there everyday for a reasonable cost of living.

Prohibitively high if you want to live in walking distance to your job. I work in SF, have a 15 minute commute, and pay a tiny amount for rent because I live in Oakland. Pretty easy to save.

I live walking distance to my job and live in the heart of San Francisco right next to BART. I pay very little money in rent. Patience on Craigslist pays off.

I would sure love to know what "very little" is to you. I have a hard time believing your rent is less than $1500, and I certainly wouldn't consider that "very little". Given how relative one's perception of costs can be, would you mind being a little more explicit about your rent?

It's a little over half of that. And it was one of several places like that I found so I know it wasn't just "luck". It was not as simple as just "get on Craigslist and find something", though. I had to watch it carefully.

EDIT: Just checked Craigslist and I can STILL find stuff for under $1000/mo in numerous places in SF. The trick seems to be looking under "rooms / shared" and also not expecting to find a place in Pac Heights ;-)