Debunking The Cost of Living Myth

[Yavin4]

I found this guy's channel. He's a map/geography nerd. He made this video debnking the cost of living, and he makes some really valid points. The video points out, when discussing the actual cost of living from region to region, we tend to leave out a lot of ancillary costs and focus too much on housing and income taxes as the sole drivers of costs:

From my own lived experience, I've found that Los Angeles is far more expensive to live in than NYC since I don't have to have a car which is a must in L.A. And like To own a car for example, I would need to put gas in it regulary, get it fixed from time to time, pay parking/traffic tickets, buy new tires, etc. These costs can grow out of control. Wherease in NYC, my rent is my biggest fixed cost, but it's a known cost. I don't have any suprise costs.

[Shermann]

1. Debunking the Debunking The Cost of Living Myth video

This guy seems to be concerned that people are just going to blindly move from high cost-of-living states to low cost-of-living states with no job lined up and only the dream of lower housing costs and income taxes with the same income level to draw from.

Thanks Captain Obvious!

In most cases, you relocate due to a higher job offer in a higher cost-of-living area (or vice versa) and have to do the math to determine if it truly is a wash or not. He didn't bother with any case studies or figures of his own, he just sort of flashed a few stock maps of the country.

He asserted that groceries and vehicles cost the same everywhere, but I don't know that this is true. Again, no supporting data.

I believe most people would check on average utility costs for an area, this is not any great insight he has here.

His conclusion is that you are better off with a career in the high cost-of-living area due to the fact that you can build more wealth through real estate appreciation and then shift the wealth to a lower cost of area later. This I agree with, and you can also accomplish this with retirement savings (which he didn't mention). But he didn't really make a rock solid case to get there.

[Yavin4]

2. His point is that there really is no cost of living advantage that one state has over another.

Looking just at housing and income taxes paints a very distorted picture when factoring in other costs such as food, sales taxes, property taxes, wages, etc.

Also, he didn't say that groceries were the same every where. In fact, he pointed out that groceries in CA are lower than TN. Vehicles do have to cost the same as people would just go to another state. Buy it there and drive it home. No major price differences.

His main point is that you are better off building a high income career in an "expensive" state than trying to do the same in an "inexpensive" state.

[Shermann]

3. He's too quick to declare everything a wash

So Tennessee has higher sales tax. Where's the cost breakdown? Maybe it's a wash, maybe it isn't. You can control your exposure to sales taxes more than income taxes.

At 04:25 he asserts that groceries are pretty much going to cost the same no matter where you go.

So you may have to get car insurance for that $25,000 car and it turns out that that can vary widely by state.

[Yavin4]

7. Sales taxes are regressive.

They take away a greater share of a poor person's income than a rich one.

In the comments section, he states:

California has no sales tax on food, groceries, pharmacy items, services, and things that are not tangible. GA has fewer sales tax exemptions. Property tax is higher in GA also. Further, housing in Atlanta metro is more expensive than non-coastal CA. Groceries cost less in CA. And all of that is on top of the fact that salaries are a lot higher in CA and the poverty rate is higher in GA.

Finally, his greater point is about the poverty rate in the "inexpensive" Southeast. If it's so inexpensive then why do they have the greatest proportion of people in poverty than any where else in the U.S.?

[Demsrule86]

6. I don't agree. Housing is very reasonable in Ohio way cheaper than in other places I have lived.

Food is also cheaper. Taxes are lower here than in Georgia although for some reason some persist in thinking the taxes are low there. Registering your car and insurance is cheaper too...utilities are cheaper.

[BComplex]

4. I subscribed to his YouTube site after I saw him on DU the other day.

I love this guy! He's a wealth of information I haven't seen anywhere else.

[Silent3]

5. As a software engineer in the Boston area, I could make a lot more money...

...if I worked inside, or just on the outskirts, of Boston. Staying where I live now, in southern NH, my commute would be about 40-50 miles.

I instead work about 8 1/2 miles from home in NH. It takes me about 15 minutes to drive one way to work, and traffic is almost always smooth and easy.

If I commuted into Boston, I'd probably spend at least 2 hours in my car each way, in typically hellish traffic. I could move closer, of course, but if I wanted to live 15 minutes from my Boston job, the cost of living would skyrocket way, way, way behind any pay increase. Even trying to cut the commute down to one hour each way would probably exact a greater increased cost of living than the expected pay increase.

Some other people seem to take long, grueling commutes in stride. Not me. As a quality-of-life things, I simply am not willing to spend 2-4 hours a day stuck in my car hating the traffic I'm in.

One possible silver lining from COVID, however, might be that telecommuting opportunities will be more plentiful than they used to be, and I could higher pay without incurring either a higher cost of living, or an unbearable commute.

[Shermann]

8. I'd be interested to know how companies are compensating remote employees

In my anecdotal experience, the pay is the same whether you are remote or not.

I believe some companies are on to that and pay market rates based upon where your remote office is, not the main office.

I'd love to land a lucrative Silicon Valley gig but stay in the Carolinas. I'm a software engineer as well.

[marked50]

9. It is always good to have some understanding of financial decision making in life but what it

really comes down to are the basics--like, where do I want to live that will fulfill me?

Lots drive the answer to that question Relationships, contributions to my community, low stress. I know that those things are not easily mapped or quantitated but those have been my primary concerns.

It is good if someone can take from this video that "money variances are minimal" based on location and that it is just some small lifestyle differences or who you pay. Think about what else may be important.

[Yavin4]

10. Exactly. If you're low skilled, then you're going to struggle economically no matter where you live.

That's the main takeaway from this video.