August 4, 2017
• 5 Minute Read
Is big-city living all it’s cracked up to be? Or, would you be better off in a quieter, slower-paced rural environment? While this question has been debated for years, there is no “right” or “wrong” answer that suits everyone. The truth is, some people prefer the close-knit quarters of an urban existence while others crave more space.
Different strokes for different folks, right?
Still, some people would absolutely disagree. We’ve all ran across city dwellers who couldn’t imagine living anywhere else. Why? Because they make more money and have access to a slew of exciting opportunities. At least, that’s how they justify their lifestyle.
If I had a dollar for each time I heard someone from Los Angeles, New York City, or Chicago repeat these common themes, I’d be rich:
“In a big city, salaries are a lot higher! Because I live in San Francisco, I earn more money every year.”
“I would never live in flyover county. I need excitement in my life.”
“Sure, rent is expensive, but I am exposed to so much culture and opportunity.”
While there’s a certain amount of truth to these statements, I still feel the benefits of living in an expensive big city are drastically overstated. Sure, there’s more opportunity in areas where the population is higher, but you’ll pay for that opportunity in more ways than one. Here are six reasons living in a cheap area could be a better deal than you think:
1. Save half or more on housing costs
Many who live in busy urban areas point to their higher salaries as justification for their higher costs. If they live in Los Angeles, for example, they can earn 20 – 30 percent more for the same job.
That makes sense, but is the additional income enough? Most of the time, the answer is a resounding “no.”
Let’s say you’re a newly-minted lawyer deciding where to live. After perusing the Bureau of Labor Statistics website, you find that lawyers earned an average salary of $162,010 in California last year. In Indiana, on the other hand, lawyers earned just $114,270. In California, you could earn 40 percent more!
Unfortunately, that’s probably not money you’ll get to keep since rents in California can be 300 – 400 percent higher than rents in Indiana. While average rent for a one-bedroom apartment in San Jose and San Francisco was $2,536 and $3,600 per month respectively last year, the average rent in Indianapolis was only $732. In truly rural areas, it can be a lot less.
2. Enjoy lower property taxes and insurance
Whether you buy a home or rent an apartment, property taxes play a huge rule in your overall housing costs. The more expensive the property you live, the higher the property taxes tend to be.
In New York’s Suffolk County (including Long Island), for example, the average effective property tax rate is currently 2.29 percent, or $5,548 on a $250,000 home. In Boise, Idaho where the average effective tax rate is just .801 percent, your property taxes would be only $2,003 on the same $250,000 home.
3. You’ll pay less for everything
Since everyone needs to make more money in higher-priced areas, everything from daycare to groceries tends to cost more. These higher prices can impact your life in numerous ways, mostly by causing your daily living expenses to go through the roof!
Consider the average costs of childcare by state. In Alabama, the average price for full-time infant care is $470 per month or $5,637 per year. In the state of New York, it’s $1,179 per month and $14,144 per year. In Massachusetts, it’s $1,422 per month or $17,062 per year.
The bottom line: Earning slightly more won’t help if you’re paying 300 percent more for daycare each month.
4. You have room to spread out
Most people who live in big cities don’t have the luxury of having a back yard, a garage, or room to spread out. Many millennials share small apartments just so they can afford to live, and they still pay out the nose for that luxury.
In many rural areas, however, you can afford to spread out. You can buy a house with a big back yard, room to play, and trees to climb in.
And, it could be a lot more affordable than you think. Keep in mind, the average sales price of homes in states like West Virginia and Ohio were just $145,000 and $142,500 as of summer 2017. If you financed a $140,000 mortgage for thirty years at 4 percent APR, your monthly payment (principal and interest) would be just $668.
5. Low housing costs make it easier to take chances
Part of the problem with big cities is that high housing costs leave you living close to the cuff. Keep in mind that households that spend more than 30% of their income on housing costs are considered “cost-burdened households” according to the U.S. Department of Housing and Urban Development. When they spend 50 percent or more of their income on housing-related expenses, they fall into the category of “severely cost-burdened households.”
In big cities, you need to earn huge salaries for your housing to be considered “affordable.” In San Francisco, you would need to earn $216,129 to rent a two-bedroom apartment and hit that mark. In New York, you would need to earn $158,229. In Los Angeles, $145,629.
In a smaller rural area, you can secure housing for a lot less – and the disparity can mean a lot more than lower housing costs; it can allow you to take chances, too.
Needless to say, it’s a lot easier to pursue your dream of starting a business or going back to school if you don’t need to earn six figures just to live.
6. You can actually afford to travel if you want
The final reason rural living is often superior is because it gives you more choices. The lower your expenses, the more freedom you tend to have in your life.
For a lot of people, that means having the freedom to travel. And yes, that includes travel to big, sprawling cities where rent is unaffordable and the price of everything is absurd.
When you’re able to live on less, you can afford to travel anywhere you want. When your housing costs are through the roof, on the other hand, you often don’t have that luxury.