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It is Amazing How Local Personal Finance Can Be

Most people discuss personal finance rules in absolute terms.  I hate it! I truly believe there are almost NO SET PERSONAL FINANCE RULES.  Rather, personal finances are well just that…personal and as I was reminded the other day local.  When I read posts about other personal finance bloggers and their housing expenses I become jealous (read: angry).  Well today I got a reminder that how local personal finance is and that it is all relevant.  I live and grew up in one of the most expensive parts of the country (Long Island), but was shocked talking to a buddy today who is moving to New York City next month.

When he told me his rent I wasn’t flabbergasted since I have had a bunch of friends who have lived in the city at one point, but I certainly had a “what the F” moment.  Yes, I put flabbergasted below what the f.  I just couldn’t resist the opportunity to figure out how much of my monthly nut is encompassed by just his rent.  He didn’t mind too much since I have known him since we were twelve and he is moving to “the city” under the best of conditions.

Before looking at my particular example I think some perspective is needed.  In 2009 (post crash) the mean single family house where I grew up was over $680,000 while the mean of my new town was $575,000 in 2009.  Mean is probably a terrible way to describe the housing costs, but it is the data I have to go off from City Data.

With that in mind lets look at my information:

  • My Original Note was for $388,000 (put 20% down on a $485K home).
  • 30 Year Fixed
  • 3.375%
  • Taxes are about $11,000
  • No Idea about Homeowner’s insurance cost but they are factored in
  • My Payment all in is just shy of $3,000.

His rent was more.  The Wife’s leased minivan (man, do I hate that thing) is $369/mo.  His rent is still more.  I pay about $130 for my triple play package…now we are getting closer.

Does Any of this Matter?

Nope! But I was reminded of a very valuable lesson that I have seem to have forgotten over the years.  Beyond the basics about credit card debt personal finances are very personal and thus very local.  For instance, someone borrowing money to buy a pick up truck would make zero sense to me unless that person was a contractor, however, there were about 200,000 of them sold in July 2013 apparently the rest of the Country feels differently!  Similarly, someone’s housing and food costs matter a lot where they live.



  1. I think a lot of people forget the “personal” part of personal finance, yes. Although I do think there are some things that are fairly universal, the details should be tweaked to suit individual situations. For example, your $3k mortgage? That’s pretty much my entire monthly budget, less my discretionary personal stuff that I could eliminate if I needed to. The idea of spending $3k on the house alone makes me want to throw up!

  2. Yeah, the bay area is nuts too. I can’t imagine living there. We spend about $2,300 on housing and that’s already a lot. I wouldn’t mind moving to a cheaper area once Mrs. RB40 retires.

    • I often wonder what it would be like to move down to texas or somewhere (while keeping my income of course lol)…

  3. Since places like New York City and San Francisco have higher wages, you should look at the percentage of income spent on housing? It would be far less dramatic as a percentage. I think it equalizes the country much more where income and expenses are so different.

    • @krantcents, you are somewhat correct. I live in the Bay Area and make a good wage that makes it affordable. Many businesses do pay more in high cost of living areas to retain their talent. Then again, there are people working for my company in other parts of the country with much lower COL who are paid the same salary as me. Go figure. I would still rather live here and I guess I am paying for that.

    • NYC may have slightly higher wages but I think the many of the people in finance skew that average too. I think the cost of housing compared to most people’s income is still pretty dramatic here.

      • It is all relative to a point…I can’t believe the cost of certain items in the city though. Go pick up a 6 pack at the local bodega and it is like the equivalent of picking up an 18 pack on the island.

  4. I get the high cost of rent here in the city, but I also know first hand that $4,000 rent is not all there is in NYC. I live in a two bedroom in Brooklyn, no more than a 18 minute subway ride to Manhattan and I pay $1,350 for a small two bedroom. I understand folks needs and/or desires to live expensively but even my brother’s 1.5 bedroom place in Midtown Manhattan is under $2,500 a month, and he’s got around 700 sq feet. But then, he doesn’t have a door man and it is a 5 story walk up.

      • That’s a huge help. I wish my excellent son would find The Mother of My Grandchildren! With a partner, he could easily pick up the whole tab on the house we copurchased before I got laid off the job…then he could own the whole money pit, instead of just part of it. 😀

  5. It definitely is local. I can own a very nice home where I live for less than most families spend at the grocery store each month. Your down payment would buy a nice home here outright – all cash.

    It blows my mind how real estate prices vary across the country. I understand differences between places, but if you can earn big city money in small town America, there’s some serious advantages to a low COL area.

    • That is how my Father in Law did it…made a GREAT living by anyone’s standards but lived in a very low COL area. Took The Wife a while to understand that is not how it always works LOL

  6. Very good point and it does make it very hard to compare situations. Have had friends move here from other parts of the country and pay cash for large houses and talk about how cheap it is.

  7. I’m a little late to the game here, but it seems to me that ratios should come into play. The absolute numbers of rent shouldn’t matter as much as rent-to-income ratio. If the friend has a sweet Wall Street job that is going to make him 300K a year (or more), the high price of his rent doesn’t really matter.

    I think we can use the ratios to make local pricing make sense nationwide.

    • True, in general. Recently, though, I was surprised to learn that in New York, median salaries in my field are really not much different than they are out here in the sticks — i.e., quite low.

      That would mean that people in my trade are paid proportionately less if they work in Manhattan than they would earn in Phoenix for the same work. A lot less, judging by the cost of living there.

    • LM,

      Not sure Ratios always work only because not everyone lets say in NYC makes that $300K number yet they are still buying food at the same overpriced grocery store or paying that crazy rent.


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