Tag Archives: high cost of living

Housing Dilemma

Gantry State Park

Last year, when our family went up to Buffalo to visit my brother-in-law, I saw a sign at the local supermarket. It was advertising some contest where you could win $250,000. It said, “Win $250,000 and buy your DREAM HOUSE!!” With $250,000 you can buy a beautiful house in a great neighborhood in Buffalo. With $250,000 in NYC where I live, you are most likely not buying a house…any house. Maybe a foreclosure or short sale in need of serious repairs in a bad part of town. With $250,000, you can put a 20% down payment on a dream house!

When I got back home, I told everybody how frustrating it was that $250,000 could buy a “dream home” upstate, but was not enough to buy anything down here. Most people said that they wouldn’t want to live in Buffalo anyway! Too cold and too much snow. That may be true, but there are many nice parts of the country where housing costs aren’t as high and the weather is a lot nicer. If I was single or if I was married but did not have children, there would definitely be more options. However, when children are added into the mix, most people who want a little more room as well as a neighborhood with good schools.

Reading various blogs, there are a few methods I see related to dealing with high housing costs. I think they are great methods, but they may not necessarily work in high cost of living areas. Here are a few suggestions I’ve heard to reduce housing costs and my explanation why it might not work in an expensive city:

House Hacking

House hacking is basically buying a multifamily house, living in one unit and renting out the other unit to cover all or most of your mortgage and expenses. Looking at multifamily houses in areas where I would consider living, which consists of a safe neighborhood, good school district, and decent transportation options, I’d be looking at around $1,000,000. With prices in that range, I’m not sure house hacking is a viable choice for most people in reducing their housing costs. The closest “hacking” I’ve seen in NYC is perhaps “rent hacking” when young and single New Yorkers share a 3 bedroom apartment which rents for $3000, paying $1000 each. This reduces their housing costs as it would cost about $1500 for a one bedroom in a similar location. Rent hacking is less ideal when you have a family.

Note: The numbers I’m using are rental and housing costs in and around my neighborhood. I live in Queens and not in Manhattan or a “hip” part of Brooklyn. It’s not a hip part of Queens either, but it has great schools, it’s very safe, and has great transportation options.

Buy a fixer-upper/Stay in your starter home

Another common suggestion to people who struggle with housing costs is to tell them to buy a fixer-upper. You can buy a house for cheap and slowly update the house as you live there. Some homeowners have the urge to upgrade to a bigger or nicer home when it makes more financial sense to just stay in their current starter home. I did a quick search in my neighborhood and surrounding neighborhoods where I’d consider buying. I saw a small 3 bedroom 1 bathroom starter house which is a short sale. Even being a distressed property, it is going for $649,000.

Move farther away from downtown

Those living in New York City have the longest commute compared to other big cities. Most people already live farther away from Manhattan where the majority of the them work. The data shows that NYC dwellers have the longest commute which is about 35 minutes, but many people I know have commutes of at least an hour or more. Some people move EVEN FARTHER away from their jobs to find a house they can afford by going to the suburbs of New Jersey, Westchester, and Long Island. Some even farther away! Three percent of the NYC workforce are “super-commuters” who travel at least 90 minutes or 90 miles each way to get to work. While living farther away might reduce your housing costs, you definitely wastes a large portion of your day commuting. Plus, you increase your transportation costs and many of the suburbs surrounding NYC have onerous property taxes which you better take into account when looking at the lower housing prices. In Long Island, many houses have annual property taxes of over $10,000.

Rent instead of Buy

Too expensive to buy? Just rent! Problem solved right? If the choice was to buy a $700,000 property versus rent for $1000 a month, the choice would be a no brainer. But what if the choice was between buying a $700,000 property or renting for $3000 a month? The decision becomes a little harder. In NYC and in a few other cities, there is a housing option known as a co-op. When you purchase a co-op, you do not technically own the apartment unit, but you own shares of a co-op corporation that owns the building. There is a monthly maintenance fees that covers expenses such as heat, hot water, property taxes and staff salaries. For many in NYC, co-ops are their best bet to own property (though technically they’re not property owners but shareholders). Co-ops are more attainable compared to a house, but they aren’t that affordable either. In my neighborhood, a three bedroom co-op would cost over $500,000 and have a monthly maintenance fee of at least $1100.

As I mentioned earlier, if I were single or married with kids, there would be many more options available. However, with two kids, I would love to find a place with a little more room in a neighborhood with good schools and decent transportation options. We live in a co-op that is about 800 square feet which is a converted 2 bedroom. The second room is very small but since my kids are small we can put them in bunk beds for a little while. So we have a few more years to figure it all out.

What do you do to reduce your housing costs?

Baby #2 Has Arrived!

Baby #2
I’m happy to announce that Baby#2 has arrived in the Living Rich Cheaply family. Older brother has been very helpful with helping out with his little bro. And to long-time readers of this blog, unlike last time when we had an unintended home-birth because the doctors kept telling us it was not time yet, they didn’t dare send us home this time around.

I’ve really been struggling to post consistently and I’m sure having two little ones needing attention will make it doubly tough. How do you bloggers with kids and a full-time job juggle all of this?? I will definitely try to get back into the blogging groove though. When I originally started this blog about three years ago, it was because I didn’t find many personal finance bloggers who were trying to raise a family in the NYC area, which can be challenging because of its high costs of living. At the time, my wife was also planning on staying home with our first child so we would be living on one-income, making it even more challenging. Although opportunity knocked and she decided to accept a job opportunity that came unexpectedly. Now with two little ones, we started having conversations again of having one parent stay home with the kids at some point. We’ve also talked about whether we would move to a bigger place or a different neighborhood with more affordable housing (still in the NYC metro area though so the term “affordable” is relative). So let me leave you with some relevant posts that I’ve written about living in NYC with a family:

Is it Possible to Raise a Family in NYC?
This post goes over some of the pros and cons I find with living in NYC with a family. It’s something that is constantly on my mind. Part of me daydreams of living in a lower cost of living area, but it’s tough to leave a place I’ve known my entire life and where pretty much all our family and friends live. Plus, it’s an awesome city! Just expensive…

Is NYC Really that Expensive?
Yes, living in NYC is expensive, but it’s mainly because of the high cost of housing. Other than that, there are ways around keeping your costs relatively low living here.

Why Do You Live Where You Live?
This post goes over the reasons why people choose to live where they live. NYC is ranked the #2 most stressed city, so why am I still living here?

Small Baby, Small Apartment, Small Budget
Surprisingly, this is one of my most popular posts. I write about what baby stuff we use to conserve space since space is limited. We have since moved to a slightly bigger apartment, but conserving space is still a priority. And now with two kids, space is even more limited.

3 More Hidden Costs of Living in a High Cost of Living Area

Cost Of Living Expenses Sky High Monitor Showing Increasing Costs
After writing my previous post about hidden costs of living in a high cost of living area, I thought of a few more. They were so hidden that it never even dawned on me that these costs exist. Actually, I think I knew they were there but since I’ve always lived in a high cost area, I just thought that it was normal. However, after reading personal finance blogs of those who live in lower cost areas, I’ve realized that there are some more increased costs that those living in a high cost of living area face.

Emergency Fund

Personal Capital, which is an online wealth management tool I use to keep track of my financial accounts, sent me an e-mail last weekend that my cash flow was high and I should consider moving some into my investment accounts where it can grow. The standard advice from most financial advisors is to keep six months of expenses in an “emergency fund” just in case you have, you know, an emergency. They also advise you to keep this money in a liquid account so that you can access it easily, such as a “high yield” savings account. When you live in a high cost of living area, you naturally have higher expenses and if you followed the rule of thumb, you’d have to keep a large amount of money in an emergency fund which earns you a pittance, and actually loses money over time due to inflation.

To combat this, you can instead put some of that money to work for you. Having funds that you’ve labeled “for emergencies” sitting in your bank account is not absolutely necessary. I don’t view my money in buckets, i.e: emergency fund, vacation fund, etc. In a true emergency, my entire portfolio is an emergency fund. Plus, I can always use my credit card in an emergency which would give me some time to access my less liquid accounts. A Roth IRA can act as an emergency fund, but make sure you know the rules about withdrawing money from it. However, this might not be the right choice for everybody. My family is a dual income family where both my wife and I have stable jobs, so I feel more comfortable with a smaller emergency fund. I would feel differently if I was working as a freelancer or in a volatile industry.

Down payment for a house

This is the same concept as the above. When you live in a high cost of living area, housing is usually the one expense which costs a lot more compared to lower cost of living areas. Similar to emergency funds, the personal finance experts tell you to put the money you’re saving for a down payment in something safe since you will likely need the money in a few years. Short-term investments rarely include stocks so once again, you’re putting savings for a down payment in CDs, high-yield savings accounts and maybe bonds. Those investment vehicles have lower returns than stocks but are safer and less volatile. This is something I’ve struggled with in the past and still struggle with now. Where should I put the money I want to save for a down payment?

A year after my wife and I got married, we started hunting for a co-op since buying a house is practically impossible for a young couple here in NYC, unless you make an extremely high income or have very generous and rich parents. My wife and I threw our paychecks into a savings account but after looking at a few places decided that we were better off renting for the time being. However, in the back of our minds, we always thought we would buy a place at some point in the near future. We just didn’t know when. So there was a chunk of money earning very little interest sitting in our bank accounts. What hurts even more was that during this time, a bull market took off in the stock market so if we had invested the money instead, we would have earned a much higher return compared to the “high yield” 1% savings account. These are the opportunity costs of having to have so much more money in accounts that generate little if any return.


I pride myself on having the strong will power to avoid keeping up with the Joneses, but maybe I have it easy. I don’t work in Manhattan. I work in government. Many of my co-workers bring their own lunches. When you work with co-workers or hang out with friends who go out to eat everyday, happy hour after work, and have name-brand handbags, cars, clothing, etc, it must be a lot harder to avoid the temptation to purchase those items as well. Even if you could resist spending wasting your hard earned money on status symbols , it is hard to always turn down invitations to go out. Plus, you don’t want to be seen as an outcast and they might at times be good networking opportunities to go out with your colleagues outside of work. I’m sure that temptation exists in lower cost of living areas as well and people living there also struggle with trying to keep up with the Joneses. But, with the amount of money that many people have in the high cost of living areas like NYC, LA, Silicon Valley, etc, it is even harder to avoid the temptation to keep up appearances.

If you live in a high cost of living area, do you have to keep a large amount of money in cash investments? How do you save/invest your emergency fund and house down payment fund? Do you think it’s harder to avoid temptation when you live in big cities?

I’d like to thank Kristin Wong for covering my first post about the hidden costs of living in a high cost of living area on Life Hacker Two Cents

Why Do You Live Where You Live?

NYC skyline
Living in New York City can be expensive . It also can be stressful, and according to a new survey, New York City is ranked the second most stressful city in America. (Washington D.C. is ranked number one). Here are the factors which were used to determine the most stressed cities:

•Commute time
•High cost of living
•Crime per 100,000 residents
•Hours worked
•Population density
•Percentage of income spent on rent

The average amount of time New Yorkers spend commuting to work is 48 minutes. My commute averages an hour. Cost of living is pretty high here, that’s for sure, but crime is pretty low compared to many other big cities. I work a 9 to 5 jobs, but I know many people who work very long hours . Population density…oh it’s dense here in NYC, that is undeniable. Commuters are cramped into subway cars like sardines, there is always traffic, and people live in apartments which are the size of a living room in some other areas of the country. The high cost of housing is probably one of the biggest concerns of most New York City dwellers. The amount that goes towards rent eats up a significant portion of your paycheck.

So why live in so a stressful city?

Well, the results of a different survey will tell you why. While Washington D.C and New York City rank first and second, respectively as being the most stressful city, they also rank first and second, as the best city to find jobs, especially entry-level jobs for college grads. There are a lot of job opportunities in this city in various fields and industries. The city also offers many people with the right skills a high income potential.

But when people choose where to live, they don’t look at studies to see which city is the least stressed or which one has the most job opportunities. Here are the main factors that I think are the most significant when deciding where you’ll live:

I think this one is it for me. I grew up in New York City and my friends and family live here. My wife’s parents also live here. It makes sense for us to stay here, even though, financially it sometimes feels like it doesn’t make sense. When you’re starting a family, it’s nice to have family nearby to help out. And as parents get older, it’s good that children are close by so they can help out too. Many retirees decide to move to a lower cost area, but looking into the future, I don’t think I could do that as I’d still like to be close to family and friends if possible.

This is another big factor when deciding where to live. You need to find a place that has jobs, especially jobs in your field. Sometimes, the job you have requires you to relocate.

Some people just can’t tolerate snowstorms and the cold weather. After this winter, I think I can understand. I’ve heard many people who say they plan on moving down to Florida permanently, or at least become snowbirds.

Check out the list of most stressed cities below.

The 10 Most Stressed Out Cities In America By Movoto Real Estate

So why do you live where you live? And are you happy where you’re living?

Is NYC Really That Expensive?

Freedom Tower
Yes it is. End of post. With the way I often complain about living in this high cost of living city, I was tempted to write that three word post. I have to admit, I am a bit of a complainypants about the costs of living in NYC. But is living in NYC really that expensive?

Well of course it is expensive. That is undeniable. NYC is often listed among the most expensive places to live in, both in the United States and worldwide. However, the biggest reason why NYC is so expensive is its housing costs.

The average rental price of apartments in Manhattan and Brooklyn are crazy. According to the Daily News, the average rent in Manhattan is $3,902 and in Brooklyn $2,411. Home prices are equally obscene. In Manhattan, the average is $1,303,421 and in Brooklyn, it’s $959,907. The media loves to throw out those numbers to make a point, but I think most can find a suitable place for much less than the average rent and home price cited above. It is pretty much impossible to avoid the high cost of housing, unless you can somehow live rent free because a long lost relative left you a paid for apartment or some other crazy scenario like that. I’ve listed some ways you can try to reduce the costs of housing in a previous post that you may want to check out.

Now, let’s move on to reasons why living in NYC isn’t as expensive as you may think.


In many cities and towns, having a car is pretty much a must. For a family or couple, a two-car household is also a necessity. Having to buy a car or two cars and paying for maintenance, gas, and insurance costs a lot of money. In New York City, often times, a car is not necessary. For $2.50 a ride or $112 for unlimited rides for a month, you can pretty much get to any part of the city. The transit system in NYC is pretty amazing and it is open 24 hours a day. Depending on where you live in New York City, most neighborhoods are very walkable. There is often no need to spend money for a car, or even if you have a car, there is no need to waste money on gas. Where I live now, I can walk a few blocks to a supermarket, a drugstore, a movie theater, restaurants and plenty of other places where a person would want to go. While I do have a car because I commute out to the suburbs for work, I know many living here who don’t have one and have no need for one.


There are so many things to do in New York City. Sure, there are plenty of expensive things to do, but there are also many cheap and affordable things to do. My favorite attractions include the museums, Governor’s Island (with free ferry service and free events), the Highline and free movies and ice skating at Bryant Park (not at the same time of course!). Actually visiting and walking around the various diverse and eclectic neighborhoods is entertaining enough for me.

I could compile an exhaustive list of the free and affordable things that you can do in New York City, but Erin who blogs at BrokeMillenial has already posted an extensive list here.

Stefanie who blogs at The Broke and Beautiful Life also has a list of posts about cool and free things to do in NYC. Just click on the NYC tab on her blog.

Groupon type deals
I’ve read some people mention that there are not many Groupon type deals in the areas where they live, but there are plenty in the NYC metro area. While Groupon does not always provide good deals, they do sometimes offer great deals for activities that you may be interested in. Groupon and other deal sites often have deeply discounted deals for museums, tours, sporting events, among other events.

Thai lunch special


I think there is a common misconception that New York City is expensive when dining out. Sure, there are plenty of outrageously expensive restaurants here, that doesn’t mean you can’t have a great affordable meal when dining out. You don’t have to go to the fancy Zagat or Michelin rated restaurants to have a good meal. My wife bought recently bought lunch for $4.75 (including a bottle of water) near where she works. No this was not in Manhattan, but even there, cheap eats are available. Also, with restaurants, Groupon deals and Restaurant.com deals are available to get a discounted meal at various places.

Cost of Goods and Services

Once again, similar to everything else in New York City, I think the cost of things here can be very expensive or it can pretty affordable. You just have to know where to look. It depends on what you’re buying and where you go to buy it. For many people, most things they purchase is purchased online so it doesn’t matter where you live. For things like fresh produce and groceries where it is much more difficult to purchase online, I still do not think the price in NYC is necessarily higher. Of course, if you do your grocery shopping in Manhattan, the options for lower costs may be harder to find. Read my post about saving on groceries here.


I think one advantage of living in NYC is that there is a lot of competition for your money. If you don’t like the service or price at one store, there’s probably another store that offers the same service or product very close by. It is not like in a small rural area where a store has a monopoly. You can use this to your advantage by negotiating the price or by shopping around.

Thrift shop/Freecycle/Craigslist
Another advantage of living in such a big city is that there are a lot of people getting rid of their stuff. There are many thrift shops and many people who donate some gently used items. And in a well-to-do neighborhood (think upper east side), you can score some pretty nice things. There are also many people selling things on Craigslist at a deep discount or people using freecycle to give away things they no longer need. Because of the amount of people here, you can often find what you’re looking for.

Nick who blogs at Pretired.org had an interesting post about great cities and listed factors including safety, affordability, walkability, Transit, bicycle friendliness, cleanliness, weather, infrastructure, open space, culture and aesthetic beauty. Based on these factors, I think New York City scores very high in all of these factors, except maybe the affordability factor. However, if you live frugally, you can enjoy the city’s amenities and cultural offerings. I don’t feel deprived living here (well not most of the time!), but my wants and needs are modest.

Does the media portray NYC living as outrageously expensive? Would you ever want to live here? If you are a fellow New Yorker, what other ways is NYC not as expensive as it seems?