By Anastasia Ivanov
In a post-2008 economy, a great many people still struggle to make ends meet every month. With dwindling opportunities to break free from the poverty trap, most people constantly look for new ways to earn a few extra dollars.
This is, perhaps, not the most effective approach. The many rising difficulties involved in increasing income make it less appealing by the year as an avenue for improving a family’s standard of living. Rather than struggling to increase income, many people would benefit from seeking to decrease expenses. While this may not seem like the best way to increase the standard of living, the principle carries a lot of weight, economically.
The cost of living discrepancy from one major city to the next impacts the standard of living of its residents by a substantial margin. For a family living in San Francisco, buying a home could cost as much as fourteen times the household income. This would result in paying nearly 50% of the family’s income in mortgage, just to pay the principal on the loan within the typical 30-year term.
If that same family could move to a new city, and purchase a house with just 1.5 times their annual income, the 30-year term mortgage becomes so inexpensive that a shorter, more financially wise 15-year term makes a lot more sense. This would conserve more of the family income to pay off back debt, pay off the mortgage more quickly, and even save for early retirement.
The idea of moving out of state intimidates a lot of people, but the potential savings can create life-changing improvements to the situation of almost anyone living below the upper class. Take a look at the actual breakdown here. Where you choose to live could cost you ten times more than other cities, relative to your income.