[frankus]

It's probably obvious to most, but I recently came to the realization that if you're paying off debt, a high COL works in your favor, whereas if you're living off cash, it works against you.

That means that if you're fresh out of college with lots of student loans, you're doing yourself a disservice if you don't move to a big city and get a high paying job. You can effectively inflate your way out of your debt by making your salary much bigger in comparison (assuming COL and salaries roughly match up).

And if you're about to retire (without having Fuck You Money), you should move somewhere cheap, all else equal. The same could be true for many bootstrapped startups.

[bduerst]

Slight tangent, but it's sort of the same with investing too.

If you're investing or saving 30% of your income, it's better to work somewhere with higher COL / higher pay. This way over time you accrue more wealth than you would if you were working in an area with low COL and lower pay.

[bunderbunder]

That only works out if the salary you can make increases in proportion with the cost of living. I haven't lived in a lot of places, but at least based on the few cities I have lived in, I don't believe the two are anywhere near that tightly correlated.

For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profession. Milwaukee's still mostly a blue collar town. This difference shows in the very different costs of living: An apartment in Milwaukee costs about half of what an equivalent one costs in Chicago, restaurants cost less for similar quality meals, drinks are way cheaper, etc.

But it does not follow that you can earn twice as much money working as a developer in Chicago. The same job in Chicago might pay a bit better, but the difference is modest. This is because the two cities are so close to each other that at least in tech they're essentially the same job market. There's even a busy commuter train connecting the two cities.

In short, it's not necessarily doing yourself a disservice if you don't move to a big city and get a high paying job. You might do yourself an even better service by moving to a small city and getting a high paying job.

[kasey_junk]

There is a bit of a fallacy going on here. If your housing costs 2x of another place it does not follow that the total COL is 2x. For instance, most cost of living calculations predict that even though housing is 85% higher in Chicago, the total cost of living is more like 28%.

A 28% salary differential is just about right for the last couple of jobs I looked at and maybe a bit lower. This also doesn't count for the choice differential between Chicago and Milwaukee which is extreme.

[brianwawok]

Cost of living in Chicago is NOT 2x Milwaukee. Nor is salary, so you need to go more in depth.

I think 30-40% more salary is easy in Chicago. I think you can easily live at only 30-40% more expenses in Chicago (think of all the stuff a big city saves you.. can get rid of all your cars, get more free entertainment options, etc).

Thus, I think Chicago is awesome for post college people to inflate their way out of college debt. I do not know enough about SF to say if that is a good idea, but the COL to Salary ratio could be off.

[superuser2]

>This is because the two cities are so close to each other that at least in tech they're essentially the same job market.

I live in Milwaukee and disagree. There is no tech scene here. Programmers work for banks, insurance companies, Time Warner Cable, manufacturing, etc. if they work at all. In Chicago, there are actual software companies and consultancies. You would never see something like ThoughtWorks or Matasano (and their correspondingly competitive salaries) in Milwaukee.

[7Figures2Commas]

You're missing one other consideration: retirement savings.

If you have a 401(k) plan, you can contribute up to $17,500 of your salary each year as an elective deferral. While it's possible to come out ahead earning a lower salary in a lower cost of living area, for most folks, it's generally going to be easier to set aside the $17,500/year for retirement with a higher salary. If you have a decent employer match, a higher salary can also be meaningful over time.

Of course, it is possible to obtain the best of both worlds (make a lot of money in a low cost of living area). You don't need to be in a high cost of living area to own a profitable business or become a consultant, and folks who are self-employed can set up their own 401(k)s.