The Jared Dillian Letter

When Half a Million Dollars Isn’t Enough… Do This

New York City is full of people who make half a million dollars a year. And yet, many of them have a low quality of life.

Why? Taxes are high in New York—they devour half of your income. Housing is also expensive. If you’re single and looking to rent a one-bedroom apartment in Manhattan, it’s going to run you $4,000 a month. If you’ve got a spouse and a kid, you will need $900,000 to buy a decent (but not fancy) two-bedroom apartment.

Then there’s food. A box of cereal from the grocery store costs $12. A cheap dinner out will run you $125. And if you plan to save money by trekking up to the East Harlem Costco, good luck trying to fit all of those cheap cans of beans in your tiny kitchen.

Now, the high prices in New York are partly the product of onerous rules and regulations. It’s called inflation by fiat. Anytime you pass a law, it costs money for businesses to comply with that law. But businesses don’t absorb those costs. They pass them on to consumers. New York City has a lot of laws, making an otherwise expensive place even more expensive.

So, it’s hard to save money living in a place like New York City. And when it’s hard to save, it’s hard to build your emergency fund, it’s hard to pay down debt, and it’s hard to invest. But those are the places with the highest concentrations of high-paying jobs. So, what are your options?

Option #1—Live Somewhere Cheap

Many of you know that I moved to the Myrtle Beach area in 2010, almost sight unseen. It’s a great place to live! I can go out to dinner here for $40.

Taxes are low. Housing is cheap. Gas is cheap. Groceries are cheap. Everything is cheap. Plus, the weather is nice most months of the year, and I’m close to the beach.

There’s a reason Myrtle Beach is the #2 retirement destination in the country. It’s full of people from New York City, who sell their $900,000 homes (which they paid $70,000 for 40–50 years ago), buy a $300,000 house, and retire on the rest.

But for younger people, or anyone who’s still working, the cheap cost of living is a double-edged sword. The wages here are atrocious. If you make $12/hour in Horry County, you are doing okay. That’s considered a decent amount of money. Because you can rent a decent place for $700 a month and live a pretty nice life.

Unfortunately, there are not many opportunities beyond that. It’s mostly just low-paying restaurant and hospitality jobs. So, unless you are a doctor or some other kind of professional, the local financial opportunities are bleak.

This phenomenon is not exclusive to Myrtle Beach. The country is filled with cheap-rent towns with limited job prospects.

Option #2—Live Somewhere Cheap (with a High-paying Job)

The best possible option is to work a high-paying job while living in a cheap place. I know, because after years of paying my dues on Wall Street, I do exactly that.

I didn’t set this up overnight, but today I can work from anywhere in the country with an internet connection. Alaska, Hawaii, Wyoming… anywhere. Culturally, Miami might be a better fit for me—it’s certainly cheaper than New York City. But I like the weather in Myrtle Beach—and it’s ridiculously cheaper.

I bring this up because a lot more people have this option now. Because of the pandemic and the ongoing fallout, many companies are letting well-paid employees work from anywhere. So, the high-salary/cheap-house setup is more attainable than ever.

That means two things:

  1. If you already live somewhere cheap, you can expand your list of potential employers beyond local businesses.

  2. If you have a high-paying job that you could do just as well remotely, and you live somewhere expensive, you can talk to your employer about relocating. There is no guarantee your boss will say yes. But you can ask.

Stop Bleeding Money on Housing

Keep in mind, it doesn’t take a cross-country move to make a huge difference. Imagine for a minute that you have a high-paying job in Palo Alto. Homes cost $1,570 per square foot there, and the median sale price is $3.6 million. So, unless your last name is Zuckerberg, you are bleeding money on housing.

Now imagine that you keep that high-paying job, work remotely, and move 60 miles away to a town called Brentwood, which is not as fancy, and not as cool, but still pretty nice. Homes there go for $343 per square foot, which is a massive discount, and you are still close enough to show face in the office from time to time.

This is an extreme example, but it might be more applicable to your circumstances than you’ve considered. Every city—even the cheap ones—has a less expensive hinterland. Moving there used to mean a long commute, but that is not necessarily the case now.

Longtime readers know it’s the big things that drive your financial health—the house, the car, the student loans. If you are struggling to meet your financial goals, despite making a decent salary, your house might be the problem. Maybe it’s time to live somewhere else.

Jared Dillian
Jared Dillian


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