Disagree. I'm from the Midwest and live in SF now. Couldn't be happier with my change.
Data point of one:
- $2200/mo 1BR apt in SF (Inner Sunset). Not trendy, but nice. I got it 3 years ago.
- Working for a major tech co.
- Roughly $275K/yr in total comp (salary/equity/bonuses). It goes up around $10-20k every year, as my equity bumps compound and I get raises.
- Putting away $18k/yr in 401k + $9k company match.
- Average bills of $1000/mo. Mostly leisure spending, but also includes the occasional Lyft, etc.
- Mostly eat at work for free. Minimal food in the house for dinner, which I don't eat that often (I snack a lot at work and don't feel hungry). I think I eat out about 2x/week.
- No car, though I occasionally ZipCar or mooch my GF's. CalTrain and Clipper card are paid by my company.
My net worth on Mint has increased roughly $50-100k/year since I began working here, due to cash savings and stock vesting. I take an international vacation every year, and visit my family 3x/year.
I previously worked in the Midwest and life wasn't nearly as fun, nor was I making as much money. More importantly, I didn't have job flexibility. The workplaces were terrible there (SV culture, silly as it can be, is much friendlier to employees), and there weren't as many jobs. They also didn't pay for public transport, give you equity bonuses, pay for your meals, or had office snacks. A spacious house couldn't make up for all of those differences.
I'm glad I came to SF, despite its downsides (like less space, commuting, etc). There is a big trend in bashing it, but if you're good at what you do and know how to manage your money, you can do pretty well here. Not to mention have a higher quality of life. And if I decide to move back (which is likely, so I can be closer to family) I'll go back with an amazing CV and probably better career options.
Stop listening to haters. Don't knock it till you try it.
As a San Franciscan for about 5 years, those costs sound realistic. However that total comp number is well above the norm for the area. Two points on that.
1. If you're going to count equity, count it by the value at the time of the grant [minus strike price], not what it's worth now. In terms of comp, it was a gamble that paid off.
2. It sounds like you work for one of the big 4? Not everybody gets this opportunity, in fact if your degree isn't in comp-sci they may not even want to talk to you (regardless of your IQ or what have you).
> They also didn't pay for public transport, give you equity bonuses, pay for your meals, or had office snacks. A spacious house couldn't make up for all of those differences.
Huh. Well, my family appreciate our Midwestern house and yard. I do get free snacks at work, but I'm not sure they really care that much.
you truly have an ideal scenario though, for me I make a 100,000 in SF and between my expenses and taxes its the equivalent of making 40000 anywhere else.
I love seeing so many people re-package a news piece based on numbeo's cost of living model which is incredibly flawed and doesn't account for the wide variance of the cost of rent depending on whether one is single, is willing to live with roommates, is willing to deal with a longer commute, etc.
Trying to develop a salary + cost of living model that doesn't take into account one's personal priorities and preferences is foolhardy. And the piece Hired wrote did exactly that.
News flash: not everyone who lives in NYC or SF is paying $3000 a month in rent. Many of my friends in NYC are paying $800-1200 for a room in Brooklyn with a 25-35 minute commute on the subway. My friends in SF tell me that they pay more but certainly in the 1000-2000 range not the 2000-3000 range that's always quoted.
Get a significant other and move in together and you can split that in half.
But yes, if you want to live alone, 5 minutes walk from Mission Dolores park in SF or bring a family into Palo Alto then the bay is the worst paying place for you as a software engineer.
On the other hand, if you're willing to commute, or willing to have roommates, cook at home instead buying into the myth that you _have_ to go get brunch at some $12 avocado toast cafe, then you'll likely save more money in the long run in SF or NYC than in the Midwest, and yes, after cost of living and after tax. Unless during your job search you find yourself in the enviable position of finding salary offers in the midwest that are very close to the same salary offers you get in the high COL cities. If you do find that though then by all means live in the midwest. And those situations do exist but it's just that there are far fewer $100,000 jobs in Des Moines, IA than in Brooklyn, NY.
It's not SF/NY vs. Des Moines. It's SF/NY vs. Seattle/Austin/Denver/LA.
Your examples don't disprove the article's main point, which is that the cost of living in the Bay Area (and New York) erodes much of the salary bump you get by working in those places. Paying $1200 to rent a bedroom is normal in NY and SF, but that price will get you an entire apartment or more in many other places.
Look, to many of us, the Bay Area is worth its high cost - being in the center of the tech industry, surrounded by thousands of companies, and enjoying the beautiful weather of this region makes up for expensive housing. But as the tech industry grows in other cities and as their salaries increase, I'm beginning to seriously think about moving.
The kind of tradeoffs that I made when I was young, stuff like having roommates, living in a rundown place, longer commute, etc. increasingly don't make sense as I get older. I have a family, and looking for a house in the Bay Area is a sobering affair. Nothing can be had in the Peninsula for under $1.2 million, and even across the Bay homes are $800k plus.
Meanwhile my friends in Seattle and other cities are buying real family homes and living the American dream. I have to wonder, is it worth staying here?
If you are willing to suffer like that (have roommates, not have all the kids you might want, not have a stay-at-home parent...) to deal with the cost of rent in San Francisco, then you can also do it elsewhere and live even cheaper. Detroit could be nearly free.
So, that doesn't help SF or NYC. The cost-saving measures work elsewhere too, getting you something better or an even lower cost.
Living in a place like The Ghost Ship is not good for you, even if you don't actually die in a fire.
Who would have more money in the bank at the end of the year? A software developer in SF spending $40k on rent, or a software developer in Detroit spending $0 on rent?
How about developer trying to pool two high incomes together to make mortgage every month after obliterating years of savings on a down payment, versus one that can easily afford to buy a house with whatever amenities one wants including an easy commute putting 20% down (less than a year's savings) and paying less than 40% of the take home pay per month?
The second option is a true story of me here in Chicago.
Most of the houses that sell for 'free'/'cheap' have been scavenged over by neighbors and similar. Things like dry wall being ripped out to get copper wiring to sell isn't unusual.
If I were a young software developer solely focused on saving as much money as possible, I would: move to SF in a heartbeat, work for Facebook, Google, or Amazon, pick a mission-critical team that exposed me to systems at massive scale, and live in a van a pleasant 5-10 minute bike ride from the office. After I felt comfortable I'd start to consult on the side on weekends for up to $53k of annual tax-free solo 401k sheltered income. Life doesn't present a ton of these "sell picks and shovels to gold miners" opportunities but this is definitely one of them.
Stupid advice. Not everything that happens is a choice, you can't just pick a team at Google, and you can't just magically become a profitable consultant on the side.
If the side business is profitable (and makes enough to enact this plan), it works like this for a solo 401(k): the employee's contribution (you) up to $18,000 and a profit sharing contribution up to 25% of the business earnings. For 2017, it maxes out at $54,000 if you're under 50 years old.
Keep in mind though that maximums are per person not per company; if you keep the day job 401(k) (and potential match) you'd have to reduce the contributions from your side business to not exceed the maximum.
The employee contribution maximum is limited per person, but the employer contribution maximum is per company (if the companies are unrelated, by ownership structure). Some illustrative answers here:
I was under the impression that you can just set up a corporation for your freelancing, with you as the only employee, and have your corporation offer a very generous 401k plan that matches individual contributions up to the maximum legal amount.
As an SF resident of 5 years, I'm not sure I'd compare this place to Athens. Not saying you haven't had that experience, but I haven't so your mileage may vary.
Data point of one:
- $2200/mo 1BR apt in SF (Inner Sunset). Not trendy, but nice. I got it 3 years ago.
- Working for a major tech co.
- Roughly $275K/yr in total comp (salary/equity/bonuses). It goes up around $10-20k every year, as my equity bumps compound and I get raises.
- Putting away $18k/yr in 401k + $9k company match.
- Average bills of $1000/mo. Mostly leisure spending, but also includes the occasional Lyft, etc.
- Mostly eat at work for free. Minimal food in the house for dinner, which I don't eat that often (I snack a lot at work and don't feel hungry). I think I eat out about 2x/week.
- No car, though I occasionally ZipCar or mooch my GF's. CalTrain and Clipper card are paid by my company.
My net worth on Mint has increased roughly $50-100k/year since I began working here, due to cash savings and stock vesting. I take an international vacation every year, and visit my family 3x/year.
I previously worked in the Midwest and life wasn't nearly as fun, nor was I making as much money. More importantly, I didn't have job flexibility. The workplaces were terrible there (SV culture, silly as it can be, is much friendlier to employees), and there weren't as many jobs. They also didn't pay for public transport, give you equity bonuses, pay for your meals, or had office snacks. A spacious house couldn't make up for all of those differences.
I'm glad I came to SF, despite its downsides (like less space, commuting, etc). There is a big trend in bashing it, but if you're good at what you do and know how to manage your money, you can do pretty well here. Not to mention have a higher quality of life. And if I decide to move back (which is likely, so I can be closer to family) I'll go back with an amazing CV and probably better career options.
Stop listening to haters. Don't knock it till you try it.