Don’t Underestimate the Cost of Living When Deciding Where to Live

I live in the suburbs of Chicago, and recently, after 11 years in the same apartment building, my husband and I re-entered the renter’s market.

When we first began renting at our last apartment, the two bedroom apartment was a bit too big for us.  Three kids later, we were bursting at the seams.

However, we were shocked to see that 3 bedroom apartments in our location rent for $1,300 to $1,800 a month.  Houses can rent for as much as $2,500 to $2,800 a month.

Houses Are Often Out of Reach

Over the years, people have urged us to look into buying a house, but even in the current buyers’ market, homes average $300,000 in our area, and the property taxes typically run $12,000 to $15,000 a year.  With those numbers, we still consider renting to be our best bet, especially since we don’t plan to stay in the area permanently.

We ended up renting a moderately priced 3 bedroom apartment for $1,400 a month.

It definitely wasn’t the nicest apartment on the market; we couldn’t afford those!

Out of curiosity I looked at the price of 3 bedroom apartments in my hometown, where we plan to move after my husband finishes his post-doc.  My hometown is a mid-sized city about 2 to 3 hours away from two major metropolitan areas.  I was shocked to see that 3 bedroom houses rented for $900 to $1,100 a month.

Salaries Do Not Always Compensate for the Cost of Living

cost of living

Understand the cost of living when you look for a new home.

When I first moved to the Chicago area immediately after graduate school, everyone told me that the cost of living was expensive, but salaries more than made up for it.

I have not found that to be true.

I began my first job here in 2000 at $31,500 a year.  I had trouble affording even a reasonable one bedroom garden apartment for $650 a month.  Now, my husband is beginning his post-doc at $35,600.  I freelance and bring home about $1,500 a month.  Between the two of us, we are able to make ends meet, but there is rarely any extra at the end of the month.

Moving Can Give You an Instant Raise

If you are struggling financially, it may be worthwhile to look at your location and the cost of living.  Using a cost of living calculator, I see that in our case, if we move to my hometown, we will essentially get a 21% raise.

In other words, it costs 21% less to live there than our current location.

While we average about $55,000 a year in income, we would only need to make $42,943 to maintain the same standard of living.  When my husband finishes his post-doc and we move, we will immediately get a raise.  Best of all, my freelance job is portable.  I can do the work where ever we move, and the pay will remain constant, so I will experience my own raise because the money will go further.

In today’s tough economic times, it may be worth considering moving out of your current town if it has a high cost of living and moving somewhere with a lower cost of living.  You may experience a pay reduction, but often, even with a pay deduction, the new locale may be more affordable.  When we visit my hometown, I notice differences not only in housing costs, property taxes and other big ticket items, but also in groceries and gas, which can add up over the course of a year.

However, make sure you are confident with the move.  I have known of two people who moved to lower cost of living areas but then decided they would like to move back to their old, higher cost of living location.  The trouble was that they were no longer able to afford to move back to the higher cost of living area and maintain the lifestyle they enjoyed in the lower cost of living area.

It is nice to be outside of a big city and benefit from all of the amenities a big city offers such as entertainment, education, and culture, but ask yourself if you are truly benefitting from these things.  In our case, we have three children who are in bed at 7 p.m.  A baby-sitter in this area runs $15 to $20 an hour, so we don’t take advantage of all of the big city offerings.

While it will be a mental adjustment moving back to a smaller area with a lower cost of living, over the long term, when we look at our lifelong financial outlook, it will be well worth it.

Free Newsletter to Keep you Free From Broke!Name: Email: We respect your email privacyPowered by AWeber email marketing
Published or updated October 23, 2012.


  1. Danny from LifeTuner says:

    Great post, Melissa! This is certainly an important post for those freshly emerging from college, as well. While recent grads have a high degree of portability, some cities with colleges (especially if they’re “college towns”) have a lower cost of living than the big cities grads may be seeking. This difference can lead to a lot of spending issues, just like the couples you mentioned.

  2. Great post! The cost of living in Missouri is much cheaper than most places, but the life of the city is very comparable to a lot of other cities.

  3. I’ve always wondered how people could afford homes that cost so much. I know salaries are higher in some areas, but not 3-4x higher (and the houses often cost that much more).

    I’m lucky to live in a low cost of living city.

  4. Jenna, Adaptu Community Manager says:

    Thanks for sharing some insights. I definitely considering it a blessing I live in low cost living city.

  5. I live in a high cost of living area and I’m always thinking about this very issue. I like it here, but before I make the decision to pay more than twice, maybe three times, as much money to buy a house in this area, I have to consider what I’m giving up. For instance, if traveling is important to me, I’ll probably sacrifice in this category of my budget quite a bit in order to continue living in the Washington, D.C. metro area.

  6. Fantastic analysis!
    Cost of living, the biggest issue,
    Everybody is looking for a low cost of living and a good guality of life (jobs, budgert)…but not always is this possible. We sometimes obviate so many factors…
    Thanks for the information, really useful.

  7. Thomas - Ways to Invest Money says:

    People tend to think oh its expensive to live here but they pay more. That rarely works out and you are better off getting a great paying job that will allow you to move to a cheaper location. I have family that lives in SC and when they here what rent is to live in FL they just laugh. I mean for the price someone would pay to rent an apartment you could own land and a very nice home.

  8. I don’t know if I agree or disagree with you. There more opportunities in the cities and I think they make up for the higher cost of living. I don’t think I would move to a cheaper area just for the lower cost of living unless I’m retired. It will be difficult to move back if needed.

  9. Tell me about it!! I live in New York City and it is not affordable in any way. But like Retirebyforty pointed out, NYC salaries are much higher than most other regions in the US. I don’t really have an issue with $8 beers at the bar or expensive milk and cheese, but when rent for a decent place STARTS at $3k a month it really makes it tough to have a family in the city even if your salary is higher than the rest of the country.

  10. Money Tips says:

    Indeed cost of living matters a lot. Specially when many people work online, it is beneficial to select a low cost city as their income does not get affected. Very useful post.

  11. Jeff Crews says:

    I think this whole idea of location and housing prices are interesting. When I was first looking for an apartment, I looked for places close to where I would be spending most of my time. Apartments were reasonable. However, looking ten minutes farther saved me almost $350 in rent. That blew my mind. 10 mins = $350. I will gladly do that!

What Do You Think?