A Month of Expenses in a HCOL Area (on a Non-Engineer’s Salary)

As I’ve mentioned about a million trillion times on this blog, I live in a high cost of living (HCOL) area. This area, the San Francisco South Bay, is known for Silicon Valley, computer engineers, and start-ups that make a shit-ton of money. I go to the gym with people who work for companies like Apple, Google, and Facebook (and Z-berg himself showed up on Sunday). The parking lot is full of Teslas, and I recently overheard a guy who couldn’t have been more than 23 talking about buying a house for his mom (which–that’s really nice–but also–23??? Dang!). Lots of people move to this area to take high-paying jobs at these companies. 

I am not one of those people. 

I work in education. And while I get paid more than the average public school teacher* in the United States ($60,483), I don’t make the type of money a Google person does ($112,849 average, as per payscale.com). I thought it would be fun to do a breakdown of what life can be like here on $72k/year.

RENT – $1351/month or $16,212/year (EXTREMELY LOW for this area)

I am very lucky in that I was able to get an apartment in a building owned by my employer.

Although this has come with a number of problems (for example, lying about available parking, having a July 1st lease start date but not actually getting into the apartment until August 8th because the unit was being renovated and no one bothered to double-check the unit # with the new leases, showing up on a Friday afternoon after being assured I would have keys and then waiting to try and hunt down someone who could help us find temporary housing, finally being told we could move in and then being given the WRONG KEYS, having the toilet installed incorrectly–BUT I DIGRESS), the savings in rent more than make up for the parade of problems I had just trying to move in.

I currently pay $1351 a month for a 417 sq ft studio that is walking distance from my workplace (1.3 miles or about 25 minutes depending on traffic lights). The average monthly rent of a studio or one-bedroom within a reasonable walking distance of my job (reasonable = less than 1.5 miles) is currently hovering around $1800 on craigslist. As such, I’m paying about 75% of what I would have to pay if I wanted to move somewhere not owned by my organization

And to be clear, that $1800 would be going to a real piece of work, if you get my drift. I’ve heard horror stories from others who live in the area about what basically sound like dorms owned by slum lords. My unit has at least been newly-renovated, even if I did have to wait five weeks for it to finish. 

This sweet living situation does come with some caveats, though–because of my rank, I’m only technically eligible to have this apartment for one year. Although some of my neighbors in the building who are of a similar rank have been able to stay from three to four years, it’s not something that’s guaranteed. I hope because of the very small size–studio–that not many other new hires will be interested. There are three open units in the same building, and I think they all have at least one bedroom. Because of this, I’m keeping my fingers crossed that I’ll get to keep my apartment for one more year. I should know for sure by June, but I’m making sure I have enough money stashed away to cover moving expenses, just in case. 

If I lose the unit? Well, that just further cements my decision to limit myself to about two years in my present position before moving on to somewhere else. 

Why two years? That’s how long it takes to be fully vested in the organization’s retirement program. If I stay for two years, I get my ten percent–that’s ten percent free money, not even a match, that I walk away with if I stay here for that long. But if I leave before those two years are up? Zero. Zilch. Nada.

I also got paid a moving reimbursement to bring myself over here. And by reimbursement, I mean they took out payroll taxes as if it were a bonus (which, had I known, I would have overestimated–nothing like paying payroll taxes on purchases I paid sales tax on that were bought with money I already paid payroll taxes on!).

Additionally, the phrasing of the moving reimbursement document was something about how I may have to pay back the moving reimbursement if I leave my job before two years are up. I’m choosing to interpret that may as a will.

TRANSPORTATION – ~$1160/year including two oil changes but not including major service or tires

Last month I had the joy of switching over my license and registration to the great state of California. This whole process, from smog check to license fees to registration fees, cost a total of $368. Luckily I won’t have to do this every year, but it was quite a bit more than the $100 it cost me in Colorado. 

Gas is also much more expensive here–according to AAA Colorado, as of last week, gas was going for about $2.73/gallon in Denver (although, since I’m not actually there, I can’t confirm this). Gas at the cheapest gas station in the area here in CA is around $3.90 a gallon. So, it costs $1.17 more per gallon, or about $14 more per tank, for gas. And while I can walk to work, a lot of other places–the gym, for example–require driving. 

I’d love to take the bus more here, but unfortunately none of the routes are very convenient. It would take me an hour and a half with two transfers to get from my work to the gym, but it’s only a 20 minute drive. So, in that instance, driving wins. 

HEALTH INSURANCE – $52/month or $624/year

I get health insurance from my work. I went with an HMO plan, so my options of where to receive care are a little limited. However, one of their super complexes is within a 15 minute drive from my apartment, so making plans to receive care has been relatively painless. This is the second-most expensive plan my organization offers, and I chose it because it has no deductible. 

 Why don’t I have an account that offers an HSA, as many personal finance gurus suggest for healthy individuals? To explain, a Health Savings Account (HSA) is an account that allows you to pay for medical expenses with pre-tax dollars. These accounts are associated with insurance plans that have a high deductible–the idea is that you pay lower premiums in exchange for a higher deductible, but you have the opportunity to save money to meet that deductible. When you contribute money to an HSA, you lower your taxable income.

Unfortunately, only one insurance plan through my workplace offers a high deductible with an HSA option. INTERESTINGLY, it’s a PPO plan–you choose your own doctor, as long as they’re in-network–which are always more expensive. So, in order to have an HSA, I’d been spending twice as much on insurance premiums per month in exchange for a higher deductible, all for the sake of being able to lower taxes. 

I’ll take my half-cost premium with no deductible and $1500 out-of-pocket maximum, thanks. 

And to be fair, I’ve been totally happy with my HMO so far. I’ve had four visits for various reasons, and I’ve paid a total of $20. 

GROCERIES – $200/month or $2400/year

I was surprised at how expensive groceries are here. I remember the first time my partner and I went to the grocery store and being shocked that there were no boxes of cereal that cost less than $4.00. Food and cleaning supplies are significantly more expensive here than they were in Denver. 

After being here a few months, I’ve started discovering the best ways of tracking down my grocery deals. Trader Joe’s is good for packaged items like my coffee, English muffins, and vegan butter, although they never really have sales. Sprouts is good for produce, but only when it’s on sale; if it’s not on sale, but is something I have to buy a full pack of at TJ’s (for example, carrots or mushrooms), it’s also best to buy at Sprouts. Safeway is only good when I have digital coupons. 

One argument against piecemeal shopping like this is that it wastes more gas; however, Safeway is next to my work, Sprouts is on the way home from my gym, and I only go to TJ’s once or twice a month. The savings more than make up for any extra gas or time spent. 

UTILITIES – $30/month for gas and ????/month for electric

My house is heated by gas, and since my apartment has no insulation, I run the gas heater for about 30 minutes on weekday mornings so I don’t freeze to death when getting dressed (I run cold, and my apartment is usually in the low 60s when I wake up. Not exactly Antarctica, but too cold for me!). In the summer, heat was only $9 a month; last month, it was $20. This month I’ve budgeted $30, since I’m using the heater more. 

Electricity is the real question mark. I live in a city where the electric is municipal–this has been great, because we were not subject to the same blackouts that others in CA recently underwent. However, since it is a government agency, things aren’t always quick to happen. I called and set up my account in August; I am still waiting for my first bill. I’ve called twice, and both times I was assured that everything is fine, and that I would “receive a bill soon” that would be “higher than usual” because it would “reflect the cost of service since starting.” This was about three months ago; I’m hoping to get this bill sooner rather than later, because I honestly have no idea how much my electric is going to cost me. I don’t have a lot of appliances, but still…

OVERALL

Overall, the biggest asterisk to my budget is my rent. Because I receive such a large discount, I know my experience in the south bay is drastically different than most others (including most of my coworkers). With my partner overseas, living by myself in this area is a huge luxury. However, it’s a luxury that is not guaranteed to last; as such, I’m trying to keep my budget low enough to cover what rent will be if I get kicked out of my unit. Right now, that budgeted money is going to student loans and retirement; I have the option of re-routing next summer if I need to.

While I’m doing OK, this area is not all it’s cracked up to be. I make $72k/year, but that’s not what the job started at; originally, they were advertising my position as low as $60k (to which I said–there’s no way I could take this job for that money). That’s also the starting rate for a very similar position that my organization is currently trying to hire for.

If someone is moving here without a partner, I honestly don’t know how they could comfortably support themselves on that salary. They’d either have to live with at least three roommates or have a two hour commute everyday, I guess (both things are true of my coworkers). That’s combined with the fact that my workplace wants someone with a master’s–so there’s the issues of student loans as well.  

I know I’m lucky to be able to have this job and live in this area making the amount that I do. However, it’s only possible because of this discount on rent. If I hadn’t been eligible for employee housing and received a pay bump, I would not have taken this job. The cost of living would have just been too damn high.

* I am not a public school teacher, but I have mad respect for those of you who are. I worked in a public elementary school running a tutoring center from Jan through May, and that was more than enough for me!

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