There are a lot of good reasons to live in a high cost of living area. For some, that’s simply where they were born and want to stay close to family and friends. Others move there because of the work opportunities. Generally, you’re going to make more money in a city but that also causes the cost of living to rise.
If you’re looking to retire early, then it could work against you even though you are making good money. But, at the same time it does provide opportunities aside from just the bump in pay. Gaining experience and expertise can travel with you.
Which means that you may be able to move to a low cost of living area and supercharge your savings and investing so you can still stay on track to retire early. Of course there are pros and cons to everything so it pays to take a closer look at what you’re getting into.
Advantages of living in low cost of living area
First and foremost, you are going to save money. The low cost of living usually means lower mortgage since property costs far less to buy. If you plan this out well, you can downsize your living expenses in a high cost of living area so you can save enough for a hefty down payment on a house that is much cheaper than the city.
If you can keep your mortgage down as low as possible, then you are going to stay on track for your early retirement since this is usually the biggest monthly expense you have. Your salary will likely be lower so you won’t necessarily have the balance to put in your pocket, but you can still have more extra money by spending less on your mortgage.
Then there may be local benefits to take advantage of that aren’t necessarily available where you were living. If you end up moving abroad, like to Canada for example then you could try using some of the best investment options in Canada that could prove to be more lucrative than what you had available earlier.
Another thing to consider is that in a low cost of living area, you can generally afford a more centrally located house. In NYC, you are likely to be commuting to your office or worksite as it would be exorbitant to pay to live close by. When you live in a small city you can generally live closer to the place where you work without spending a fortune and enjoy a slow pace of life. Commuting is a major source of stress for most North Americans and eliminating that from your life can work wonders for your mental health.
There is also generally more of a community in areas like this. You are far more likely to know your neighbors than when you live in a large metropolis or a bedroom community filled with commuters and little social life within it.
Having a social circle that isn’t just your co-workers is also very beneficial to your mental well being. This does have an effect on your finances as well since you are less likely to spend money to fill the void that a lack of social time usually has on you.
Disadvantages of a low cost of living area
The most obvious disadvantage of living in a cheaper area is that salaries are generally lower. If you are moving there for a job then you may end up making less money. Now, this isn’t a huge disadvantage since having lower expenses always opens up the door to more savings. For instance, maybe your job doesn’t pay as much as you were making before, but taking on a side hustle will help you go beyond what you would be able to save if you had stayed put.
Also, you may already be working remotely and have the same salary as before but now you don’t need to live close to where you work. This new age of remote working may help a lot of people end up retiring early since they are free to move somewhere less urban.
Another disadvantage could be distance from family and old friends. Usually a low cost of living area is far from a major urban center. Even if you stay within your same state, you likely will be moving away from the social circle that you had before. Seeing people is going to prove to be more difficult.
How to find the right low cost of living area
These days, thanks to high speed internet, you can pretty much choose anywhere in the world that you would like to live. Whatever it is that you are looking for in life can be found and you simply move there.
For instance, if you are able to work remotely or have an online business, then you can find a cheap area to live that also offers plenty to do with your interests. If you love nature, then setting up stakes in Montana is not only possible but a great idea so you can take advantage of all the outdoors activities that keep you happy.
If you like to travel, then finding an out of the way house in a place in Southeast Asia will provide you with some good, cheap travel opportunities.
If you are looking to downsize, then you could find a place off grid to build your own tiny house and end up living rent and mortgage free while also reducing your carbon footprint. Again, as long as you have an internet connection then you are free to go just about anywhere. You don’t even have to go off grid if you are just looking to live more cheaply.
Conclusion
The world is your oyster and if you really want to retire early then you can find the perfect place to settle down and enjoy it. When you’re ready to start putting some serious money aside for early retirement, then there is the ideal location waiting for you!