I did some calculations this week that perhaps nobody but myself will find interesting. I am not sure exactly what my results say, only that they say something.
What I discovered is that the cost of living in a depressed market like Phoenix is not much less than living in the bustling community that is inner Portland. I hear people say things all the time like, "I would love to live in Portland, but the cost of living is so high." Turns out if you are willing to think outside the box a bit, it's not any more than living anywhere else.
How it Started
I was reading a financial planning blog about how to save money in various areas of life. Under the title "Housing" I found an interesting paragraph that stated something about how it may be wise to live in an area like Phoenix where the cost of living is generally much lower than that of the rest of the country because housing is cheap. Having lived in the Phoenix area for nearly five years, this little fact stuck with me and I started mulling it over in my mind.Our life in Portland is completely different from what we enjoyed in Phoenix so it's hard to compare. It is literally comparing apples to oranges. However, one day as I was riding my bike with the kids I began thinking over some general numbers and I thought, "What is the cost of living in Portland compared to that of Phoenix?" I couldn't wait to get back to my spreadsheets at home to find out.
So I did some calculations and honestly, the results shocked the pants right off me. I have converted all figures into 2014 dollars to make for a more fair comparison. Because inflation.
What is Included
I wanted to compare what our monthly living expenses have been in the last three places we have lived. What I included are all the expenses of just living in a place and getting around that place.For housing I have included the following: mortgage or rent, HOA expenses, home repairs and maintenance (including the lawn and garden), all utilities (water, sewer, trash, electricity, internet, and gas).
For transportation I have included the following: car repairs and maintenance, gas, car rental fees, car insurance, car registration, bike repairs and maintenance, bus expenses.
What is NOT Included
I did not include the initial cost of buying a car, a bike, or a house. I was interested solely in the month-to-month expenses it takes to live in a place. I also didn't include expenses such as food or healthcare, even though these expenses have changed because of our location. For example, we eat out a lot more now that we live in Portland because PORTLAND. And food trucks. And doughnuts. But the move to Portland also brought a new job for Ben that actually pays for our healthcare, so we are saving big time there. And Ben is getting paid a higher wage now than he was in Phoenix, but that's another factor I didn't include in my calculations.The Results
We lived in Goodyear, a suburb of Phoenix, for just of over three years. We owned a home. We had one car that we used sparingly since Ben worked from home at the time. On average, we spent $1,723 per month on living and getting around there. This shocked me since our mortgage was less than $1,000 per month.In 2013 we moved to Aloha, a suburb of Portland. We rented a home. We didn't own a car anymore, so we got bikes and learned to ride the bus. We had very kind friends who let us borrow their car often, and we always refilled the gas we used. If we were going far we rented a car through Getaround. On average, we spent $1,790 per month on living and getting around there. Our rent was $1,195 per month.
In 2014 we decided we wanted to try our hand at city living. We downsized to a small apartment and Ben started commuting by bike to work. In the six months we have lived here we have spent an average of $1,785 per month on living and getting around. Shocking, since our rent makes up a huge portion of that figure, coming in at $1,495 per month.
Summary
Aloha vs. Portland - The fact that we are spending nominally the same amount of money living in inner Portland as we did in Aloha blows my mind. Our rent is $300 more now than it used to be, but we are saving that much in utilities (small apartment vs. house), gas for cars, and bus fare (Ben alone spent nearly $100 per month on bus fare in Aloha because of his commute). Added to this is that our quality of life is so much better in Portland than it was in Aloha. We are close to everything, we walk and bike mostly everywhere, and we have a community here that just doesn't exist in the suburbs. Don't get me wrong, we loved our friends and neighbors in Aloha and I miss our backyard something fierce, but overall, our life is much simpler in Portland. We have a lot more time to be together as a family and there is so much more to do and to see and to experience that it is well worth living in a small space.Phoenix vs. Portland - Again, it blew me away how much we were spending in Phoenix on all the secondary expenses. Sure, our mortgage was below $1,000, but our utilities were through the roof. Cooling down a big house and watering a big lawn definitely cost a pretty penny! And of course we had to pay for all our own home repairs and updates. We were spending on average around $300 per month on our car (this never included a car payment), which I suspect is much less than most people in that area spend. Ben didn't commute to a job and we only ever had one car to insure and repair. And yes, we did make a few bucks when we sold our house, so it was a decent investment. But living in the exurbs was difficult for a lot of reasons and I'm not sure we'll ever choose that experience again (though we did love our friends there and miss them terribly still).
Again, I realize that I am comparing apples to oranges, but these are the apples and oranges we have actually experienced! If we wanted a big house in Portland and a car it would be far beyond what we could afford at this point, whereas we could easily afford those things in Phoenix again. Likewise, living in a small apartment without a car in Phoenix would be downright ludicrous. Even if Phoenix had the infrastructure to support a carfree lifestyle (which it doesn't), there are still at least four months out of the year when it is hotter than hell and trying to walk or ride a bike in that weather would be virtually impossible. I understand the limitations of my calculations here :)
What I would like to drive home is that things aren't always as simple as some people make them out to be. Saying that you would save money living in a place like Phoenix (or Las Vegas or Miami) where the cost of living is supposed to be low may not actually save you anything. And thinking that a place like Portland (or Seattle or Chicago) is too expensive for you only says that maybe you need to think about alternative ways to live. Overall, I think it is more important to look at a place and consider the quality of the life you will have there, and then find a way to make it fit into your budget.
I have totally nerded out tonight. Thanks for reading :)
