Lately I’ve been reevaluating my budget and spending patterns. Through blogging and reading about personal finance I’ve learned that I’m doing it all wrong! Apparently I shouldn’t be spending more than 30% on my housing needs, but that’s a hard figure to find in the big city.

Take for instance Los Angeles (I’ll start with my home city). Thirty percent of our take-home (I’m not using our gross because it’s an inflated figure) would mean that our rent should be no more than $1,800 a month. Unfortunately, finding a two-bedroom apartment in a decent section of the city for that price is tough. Now, it’s not impossible. It just means I’d have to downgrade to a smaller place in a less desirable area.

Alright, soย  maybe I’m not doing all I can to make these tough changes, but bear with me here.

New York City is another story. Theoretically my salary should be higher in such a pricey city, but that’s not always the case. So sticking with the same income level, $1,800 a month would get me a tiny studio apartment; not at all comparable to what I’m living in now (so I guess I shouldn’t complain, right?) Literally a 500 sq foot apartment in the big apple is equivalent in price to a 1,100 sq foot apartment in LA – wow, I guess New Yorkers are paying a high price for their four seasons. ๐Ÿ˜‰

The sister city to the north of Los Angeles, San Francisco, is another quagmire. Using I found a few suspicious rentals that were flagged as being below the market price. At my income level, I’m completely priced out of the city. I guess Oakland would have to do if I lived in the bay area.

So what’s a big city person on a small-ish budget to do?

The obvious thing to do would be to move out of the uber-expensive city and find a comparable job somewhere more affordable. This is something I’ve been rolling around in my head lately. Yet, for the city slickers who just can’t give up their corner Starbucks, city nightlife, or the hustle and bustle of a city that never sleeps, here are a few ideas from someone who lives in one of these cities (but just can’t follow their own advice!):

  • Downsize – Smaller in a better area beats out bigger in a crummy neighborhood. Been there, done that.
  • Rent out a room – If you must go bigger and go nicer, rent out a room to help afford the rent/mortgage (purchasing in an expensive city is in a category of it’s own, but this rule still applies)
  • Get a roommate – Very similar to the above tip, but in this case you can split the rent. Just be sure it’s someone who you can comfortably share the whole place withย  – it’s uncomfortable when one person feels like they’re excluded to the bedroom when they’re paying half the rent! Oh, that brings back bad memories.
  • Make more money – Pick up a side hustle, find a seasonal job, or ask for a raise. ๐Ÿ˜‰

Have you lived in a big, expensive city? How did you find ways to reduce your housing costs? **Those who live in mommy and daddy’s old house need not answer this question. ๐Ÿ˜‰


  1. Money Beagle Reply

    In your example, I think having a roommate or renting a room is the best option, combining your desire to live where you want with keeping your costs in check.

  2. When my wife lived in New York City (circa. 1968), she had 3 roommates. We live in Los Angeles and you need to earn more to live reasonably. The going rate for wages and salaries is higher because of the higher cost of living. You have to make choices with all your expenses.

    • @Krantcents – That’s true – there’s no point living in an expensive city on a meager salary, though lots of people do it. Yes, the salary is higher here. But when I compare it to lower cost cities, the salary really isn’t that much higher or at least doesn’t cover the difference in cost of living.

  3. Barbara Friedberg Reply

    Little House, As we were starting out we made a decision to live in a low cost of living area to reduce our financial stress. This decision enabled us save and grow our wealth when we were younger and have more flexibility as we grew along in years.

    • @Barbara – I wish we had stuck to lower cost living long ago. I’m not sure when we’re going to make the change, but probably in the next year.

  4. I live in Ottawa, Ontario Canada. This too is a pretty expesnsive place to live. My husband and I bought a home with some property outside the city so that we could afford it. We also bought a house that was older and we could update it as we have the money saved up. We have run into a few surprise expenses…the heat source is propane gas (natural gas lines don’t run out our way) which is super expensive. We have updated the woodstove to offset some of this expense. My mom also has the granny suite which helps offset costs too.

  5. nicoleandmaggie Reply

    In graduate school in Boston, one of my classmates who is an expert on housing said that the 30% rule doesn’t apply to expensive cities. We were spending 50% of our income on housing, and took it out of other areas, like transportation and entertainment.

    • @Nicole and Maggie – sometimes it feels like I am spending about 50% on housing. Unfortunately I’m pretty sure the rest of my expenses aren’t reduced!

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