
Ask HN: Financial independence in high cost of living city? - icki
Hi HN,<p>I&#x27;m a recent grad with about 2 years of professional experience, currently working as a software developer. Even though I think my salary is higher than average for where I work, I am still struggling to come to terms with the high cost of living in my city.<p>The average cost of a detached home in Toronto has just passed $1M Canadian dollars (~$820k US). Even if I were to commit to a commuter lifestyle and live outside the city, a 20% down payment could require upwards of $100,000. Some say that a recession in the housing market is inevitable, but with so much foreign investment and insatiable demand for detached homes, I just find it hard to believe. Worst of all, with real estate prices having climbed ~10% each year for the past few years (faster than the average salary, and at a higher rate than a typical mortgage), real estate ownership is getting further and further out of reach.<p>When I look southward, I see such vibrant cities in the US where developers are getting paid more, and the cost of living (and real estate ownership) are much lower.<p>I fear that I am coming off sounding as entitled, as many of my non-techie friends are struggling to find jobs relevant to their studies, while I am in a situation where I am quickly paying off my student loans and trying to increase my savings. I&#x27;m still young, and perhaps I am just asking for too much. I would very much like to spend more time working on my own projects, and would like to one day do that full-time. However, I can&#x27;t imagine that happening without a large safety net (not having to worry about a mortgage, or rent).<p>I guess I haven&#x27;t really asked a question yet ... I was just hoping to discuss this topic and hear your stories.
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hwstar
I'm older (54), live in San Diego, CA. San Diego is also high cost with a 440K
median house price.

I was employed as an electrical hardware engineer for a computer peripherals
company until November 2014. The job market for electrical engineers in San
Diego is currently in an awful state.

While I was employed, I managed to buy a vacation home which I converted to a
rental property after I became unemployed. I also was able to build a large
nest egg of investments and cash. I am using these to live off of at the
moment.

I am Financially Independent to the point where I can pay for basic living
costs, but not for fancy stuff like eating out or vacations.

When I became unemployed, I updated my home engineering lab with a new test
equipment by selling items on Ebay which I no longer needed. I currently spend
a lot of my time developing open source hardware,firmware, and software and
upload my projects to Github.

If the job market in San Diego improves, I would consider going back to work,
but it would have to be on my terms. I have enjoyed not having to commute to
work every weekday. Any new job would have allow 80 to 100% telecommuting.

Financial independence can be achieved, but it requires sacrifice and
dedication. For details on how to do this I recommend visiting the Mr. Money
Mustache blog:
[http://www.mrmoneymustache.com](http://www.mrmoneymustache.com) for ideas and
support.

~~~
icki
Thanks for the reply. I'm saddened to hear about the tough job market you're
facing, but I'm happy to hear about your garage hacking :) I personally wish
you the best of luck. Your GitHub repo's are neat!

San Diego seems like a great city, with much nicer weather than Toronto - I've
heard a lot of nice things about it. While the housing prices are equally
high, it seems like tech salaries are much higher there, compared to Toronto.

I would like to one day be in your situation, but I feel like starting an
independent adult life is harder than it used to be (mainly from accumulating
student debt) for graduates in previous generations.

Do you think you could elaborate a little more about your early career?

Thanks so much!

~~~
hwstar
I have been passionate about electronics since I was 6 years old.

In my senior year in high school, I landed a part time job as an electronics
technician. When I graduated, I worked full time for that company for 10 years
as a self-taught electrical engineer. I started working on my college degree
(Computer Science). I was able to take advantage of tuition reimbursement
offered by the company to pay for college. Student loans were not really
needed back then as college costs were reasonable. I bought my first house.

I switched companies in 1989 and worked for almost 26 years as an Electrical
Engineer. I finished my Bachelor's Degree in Computer Science at the second
company using tuition reimbursement, and my own funds. I really wanted to do a
Bachelor's in Electrical Engineering, but there were not any evening classes
available for EE at the time. Sold my first house, bought my second house and
my vacation home. Paid off my vacation home, refinanced my first home several
times.

I think the main things which got me to where I am today are the following:

1\. Think of debt as slavery. It should be paid off as quickly as possible.
2\. Have as few children as possible. (I have none). 3\. Don't spend
frivolously. Live way before your means. 4\. Try to do as many home and car
repairs as you can yourself. 5\. Make sure you are adequately insured. In the
US, you need medical insurance to cover medical costs and liability insurance
to protect from lawsuits. As your assets grow, you need to adjust your
liability insurance accordingly. 6\. Invest regularly and often.

~~~
icki
Thanks again for the reply. It sounds like you've always maintained some level
of financial independence, even at a young age, which is awesome.

Have you ever wanted to work on your own startups? It seems like you have some
personal projects - why work a traditional career?

If you could do it all over again, would you do anything differently?

~~~
hwstar
Things I would have done differently:

1\. I should have started earlier. I didn't start working towards financial
independence till my second job. 2\. I should have bought more rental
properties.

Regarding startups:

For hardware products, startups involve a lot of effort. You usually have
regulatory things to deal with and that is a big burden. Also the capital
requirements are more than a pure software startup.

------
jasonkester
It doesn't sound like you're looking for financial independence. It sounds
more like you're looking to buy all the same things that everybody else buys
and otherwise act like all the other adults you see, but be able to do so
_now_ with your entry level salary.

But that's what _everybody_ wants. And it's why people end up living beyond
their means.

If you want actual financial independence, that's pretty easy to pull off.
Even in a place with million dollar houses. Just convince yourself that you
don't need a million dollar house. Or a nice car. Or your own place without
roomates. All you really need is to pay that debt down to zero over the next
year or so then find an equilibrium where you can live on about a quarter of
your take home pay.

Then you're done.

At a developer salary (even a canadian developer salary), that will start you
down a path of saving a _lot_ of money in a hurry. Enough that were you to
lose your job entirely five years down the road you could happily coast along
another five years before really needing to worry about money.

That's what you're shooting for. Notice that at no time do you do any of that
coasting in a million dollar house. But if you keep at it, you'll eventually
get to a place where you can buy that place in cash.

------
a3n
Nothing wrong with wanting a detached home. Wanting one where it's too
expensive, or getting one far away because it's affordable while continuing to
work where it's expensive, probably requires a rethink.

Right now you're building experience, knowledge and savings/investments, so
you should probably focus on that. So live as cheap as practical where you
are.

At some point the curves will cross. If you still want a detached house, and
you haven't become rich relative to where you work, then move to somewhere
that you can work and live cheaply. Then buy your house.

~~~
icki
This is definitely the pragmatic choice, and it's what I keep telling myself.
Thanks for reverberating the message :)

If I may ask, how do you feel about your personal situation right now? Are you
living in an expensive city?

~~~
a3n
Denver's not so bad. It would be a great choice after you've done whatever
you're doing where you are now, there's a reasonable amount of tech work.
Lot's of telecom (but that's not all), something to do with being at 105 west
I've been told. Boulder is nearby, and lots of tech jobs there. Also the
skiing is great, and only when you want to. :)

Ah, here we go, "Denver's west-central geographic location in the Mountain
Time Zone (UTC−7) also benefits the telecommunications industry by allowing
communication with both North American coasts, South America, Europe, and Asia
in the same business day. Denver's location on the 105th meridian at over one
mile (1.6 km) in elevation also enables it to be the largest city in the U.S.
to offer a "one-bounce" real-time satellite uplink to six continents in the
same business day. Qwest Communications, Dish Network Corporation, Starz-
Encore, DIRECTV, and Comcast are a few of the many telecommunications
companies with operations in the Denver area."
[https://en.wikipedia.org/wiki/Denver](https://en.wikipedia.org/wiki/Denver)

EDIT: s/east/west/

------
andkon
I'm a startup founder living in Toronto, and thought I'd post in counterpoint.
I live in a small apartment, and pay myself using any money I can cobble
together from grants, contracting, investment, etc. I have no interest in
buying a house, and I'm actually pretty sure that committing to that would be
counterproductive if you're founding your own startup. If you think it's
necessary to have a paid-off house before you start something, then you likely
don't fit the risk profile of someone who would successfully be able to do so.
No first time startup founder I know owns their own house, and most pay their
own rent, and most have jumped off to do their own thing because they simply
cannot wait any longer and hate working on anyone else's stuff.

On the other hand, you're right about developer salaries being low here,
comparatively. It's partly a function of the startups that exist here, and of
Canadian cultural tendencies to just sit and simmer. If engineers are unlikely
to jump ship, it's likely going to mean that salaries are lower than they
could be.

So if you just want to get paid more, interview at a bunch of places and get
higher offers, then tell your boss. If you want to be a startup founder, then
quit your job when you've got six months' runway saved up, incorporate your
company in London, ON, and do your best to get NRC IRAP and OCE SmartStart,
and expect the rest to work out.

~~~
icki
Hey thanks for your reply! How do you like being a T.O. startup founder?

I'm not 100% committed to buying a house, but I don't have any runway to start
out with my personal projects full time. What I meant to say was that I would
never want to be in a situation where I can't meet my financial obligations
(rent as a part of a longer-term lease, or mortgage payments). I am doing my
best to get out from under my student debt and build my runway/rainy day fund
as quickly as possible.

Do you think that low salaries might also be a function of brain drain? There
are a lot of tech workers in Canada on visas, and it might be because a lot of
Canadians leave the country to work in SFBA, NYC, Seattle, etc.

Could you point me to any resources for information about starting companies
in Ontario, and receiving grants? You seem like you've got quite a bit of
know-how :)

~~~
andkon
No problem! So far it's decent, but for the stuff I like (consumer-facing
businesses) it's definitely nothing like the Bay. There's a lot less money for
early-stage startups, there's a lot more government money (which is good and
bad), and there's a more risk-aversion on behalf of founders and investors
alike. Here's an instructive read: [https://medium.com/toronto-
tech/toronto-d0ea5da434e](https://medium.com/toronto-tech/toronto-d0ea5da434e)

I was fortunate enough to not have student debt when I graduated, so that's
one thing that made my leap easier. Agreed, though - I don't wanna go broke
either :)

I think braindrain probably plays a role... But ultimately, the issue is that
there aren't even enough (successful) startups in the province to employ all
those grads if they stayed.

Actually helpful resources are scarce but we could grab coffee or skype if you
wanna talk about your options! My email link is in my profile. It's always
best to find someone who has done exactly what you intend to do, so just keep
talking with folks.

-Andrew

