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Starter City

April 9, 2008

Have you ever heard of a starter city?  Much like a starter house, it is not your dream city, but a city you can start out in before you can get to where you really want to be.

I am interested in the concept because I inadvertently picked a job in a starter city before moving to Los Angeles.   After loving life in a major world city for six months on study abroad, I settled into my first job in a small city (about 130,000) in the Midwest.   My reasons for doing so were personal: driving distance to my family, reasonably close to the boyfriend, and I already had friends there from my internship. However, there were many positive financial side effects.

Benefits of my starter city

  • Very low cost of living. For $575 you could get a nice one bedroom apartment. If you wanted roommates, you could get by on $300-$400 a month rent.  People my age rented 2 bedroom apartments by themselves and used the spare room as an office, and others bought houses straight away. Salaries are slightly lower, but it certainly isn’t directly proportional to cost of living. I could live better there than I can here, even though my salary is higher here. This allowed me to pay off all of my private student loans, and boost up savings from about -$500 to almost $10k. Gas was cheaper, insurance was cheaper, and even the movie theaters were cheaper ($4.25 during certain hours!)
  • My company was much smaller (though still very much a corporate environment).   There were tons of opportunities for a young employee to jump in and get good assignments, and the competition was less stiff. I could have easily moved into management (eventually) and became a key member of my team and a top performer in just over a year and a half. I got a lot of great experience.
  • The company had really good benefits in order to entice their young employees to stick around. They knew they were in a less desirable location. I had a full 5 more days of vacation at my last job and the bonuses were more generous.
  • Much less traffic and much closer to work. I could easily get by on one tank of gas a month if I didn’t go out of town.
  • Less fashion/image conscious. It was much cheaper to be one of the best dressed in the office!
  • Lower cost of living = lower salary, which makes it easier to qualify for certain tax benefits that are based on MAGI (Roth IRA, student loan interest). I’m in no danger of disqualifying myself for a Roth, but I may not be able to claim the student loan interest deduction this year.  Even though I have considerably less money to spend on fun stuff.
  • Clean air. Well come on, I had to say it. I live in L.A.

Disadvantages of my starter city

  • Some may argue against this, but there are reasons for it being cheap: no one wants to live there! The weather was bad (I had to scrape ice off my car window regularly. The culture was lacking, even though they tried. Some people argue that there was more nature around… but while it has some nice parks, there are no mountains, no lakes and certainly no oceans.  Despite air quality issues, there is much better nature/outdoors things here.  [This isn’t true for all less expensive cities, just the particular one I was in.]
  • Better for families than young people. Most people were married, even a good percentage of those who were my age. Besides going out to the bars, there wasn’t a lot of entertainment for 2osomethings (though some argue there is if you are creative about it).  I have nothing against bars and I had some good times at house parties or tailgating at the college games, but… there just wasn’t that many options.
  • Since salary was a little lower, any 401k matching was also lower since it is percentage based. However, the difference is less than 1k each year.
  • If my company went under, job prospects were slim.

My move to L.A. was also primarily for personal reasons, at least the timing and the location.  I always intended to move FROM my starter city to somewhere more to my liking, but I really should have stayed one more year to get the most out of it. My savings could have been increased further, and more importantly, I would have been able to be promoted into the next pay grade for my new job (I fell short on experience).

I’m obviously coming out behind financially here, though I’m not struggling. Rent is the biggest increase, but gas and insurance aren’t insignificant either. Still, there is much to be said for loving where you live, especially when you are young.  Personally, I love it here and while my former city was nice, it wasn’t for me.  Despite the financial benefits.  There are a ton of factors that go into a person’s choice of where they settle, and money often turns out to be a pretty small piece of the pie.

7 Comments leave one →
  1. April 9, 2008 10:34 am

    One thing stuck out from what you listed, and that is gas. ONE TANK A MONTH?!! That’s incredible! Right now I use almost 1 tank a week, just slightly under 4 tanks a month. (I am in a city though…) So, out of curiosity, how many miles did you drive to work and back each day?

    I have heard about the “starter city” idea, but never thought much about it. I’d already made up my mind before I was even close to graduating, plus living with my parents for the time being helps to offset those extra expenses. Other than housing, traffic is the only thing that really gets to me.

  2. April 9, 2008 1:00 pm

    I’ve never heard of this concept before… but I like it!

    I’ve actually usually heard it the other way around. Young people congregate in expensive cities, then get married and have kids and move to more rural areas (sometimes they’re cheaper, sometimes they’re Westchester).

    Working in a starter city would be great though, if you could. Or, starting in a starter city, going to a big, expensive city, and then settling down in a place with a lower cost of living, once you’re at the point that you would rather spend time with kids/spouse than at bars and concerts.

  3. April 9, 2008 3:40 pm

    Interesting article. They put Austin as a starter city and I’ve been here seven years. I guess there’s a certain type who prefers to stay perpetually unambitious. Actually the city I want to “move up” to is Bangalore, which as I understand is now more expensive than here (at least, real estate).

  4. April 9, 2008 5:08 pm

    Nice article. Having grown up in Chicago and recently moved to LA, I completely understand how where you live can be one of the biggest, if not biggest, financial decisions for a young person entering the workforce. Cost of living takes a huge bite out of savings and I’m feeling it more moving from one expensive metro area to another super-priced area.

    But as you said, life is about more than just what you put away in savings. LA is not for everyone, but I’m glad I made the decision to move and I haven’t looked back.

  5. April 15, 2008 9:11 am

    @QL girl – Sorry it took me so long to respond, your comment was caught in spam filter!

    I lived maybe 1.4 miles from work (I could have biked), and often went home for lunch! There also was no traffic, no lights (two stop signs?), on those 1.4 miles. Most of my grocery shopping was done within 2 miles of my apartment as well. To drive across the whole city took at maximum 15 minutes.

    Though I often went out of town on weekends, particularly when I was in a LD relationship. If I didn’t, there was no problem getting by on one tank. Now I live 4 miles from work (but there is more traffic and lights) but spend at least a couple hours a week fighting traffic to get to my bf’s apartment (8 miles each way), so I use 3/4 tank a week or so.

  6. Bonnie permalink
    April 22, 2008 10:29 am

    StackingPennies–was your starter city by any chance St. Louis? 🙂 Seemed like it could be from the description. I’m from Memphis originally and have lived in St. Louis for 7 years. STL is bigger than Memphis, if you can believe it, but I am DEFINITELY ready for a much larger city–Chicago, Seattle, LA, maybe even NYC. Living here has allowed me to live cheaply and make big strides on my debt. (I pay $445/month for a nice one-bdrm.) Once I am debt-free and have more substantial savings, I’ll be looking to relocate. I think another advantage to the starter city is that he lets you get used to the idea of living away from your home (and your family and the friends you’ve known for years) before you make a big jump. The culture shock is less, I think.

  7. SJean permalink*
    April 22, 2008 11:11 am

    @Bonnie – No it wasn’t st louis, but i think a city similar to that! I lived away from home for several extended periods before (9 months in same starter city as intern, 6 months abroad), but that is true, it was a lot less different than moving direct from college to a big city

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