Cost of Living and State Taxes (Important but overlooked)

Question

I feel that a number of people when considering where they want to work and where they attend school tend to overlook these factors. It can tend to be especially true for international applicants who are not as familiar with this country as domestic students.

I did some comparisons using the following sites,

To calculate cost of living difference
https://swz.salary.com/CostOfLivingWizar ... Start.aspx

To calculate tax difference between states on your paycheck
https://www.paycheckcity.com/calculator/ ... lator.html

For the purposes of my comparisons I used New York City and Houston.

I used a standard base salary of $100,000

As you can see the cost of living difference is staggering, showing how much more you would have to be paid to make a viable living in NYC as you search for that prime job in finance. What people are not aware of to a degree, is that a very large portion of finance jobs have trickled down to Texas over the last decade.

Now we come down to the state taxes

As you can see, Texas has no state income tax. This roughly comes out to an additional $10,000 a year in money that you get to keep compared to living in NYC.

While salaries will tend to be lower in Texas, they are still fairly high in comparisons to most places, and with some positions you'd be able to even get the same salary.

On top of all this you have to factor in the total cost of you education where you go. Dartmouth for example has you down for $170,000 for 2 years. Assuming you get that $100,000 job in NYC at Goldman, which after taxes would roughly only be $64,000, will still be quite the trek to get that paid off.

While attending a school like Texas A&M your total cost of school would be just under $70,000. Paying off $70,000 if you managed to get a similar paying job in Texas is much easier, especially considering the take home of $100,000 is roughly $73,000.

sanjuro9 · Answer

Very true. But, there are reasons people would still study and find a job in New York.

I live in Charlotte, home of Bank of America. A comparable job in JP Morgan and Bank of America will probably pay similar, if not same. Say 10k less. The cost of living in North Carolina is much less than NYC suburbs.

But, even then if would like to pursue a career in IB, Finance, NYC is better bet for your career. There are opportunities to network, learn and move across roles and organizations that you would never find in Charlotte, Atlanta or Austin.

If you would just like to have job and retire with that job, then living down south in Atlanta, Charlotte makes much more sense.

losttraveler · Answer

Don't forget bonus checks... you're overlooking that

Apply 50% of your year-end bonus to your tuition debt and you will watch it dissolve pretty quickly

Rommeliv · Answer

Just how many of those jobs are around anymore? Not only that, but the bonuses have been shrinking significantly. The number of IB jobs which are available is much less than it used to be, and coupled with even more students to vie for those, it makes it even more difficult to break into that field.

riverripper · Answer

I moved from a low cost of living area to a high cost area recently due to a promotion. Despite a large raise, I am still probably worse off financially than had I stayed at the lower level with lower pay. Long term the opportunities are much better by doing so.

However, it sucks seeing that you are paying close to $300 in state taxes every paycheck after not paying any.

However, it sucks seeing that you are paying close to $300 in state taxes every paycheck after not paying any.

Cost of Living and State Taxes (Important but overlooked)

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