Monday, March 8, 2010

Cheap Locations Can Be Expensive

When choosing a community to live, people usually look at the prices for housing and food in order to determine if there is a high cost of living there. There are a few different aspects that you might not realize that also affect whether living in a certain location is financially sound or not.

The Boonies
Living in a place in the middle of nowhere can usually save you lots of money on rent. Since people aren't usually rushing out to rent or buy homes in the boondocks, the laws of supply and demand usually will lower the price of housing there.
You usually can get larger homes for less money and pay less property tax by living in a "far out" location. By living far out and having more land, you can be more self sufficient, like growing your own food on your own property.
However, living far from "civilization" can cost more because of a few reasons:

High Cost, Low Quality
Usually "the boonies" have few amenities, and the few that they have generally have little competition. This usually makes whatever amenities there are, overpriced and of a worse quality. People living in the middle of nowhere can expect worse service for more money. Examples of this are medical care, grocery shopping, clothing shopping, etc.
I live in "the sticks" and until recently, there wasn't much competition when it came to groceries. Our one little mom and pop's grocery store would employ some slightly sneaky tactics in addition to offering substandard merchandise at twice (or three times even) the price of other stores. They figured they could sell half spoiled dairy products, freezer burnt meat, buggy legumes, wilted vegetables, etc... because they were the only local store and knew we had no where else to shop easily. They got away with their overpriced madness because there was no place else to shop.
By living far from "the city", you may have to settle for paying high prices for low quality merchandise.
Alternatively, you may chose to travel farther to buy better quality for lower prices, but then you need to pay more for transportation to get to those cheaper places. Which brings me to another point:

Transportation Costs-
Transportation is usually difficult to come by, and expensive, when you're looking at the boondocks. It is expensive to travel to more populated areas. Gasoline for cars is expensive as well as the wear and tear on the vehicle from traveling great distances.
One usually can't get by without a car when living out yonder, and owning a car adds on a whole bevy of vehicle related expenses, such as maintenance, insurance, parking, and tolls in addition to the initial cost of the car and regular usage of gasoline.
If one lives in the middle of  nowhere with no car, usually there is no direct (or even remotely direct) public transportation, so he need to pay much more and spend hours traveling with all the transfers required to get from Point A to Point B. Direct transportation from one place to another via taxi is also quite expensive.
One needs to factor in the cost of transportation when deciding if it is financially wise to settle in remote locations.

The Job Market
"Supply and Demand" is one of the golden rules of economics. When there is a great demand for something, prices will either go up or go down, depending on the case. When it comes to amenities, the lack of supply and great demand allows shop keepers to raise their prices while still keeping their customers. However, when it comes to jobs in far out locations, salaries are usually lower.
There usually are many people vying for the few jobs available in the hinterlands (all those people who are either unable or unwilling to travel further for work). Because of this, business owners know that they can lower salaries and people would  still take them up on the offer of employment. Because of this, it usually is not worth it to work in these far out locations. However, to travel to these distant jobs costs more, both in time and transportation costs.

Poor Communities
Aside for the boondocks, one can also save money by living in a poorer community. I personally live in a poor community and there are plenty of pluses and minuses to living in this type of place.

Keeping Down with the Joneses
I know, I know, the real phrase is "Keeping up with the Joneses". But bear with me anyhow.
In many places I've lived, there's been peer pressure to keep up with the latest fads and the latest trends. If you know people will snub you if you don't have that latest Louis Vuitton bag or if you're still driving your Subaru instead of the latest model Acura, its hard to keep yourself from spending money on these status items.
There are always those special people who are unwilling to kowtow to peer pressure and will march to the beat of their own drummer. These people could care less if others think badly of them for refusing to buy the latest gadget; they know that what is truly important in life are not the things that can be bought with plastic, cash, or payment plans.
However strongly parents feel about not letting the Joneses dictate where their money should be spent, it would be callous for parents to decide that their children may never keep up with the Joneses, even if the child's little heart longs to conform and be part of the "in crowd".
If a parent bends to their child's wishes, parents will start buying their child the latest toy, and then more expensive fads, such as electronics. It escalates until the parents either refuse to let the child "fit in" or he agrees to fund an exorbitant party along with the standard Rolls Royce keys for their child's sixteenth.
If a parent refuses to bend, they may be dooming their offspring to a childhood filled with torment, loneliness, and a longing to fit in.
The solution? Move to a poorer community.
At a recent get together in my community, some moms and I were discussing the special aspects of our little town. They proclaimed that there was no pressure to "Keep up with the Joneses" here. I corrected them- in our community, there is peer pressure, of sorts. Pressure to be poor. If someone is going to be living a ritzy lifestyle or spend money on frivolities, they keep it to themselves; luxurious spending is looked down upon in our community. Materialism is out of style where I live. We swap tales of our latest charity shop finds, boast about how cheaply we got our newest things, and lend a supportive shoulder to those who are having a harder time financially.
By living among people who put other values above material desires, my family and many of the others here are able to save lots of money, because we don't feel pressurized to live above our means.

No Money to Spend, No Money to Earn
The downside of living among people with no money is, as the header implies, that these other people have no money to spend. When your neighbors are on a tight budget, its not easy for you to earn money among locals. Home based businesses are the pits.
Last night I hosted a Tupperware party in my home. Few people came and only 2 people bought by closing time, as they felt bad that nothing had been sold. I felt bad for the Tupperware manager, but it was to be expected. I live in a poor community; if people here aren't willing to part with their cash because they have none spare, it is hard for one to make even a decent income.
My sister in law and I both run playgroups for children of the same age. We run the same type of program with the same amenities. Her playgroup is 4 days a week and mine is six. However, because her playgroup is in her more affluent neighborhood and mine is in my poorer community, I make 75% of what she makes, working 150% of the time that she does.
I cannot charge any more for my services as I charge the going rate in my community. In a place with no money, it is foolish to charge  more than anyone else. And hence I work hard for little pay.
This goes for all businesses in poorer communities. When there is no money for people to spend, there's no money for people to earn.

Troubled Families
I do not want to elaborate much on this topic, but it needed mentioning. Poorer communities often attract some undesirable elements and unsavory characters. Fortunately there are not too many of them in my locale, but there have been a few scary stories about highly troublesome and dangerous happenings. Not to worry, the police and CPS have already gotten involved, but it does need mentioning that you may get a higher percentage of low class individuals if you live in a poorer area.

Sales, Benefits Geared Towards Poor People
Another benefit of living in a place with many non affluent families is that there often are more programs available to help out the communities than there are in richer places.
In my community there are:
Second hand clothing sales
Specialty discount sales for meat, poultry, fish and eggs
Specialty discount sales for dry goods
Reduced fares for busing
Very good and frequent public transportation- the local government tries to help us out because they realize most people here cannot afford to own a private vehicle.
Cheaper schooling
Lending libraries for everything under the sun- from plastic chairs/tables to nebulizers to mattresses to books, etc... Anything you need short term, practically, is available from various lending libraries, so you don't need to lay out money for something you only need temporarily.
Food pantries.
The list goes on.

When deciding whether it is worth your while to live in a cheaper place, take into account the pluses and minuses of living in cheaper communities and see if it really does work out to be cheaper in the long run.

Do you live in a cheaper community or a more expensive community? What benefits and issues have I forgotten to add to my list?


  1. I chose to give up vacations and other splurges to live in a good area because of schools and safety. That did limit options for low cost child care and I do have to have a car but I limit our grocery spending and we don't have cable. We do have internet for son's school work. I work OT when I can and stock up on what we can during that time. I have a lot of hand me down clothes and by for my son on clearance.

  2. We retired to my husband's old hometown in Eastern Tn. The area is poor but the people are so nice and everyone helps each other. We no longer worry about having an old car because everyone has old cars. We bought a 114 year old house that had been completely renovated for less than a third that would cost us in the city. The county has great things for the seniors. We are close to healthcare , the store and there is a new Walmart 12 miles away instead of 32 miles . There are no fast food and to eat out you do have to go 32 miles. The upside of this is that we buy groceries once a month and make a grand day of it ,some times we even go to Micky D's. We appreciate every trip now instead of taking it for granted. I have a large garden that this year we helped 3 families with vegetables plus we filled our freezer. God has really Blessed us. He took a negative and made it the best thing that ever happened to us.


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