Why Some Who Cut Expenses to the Bone Still Can’t Make Ends Meet

The other day I was fueling up my car at the local gas station. While I was waiting for the tank to fill, I thought it would be a good idea to get rid of the remains of a ridiculously large bug that was splattered on the windshield.

Unfortunately, the only squeegee I could find was at another pump island that was occupied by a big ol’ cowboy who was filling up his pick-up truck. (Yes, there are a few cowboys in my neck of the woods.) So I walked over to him.

“Do you mind if I use the squeegee?” I said. (I almost ended the question with “partner,” but I figured that would be overdoing it.)

The rancher squinted and then, for a couple of uncomfortable seconds he just stared at me with his steely eyes. Uh oh, I thought. It suddenly crossed my mind that if this guy was in a bad mood and looking for a fight, it wouldn’t be long before that dang bug wasn’t the only thing plastered on my car windshield.

Thankfully, and much to my relief, the wrangler broke into a wry smile. “It’s a free country,” he said.

Well … He’s right about that. It is a free country.

Of course, that freedom extends to how we manage our personal finances too — which is why it almost always surprises me whenever I hear people making excuses for why they can’t make ends meet.

I don’t care how much money you’re earning; unless you’ve been struck by a catastrophic medical condition, are stuck in an extended period of unemployment, or blindsided by another unforeseeable event such as a gold-digging spouse who skips town with your life savings, there’s no reason why you shouldn’t be able to balance the bills every month.

Let’s face it, folks. The reason most people get into financial trouble is because they make lousy choices, and one of the biggest choices we all make that affects our standard of living is where we choose to live.

A few years ago, I explained why people who can’t survive on an income of $40,000 per year have nobody to blame but themselves — and one of the biggest reasons is because, well, it’s a free country.

Think about it; most of us have the freedom to live wherever we want — especially in the early stages of our adult life. And yet, there are countless numbers of people who insist on living in high-cost-of-living areas even though they lack the means to afford it. Why?

The most recent data from the United States Census Bureau Cost of Living Index reveals just how much disparity exists in the standard of living for the 325 largest metropolitan areas in America. The index measures relative price levels for consumer goods and services such as groceries, housing, utilities, transportation, and healthcare.

Here are the American metropolitan areas with the ten lowest and highest costs of living:

The nationwide average equals 100 and each score represents a percentage of the national average, so areas with lower scores are more affordable than those with higher scores.

As you can see, all things being equal, it’s approximately 2.6 times more expensive to live in Manhattan, New York, than Harlingen, Texas. That’s a significant differential — and it’s especially important to keep in mind if you’re, say, a twentysomething or somebody who is still trying to figure out where to put down your roots.

Yes, for many people, living in San Francisco (affordability index: 164.0), Lake Tahoe (146.4), Honolulu (165.7) or the Big Apple is a romantic notion — but it’s not the smartest idea if your household income can’t cover the bills. It’s just not.

When it comes to keeping your financial head above water, remember: where you live matters. It really does, folks.

The good news is, it’s a free country. So choose wisely.

Photo Credit: Phillip Taylor PT


  1. 1


    Not surprising to see New York, California and Hawaii on the most expensive list. Also not surprising to see Texas pop up on the most affordable list. By the way, wouldn’t Manhattan be 2.16 times more expensive rather than 2.6?

    • 2


      True, but three of TX’s affordable cities are border towns, four hours from any of its bigger cities. Not that they wouldn’t be awesome places to live in, but if you think you’re going to be spending your weekends in Dallas, that’s not the case.

    • 3

      Len Penzo says

      “Wouldn’t Manhattan be 2.16 times more expensive rather than 2.6?”

      I don’t think so, FMM. By my calculations it’s 2.61 times.

  2. 4


    I may be mistaken but I believe the residents of Harlingen, TX also hold the distinction of the lowest average credit score in the country. Interesting how that can be accomplished given the apparent low cost of living.

    • 5


      That would be McAllen. McAllen also showed up on national financial radars in recent years for being one of the most expensive cities when it comes to medical care.

      • 6

        Len Penzo says

        Interesting. According to the Census data, McAllen’s affordability index for healthcare is 97.9, which is slightly below the national average.

  3. 7


    “The reason most people get into financial trouble is because they make lousy choices.” I couldn’t agree more.

  4. 9


    My brother lives in San Jose. He doesn’t like it because the cost of living is so high, but that’s where the engineering jobs are.
    Our area is pretty expensive too, but it’s way cheaper than California.

    • 10

      Len Penzo says

      Speaking of California engineering jobs, Joe …

      When I graduated from college 25 years ago I had competing engineering job offers; one from an integrated circuit manufacturer in the Bay Area and the other from an aerospace company in Southern California. There was very little difference between the two offers, so initially it was a real toss-up for me. However, the cost of living was significantly less expensive (relatively speaking) in SoCal.

      Guess which job offer I accepted.

  5. 11


    Having lived in both cheap and expensive areas, I can tell you right now that the COL indexes are like “chained” CPI–they take into account all the compromises you make when moving from one location to another. So in Texas, you have a 4 bedroom, 2.5 bathroom house that costs $125k. You are 6 minutes from work. Then you move to Boston, and you get a 3 bedroom, 2 bath townhouse in the suburbs for $280k. You are 25 minutes from work. Sure, you’re making 150% of what you were, but you’re really way worse off, even though the COL index shows only a 45% difference between the areas.

    • 12

      Len Penzo says

      As part of my research for this article, I did a little price shopping in Harlingen, TX.

      For example, I found out that you can get a 3-bedroom 2-bath apartment (1213 sq ft) there for $650 month. And gasoline is currently just $3.06/gallon. (It’s $3.94 at my local station right now.)

    • 14

      Len Penzo says

      The OC is not #2, Bret — it’s #9. Manhattan (at the bottom of the chart) is the most expensive place to live in the US.

  6. 15


    Your lifestyle in these high cost areas will be very different. You will buy or rent a very small place comparatively and your housing expense swill be similar to other parts of the country. In a high cost area, the wages are generally higher too. Housing will represent the same percentage for a lot less.

    • 16

      Len Penzo says

      Yep. The thing is, the impact becomes more severe as household income decreases — so professionals earning good wages can temper the effects and get by.

      It’s the people earning minimum wages who are the one’s who are more sensitive to standard-of-living impacts. The good news is, low-wage jobs can, for the most part, be found everywhere — so, in theory, there is less risk involved in picking up roots and moving to a lower-cost-of-living locale.

  7. 17


    I grew up in Nassau County and I’m not surprised to see it in the top 10 (and my parents still live there). Living there skews your perception of what’s expensive and what’s affordable. For instance, my parents will come visit me (I live in Delaware) and while we think $3.42/gallon is expensive, my parents marvel at how cheap it is (the reverse is true, too, when I visit them).

    I think when you live in a high cost of living area, you just become used to paying a premium for everything just for the perceived privilege of living there. I think that’s a little sad.

  8. 19


    But then there are folks who can but won’t leave their towns.

    A few years ago, we went to see family friends on the Appalachian trail between Virginia and West Virginia. The head of the household was my college buddy. He drives down to work – an hour and a half one way. He is very well educated, has a Ph.D. in environmental sciences, a good job. Up the mountain where he lives, they don’t have running water. The “bathroom” is a couple of hundred yards from their home.

    When I asked them why they don’t move out to a better place, their answer was because they were born there. It’s their home. Their great grandfather moved there.

    The family said they’re happy. When we were leaving, the guy said to my kids in whispering sound like a Dracula movie, “We are called mountain people.”

    The whole family is just great, very hospitable, very soft spoken and very humorous.

    • 20

      Len Penzo says

      Great story! Thanks for sharing that, DF.

      “But then there are folks who can but won’t leave their towns.”

      That’s true. It’s a free country!

  9. 22


    The taxes and the affordability in my area are very high. It would be best to move either south or west to save some dollars, but I am tied to my area for famiy reasons. Maybe in 10 years I can make a move towards greater affordability.

  10. 23


    I think a big part of finding a place to live is to also remember other indirect costs. Texas is a state without state income tax and as a result, has high property taxes. But in areas where there isn’t a lot of expensive properties filling the government coffers with property tax income, those areas end up with cash strapped public services. Public schools in smaller border towns in Texas are some of the most cash strapped. Jobs aren’t great to come by either–for some in these small towns, Border Patrol is the only major job outside of the service industry.

    Life is a series of engineering trade-offs–any where you choose to live is going to have a benefit to loss ratio. The important thing in choosing where you live is to find the place that has the least amount of losses that hurt you the most (and hopefully allow you to get a decent job and save some money)

  11. 24


    That cowboy sounds like a real peach! :) I agree that often times (OK fine most of the time) it’s because we make lousy choices. Believe me I’ve been that person from time to time. I think the cost of living thing is too much of a generalization though. If you are in the industry I’m in (film/TV) then yes the cost of living is high in LA, but the opportunities are greater. It’s sort of a balance and give and take thing. I also wouldn’t completely give up quality of life just to live in the cheapest place in America either. But that being said I also have to accept that I have to make sacrifices then, like not eating out with friends, traveling as much, or spending as much on entertainment. But I also get awesome resources like great weather, good quality of life, etc. That being said, I’m working my side jobs as much as possible to not rely on video editing work so I can feel “location independent” someday and try to find a balance between a good quality of life AND affordable living. BTW nice to meet you Len!

  12. 25

    Greg Lynch says

    This isn’t too hard to figure out but it is only half of the equation. Unfortunately if someone wants a decent job with a salary that will put them on apath with a future it won’t likely be in one of those bottom 10 locations.

    • 26

      Len Penzo says

      I disagree, Greg. I have a relative who was living from paycheck to paycheck in California and incapable of making ends meet. He then moved to Mississippi and, thanks to its lower cost of living, is thriving there.

      I’d be curious to know what your definition of “a path with a future” is.

  13. 27

    rock paper scissors says

    I have lived my entire life only in those high-cost places: Mnahattan, Brooklyn, SF Bay Area.

    One thing I can say is once I became determined to act responsibly about money, living in these places had its advantages. Yes, many things are expensive, but if I am cautious with my income I can use it to my advantage.

    I can have enough money to live (and save and invest) because I dont dont spend it all. Since salaries are higher, there is more cash flow. Yes I need to spend more for necessities, but I also am able to divert some of that cash for my own use.

    I live below my means and I pay myself first.

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