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10 Places You Can Earn Six Figures and Still Feel Broke in 2018

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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A six-figure income may not go as far as you think depending on where you live. After factoring in taxes, debt payment and living expenses like child care and transportation, a family earning $100,000 in certain cities could still find themselves struggling to get by. Last year, MagnifyMoney published “The Best and Worst Cities to Live on Six Figures.” This year, we’re back for the 2018 edition to uncover the metro areas where a household income of $100,000 can still leave you strapped for cash.

For this study, we created a hypothetical, but fairly typical, couple with one child who earns a combined gross income of $100,000 (or $8,333 monthly). We estimated monthly expenses, debt payments and tax obligations to calculate what the family’s disposable income would be in various metro areas based on the average lifestyle of a six-figure earner in the corresponding metro area. Then, we ranked the locations from places where they would have the most and least disposable income.

The order in this year’s ranking has changed from last year due to changes in living costs like housing, transportation and child care. But you’ll notice many usual suspects on the worst list and some familiar faces on the best list.

Places Where You Can Earn 6 Figures and Still Be Broke

How the study — and our findings — evolved in 2018

There are a few changes to the methodology in our 2018 study. We focused on the largest 100 metros this time around as opposed to some 381 metros last year. We also took a more detailed approach to calculating variables that impact a family’s disposable income. Here are the updates we made:

We based our case study on a family earning a gross income of $8,333 per month. Then we subtracted their monthly expenses, debt obligations and savings to come up with an estimate of how much cash they’d have left over at the end of the month.

Savings. We assumed the family contributed $500 monthly to their 401(k). Last year, we assumed the family set aside 5% of their savings in a regular savings account. This year, we changed the savings to 401(k) contributions because it’s something of a bastion of corporate middle-class personal finance, and it offers a tax benefit.

Tax assumptions. Our study assumes the couple will file jointly for 2018. They took the standard federal deduction and received a federal $2,000 credit for their one child. They also took the standard deductions and credits offered by their state, and took advantage of the pretax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer. The couple had insurance premiums paid from their pretax income by their employer and their 401(k) contributions paid from their pretax income by their employer.

Debt: We assume the family had a monthly student loan payment of $222, which is the median student loan payment according to the Federal Reserve. Housing and auto debt are bundled in with the housing and transportation cost budget line items in monthly expenses.

Monthly expenses. We based monthly expenses — housing, transportation, food, utilities, household operations, child care and entertainment — for each location on data taken from the Bureau of Labor Statistics, the Department of Housing and Urban Development, Care.com, Kaiser Family Foundation and the Federal Reserve. We calculated an average for these expenses taking into account the lifestyle costs of a six-figure earner.

Compared with last year, we beefed up the monthly necessity expenses — although by no means hit them all — by adding costs like household operations costs and utilities to get a more realistic sense of how much people would have left over after paying their basic bills. We also added health insurance since it’s one of the most basic expenses.

Read the full methodology here.

Key takeaways:

  • In San Jose, Calif. (the seat of Silicon Valley), a joint income of $100,000 with a preschool-aged child means a couple would have to run up their credit cards $454 a month just to make monthly bills on the basics (not including compounded interest on that credit card debt)
  • In McAllen, Texas, a couple earning $100,000 can expect to have around $2,267 left over every month after paying bills.
  • In fact, the five places where couples can expect the most in disposable income are in Texas and Tennessee, where there’s no state income tax, and metros in Florida (also without state income tax) tend to have six-figure earners with plenty of money left over.
  • Regionally, with the exception of Minneapolis — a perennial on our list of most prosperous places — the most expensive cities lie on the coasts and Hawaii, and the most affordable cities are in Southern states without a state income tax.

Worst Places to Make Six Figures

1. San Jose/Sunnyvale/Santa Clara, Calif.

San Jose, Calif., moves up to the top spot replacing Washington D.C. from last year’s study. San Jose is the location where a combined income of $100,000 is going to offer the least amount of security for our hypothetical family of three.

To make ends meet, they would need to either dip into savings or rely on credit cards to cover the $454 budget deficit. Housing in this area decreased compared with last year ($2,916 in 2017 versus $2,520 in 2018). However, an 84% increase on child care costs and 30% increase on transportation costs takes the location to the no. 1 spot. This year, we used a different source for child care costs, which could also contribute to the increase in cost.

  • Monthly income minus taxes and FICA — $7,087
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,768

2. Washington/Arlington/Alexandria, DC-VA-MD

Washington D.C. comes in at a close second leaving the family $360 in the hole each month. Housing costs increased to $2,597 compared with $2,274 in 2017. This is the most expensive metro area to find living arrangements. The general rule of thumb is to not spend more than 30% of your gross income on housing, but this recommendation could leave you house poor since it doesn’t consider your net income.

In this case, housing takes up about 31% of the couple’s gross income ($8,333 per month). However, housing takes up 47% of the family’s actual paycheck after subtracting taxes, FICA, 401(k), health insurance and the pre-tax child care saving incentive. Couple the housing costs with the transportation expense ($1,302), and a six-figure earning family can really struggle to live comfortably in and around the nation’s capital.

  • Monthly income minus taxes and FICA — $6,932
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,560

3. San Francisco/Oakland/Hayward, CA

San Francisco is about 50 miles away from San Jose (no. 1 on the list), but offers slightly lower living costs, which makes the $100,000 income go a bit further. The two cities share almost the exact same monthly expenses. It’s the $320 total saved on housing and transportation that makes San Francisco slightly more affordable than the San Jose metro area. San Francisco made it to no. 4 last year, so it’s no surprise we’re seeing it again this year taking one of the top spots.

  • Monthly income minus taxes and FICA — $7,086
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,768

4. Bridgeport/Stamford/Norwalk, Conn.

The Bridgeport, Conn., area offers some opportunity for savings in food and child care costs, but estimated utilities and transportation costs come in higher than even the top three worst places for six-figure earners. Our hypothetical family would spend almost 29%* of their paycheck on transportation and utilities alone.

  • Monthly income minus taxes and FICA — $7,035
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,678

5. Boston/Cambridge/Newton, MA-NH

Boston has the third highest cost of child care to make the list. Child care could take up a whopping 15%* of a family’s paycheck after subtracting taxes and savings contributions. Just like last year, housing is another budget buster in the Boston area eating away another 37% of their paycheck.

  • Monthly income minus taxes and FICA — $6,932
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,595

6. Oxnard/Thousand Oaks/Ventura, Calif.

Oxnard, Calif., is a new addition to the list this year, and the first metro area that doesn’t leave a $100,000 earning household in the red each month after taxes, investment contributions and expenses.

With that said, disposable income of just $138 isn’t much to write home about. An unexpected expense could easily wipe out their spare cash. Like the other California locales above, housing takes a huge bite out of their budget — almost 38% of net income.

  • Monthly income minus taxes and FICA — $7,086
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings— $5,768

7. Urban Honolulu, Hawaii

Honolulu gives the family more disposable income than Oxnard, Calif., but just barely. When all expenses are covered, the family has $140 left over to spare, which is less than last year’s disposable income of $302. Year over year, child care and transportation costs increased by 30% and 23% respectively, but housing decreased by almost 18%.

  • Monthly income minus taxes and FICA — $6,805
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,527

8. Minneapolis/St. Paul/Bloomington, MN-WI**

State income tax is one of several reasons the Minneapolis area makes the list. The estimated state tax here ($506) is higher than the top two worst places — San Jose ($206 state tax) and Washington, D.C. ($366 state tax). Housing takes up about 37% of the family’s paycheck, which isn’t ideal but less than other locations.

  • Monthly income minus taxes and FICA — $6,785
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,470**

9. Hartford/West Hartford/East Hartford, Conn.

Hartford, Conn., is another new addition to the list. Hartford offers $339 in disposable income which is more than double that of Honolulu. Housing in Hartford is the second lowest of this list taking up just 33% of the family’s paycheck.

  • Monthly income minus taxes and FICA — $7,035
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,678

10. New York/Newark/Jersey City/NY-NJ-PA

The New York metro area came in no. 5 last year, but takes spot no. 10 for 2018. It may come as a shock that it’s not closer to the top, but major savings in transportation contributes to a disposable income of $505 after bills and other responsibilities.

For a comparison, the other “worst places to live” have monthly transportation costs ranging from $1,200 to $1,400. The estimate for transportation costs in the New York area is just $997 per month.

  • Monthly income minus taxes and FICA — $6,934
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,629

Best Places to Make Six Figures

100. McAllen/Edinburg/Mission, Texas

It’s no surprise that states without state income tax make the top of the list for best places to make six-figures. McAllen also has a remarkably low monthly housing cost ($889). Last year, housing costs for McAllen were sitting at $1,086 contributing to its no. 5 ranking on the best list.

Here, the family has a nice $2,267 per month in disposable income. This surplus in cash can offer plenty of flexibility to save, invest or tackle lingering debt. Overall, household bills take up just 62%* of the paycheck in McAllen. In comparison, for San Jose, the worst metro area for six-figure earners, bills take up 108%* of the paycheck.

  • Monthly income minus taxes and FICA — $7,300
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, childcare savings — $5,913

99. El Paso, Texas

El Paso, Texas, has a slightly higher housing cost than McAllen ($1,060 versus McAllen’s $889). In El Paso, the hypothetical family gets a disposable income of $2,135, again, enough to comfortably stash some cash away for a rainy day while keeping current on bills.

  • Monthly income minus taxes and FICA — $7,301
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,913

98. Chattanooga, TN-GA

Chattanooga, Tenn., offers low child care and health insurance, but comes in third with a disposable income of $2,048 thanks to the higher housing cost ($1,116) and transportation cost ($1,186) . These two major living expenses are higher than McAllen and El Paso, but when combined still only take up 39% of net income.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,894

97. Memphis, TN-MS-AR

Memphis has higher housing costs than the locations above but more affordable child care. Child care ($622 per month) is lower than even the two best metro areas — McAllen and El Paso (both $686 per month). The family gets a disposable income of $1,970, which is a respectable sum.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,984

96. Knoxville, Tenn.

Knoxville, Tenn., is yet another southern metro area in a state with no income tax. Housing and child care costs put Knoxville behind Chattanooga and Memphis. But together, housing and child care costs, two big ticket budget line items, only eat up about 31% of the household’s paycheck.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,984

95. Lakeland-Winter Haven, Fla.

The monthly disposable income at Lakeland-Winter Haven, Fla., clocks in at $1,850. The health care costs ($525) are considerably higher here when compared with other cities even the most expensive places for six-figure earners. San Jose, Calif., and Washington, D.C., have health care costs of $402 and $456, respectively.

  • Monthly income minus taxes and FICA — $7,306
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,866

94. Jackson, Miss.

Jackson, Miss., is the first locale on the best places to live list that has a state income tax. Jackson offers a disposable income that’s just two dollars shy of Lakeland-Winter Haven, Fla. at $1,848. Despite the state tax, housing ($1,082 per month) and child care ($514 per month), it’s still an affordable place to call home for six-figure earners.

  • Monthly income minus taxes and FICA — $6,993
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,627

93. Youngstown/Warren/Boardman, OH-PA

Youngstown, Pa., is the only location representing the Northeastern states in this list. Child care is high ($694) compared with other states that have affordable living. But housing and transportation costs are comparable with other locales, and health care is noticeably lower at $331 per month.

  • Monthly income minus taxes and FICA — $7,069
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,823

92. Deltona/Daytona Beach/Ormond Beach, Fla.

Daytona Beach, Fla., is in a no-income tax state but has high housing, transportation and food costs, which takes it down a few pegs even below two states that have state taxes. Bills take up 70%* of net income.

  • Monthly income minus taxes and FICA — $7,306
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,866

91. Toledo, Ohio

Toledo, Ohio, rounds out the top ten best places for six-figure income households. Like, Youngstown, Pa., Toledo has high child care costs ($694 per month) when compared with the other affordable locations. Food and entertainment costs can also put some pressure on the purse strings. But overall, the household will pay just 70%* of their paycheck on household expenses.

  • Monthly income minus taxes and FICA — $7,069
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,823

*These numbers have been corrected due to an editing error.

**Due to a data collection error, the health insurance costs for Minneapolis were incorrectly calculated. We have updated the ranking for Minneapolis from #5 to #8. 

Additional Findings:

  • Residents of the New York metro (10th on the list) get a bit of a reprieve, thanks to low cost public transportation. They’ll have $505 left over every month for things like clothes, toys, and co-pays for their kid.
  • Other states with no income tax include Nevada, Vermont and Washington, but expenses there are high enough to eat up most of the savings (Seattle is the 13th brokest metro).

Background & methodology:

The hypothetical family we created is a typical one that earns a combined income of $100,000 (the median income for a married-couple family in 2016 was $81,917, and 39% of such couples earned at least $100,000 that same year).

We were pretty conservative about the couple’s financial and debt obligations by making the following assumptions:

  • Both have corporate-style employers who offer typical benefits.
  • They have one child currently in day care.
  • Between them, they contribute 6% of their income to their 401(k)’s, which is considerably less than the median rate of 5% from an employee in a matching plan (page 40; assumes the employee is contributing half of the 10% median).
  • Only one of them has student loans and is making the median payment of $222 a month.
  • The entire household is on one person’s group insurance plan.
  • The family has average spending habits and expenses for where they live.

To calculate federal and state taxes, we assumed the following:

  • The couple will file jointly for 2018;
  • Took the standard federal deduction;
  • Received a federal $2,000 credit for their one child
  • Took the standard deductions and credits offered by their state;
  • Took advantage of the pre-tax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer;
  • Had insurance premiums paid from their pre-tax income by their employer;
  • Had their 401(k) contributions paid from their pre-tax income by their employer.

The following variables were used to create their hypothetical expenses (each is the average cost for the geography indicated in parentheses):

  • Federal tax contribution (national, but adjusted for state average health care premiums)
  • State tax contribution (state)
  • FICA contribution (national)
  • 401(k) contribution (national; see notes on assumptions)
  • Insurance premiums (state)
  • Housing costs (MSA)
  • Transportation costs (MSA)
  • Food costs (regional)
  • Utilities cost (regional)
  • Household operations costs (regional)
  • Child care costs (MSAs where available (half of the MSAs), and state averages where not)
  • Student loan payments (national)
  • Entertainment costs (regional)

Sources include the Bureau of Labor Statistics; the Department of Housing and Urban Development; the Tax Foundation; Care.com; the Kaiser Family Foundation; the U.S. Federal Reserve; and the U.S. Census Bureau.

Full ranking:

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Here’s Why Single Women Are Buying More Homes Than Single Men

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Right after she turned 30, public relations pro Wendy Hsiao put in an offer on a cute brick townhouse in Atlanta. “For a lot of my friends, being an adult started either when you got married or had a baby,” she said. “I chose to buy a house.”

Why did she buy? She felt ready for a major life change, considered buying to be a smart financial decision and wanted a yard for her Pomeranian named Georgia. “I felt like it was time to make a place my home,” Hsiao said.

Her story is one example of a growing trend: the rise of single female homeownership. Single women are far more likely to become homeowners than single men, according to a study on singles owning homes by LendingTree, which owns MagnifyMoney. In fact, single women own 22% of homes on average, while single men own less than 13%.

This “gender gap” stems partly from the fact that single women prioritize homeownership when setting life goals. In fact, 73% of single women list owning a home as a top priority compared with 65% of single men, according to the 2018 Homebuyer Insights Report from Bank of America.

Single women are “skipping the spouse and buying the house,” according to the Bank of America report, which found that single women rank homeownership as a goal above getting married (41%) and having children (31%).

From homemaker to homeowner

While there’s still work to be done, women have taken huge steps toward professional and financial independence. Homeownership in particular contributes to economic stability, so it’s great that more single women are buying homes. There’s no doubt the increase in the number of women in the U.S. workforce, a figure that has more than doubled since 1975, has contributed to the trend. Here are some other driving forces behind the rise of single female homeownership:

Homeownership empowers women. Homeownership offers a place to live, stability and a way to build wealth, so it’s no surprise women view owning a home as empowering. In fact, 31% of single women (vs. 23% of single men) feel empowered when thinking about buying their first home. A licensed real estate agent in Chicago, Martina Smith bought a condo in her dream neighborhood of Streeterville after she broke off an engagement a few years ago. Her budget only allowed her to buy a “fixer-upper,” but she got a great deal and renovated her place. “It’s been very rewarding and empowering,” she said. And she thinks it reflects a bigger national trend. “We’re seeing more women taking charge,” Smith said.

Women are becoming more educated. Over the past few decades, women have become more educated than men. In 2017, 38% of women and 33% of men ages 25 to 64 had a bachelor’s degree. In that age group, 14% of women and 12% of men had an advanced degree. And women are putting off marriage to pursue that education, according to the 2018 Women in the Housing & Real Estate Ecosystem report. Educational attainment has a positive impact on homeownership rates.

Women are done waiting to marry. There’s been a cultural shift where women no longer feel they need to wait until they pair up to embark on certain aspects of “adulting,” said Kelley Long, a CPA and certified financial planner with Financial Finesse. “I will never forget a friend’s dad chastising me for doing ‘nesting’ things like buying nice furniture before I was married because of his perception that you just don’t do things like that until you’re married,” Long said, adding that women are “rejecting that idea because it’s not true.” If you want to marry in the future, the right partner will likely be impressed that you were financially secure enough to buy a home on your own, she said.

Single moms want a home base to raise kids. “Oftentimes, when people buy homes it’s for lifestyles reasons,” said Tendayi Kapfidze, chief economist for LendingTree. Getting married is one big reason, but having children is the other, he said. About 21% of U.S. kids live with single moms, a number that has almost doubled since 1968. In contrast, just 4% of kids live with single dads. “Children prompt people to buy homes,” he said. “So that might be one of the factors at play.” And it’s not just kids. As many as eight in 10 caregivers for elderly parents are women. The median age of a single female buyer is mid-50s, points out Jessica Lautz, vice president of demographics and behavioral insights for the National Association of REALTORS. A single female homebuyer “may be coming from a past relationship and purchasing a new home for herself, her children and her parents,” Lautz said, adding that single females are “willing to make sacrifices” to purchase a home.

So what does the future hold for single women owning homes? If marriage rates among all U.S. adults continue to drop, it’s likely the number of single women purchasing homes will rise even more, Lautz said.

Turn your homeownership dreams into reality

Strict lending standards can make it more difficult to qualify for a mortgage on a single income. Considering women also only make 80% of what their male colleagues earn, getting to a financially secure enough position to afford homeownership may feel daunting. Here are three tips for single women looking to buy a home of their own:

  1. Prep your finances for homebuying. It’s important to check your credit and your debt-to-income ratio before you start the homebuying process. If you spot problems, work on increasing your credit score and paying down your debt before you try to get preapproved for a mortgage. Getting the best possible rate can save you money over the life of the loan, which is especially important when your household depends on a single income. The upside is that single women have complete control and don’t need to worry about anyone else’s shaky credit or loads of debt. “If you’re in a couple, somebody is going to be dragging the other person down,” Kapfidze said.
  2. Build your nest egg before you buy. Forty-eight percent of women say they haven’t purchased a home yet because they haven’t saved enough for a down payment. But that’s not the only savings barrier to breach before taking the leap into homeownership. “Make sure you have a robust emergency fund,” Kapfidze said. Because single homeowners are on their own, they should set aside at least three months of mortgage payments as part of their emergency fund, Kapfidze suggested. “If you’re single, you’re the only one with income coming in to pay the mortgage,” he said.
  3. Pick a home that comes in under budget. Single women have lower household incomes than single men, so they may need to consider buying a smaller home, taking on a house that needs some work or settling in a lower priced neighborhood. The good news is that single women may be doing exactly that. In fact, the average home purchased by a single woman cost $173,000 compared with over $190,000 for a single man. Single women “may need to make price concessions when purchasing to find a home for themselves and their families,” Lautz said. And buying less house than you can afford can help you make your mortgage payment more easily if you hit financial hard times in the future.

Finally, it’s normal to feel stressed when you think of buying a home. In fact, more women (40%) than men (30%) feel overwhelmed by the idea of homeownership. But even though the homebuying process was scary, Hsiao said she has zero regret about buying a home of her own: “If you love the house, it’s 100% worth it.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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