City Vs City was born out of a deep frustration that there was no effective cost of living calculator available on the market. I needed way to compare the cost of living in my current home versus the costs in another city and state. The result? City vs City was born.
The Birth of a New Cost of Living Calculator
Yes, there were many cost of living calculators on the market, but none of them that:
- Started with how much you spend (particularly on the huge cost of housing),
- Accounted for the relative costliness of your neighborhood. For example, if I lived in the high-end 90210 ZIP code of Los Angeles I wanted to compare an equivalent ZIP in a new city.
- Painted a clear picture of tax situations. State and local taxes are a big factor when it comes to moving. For example, I wanted to compare a state with no income taxes but high property taxes versus a state with the opposite structure.
The available cost of living calculator apps all functioned similarly. They had me enter my current income and then a percentage was applied to that figure. That percentage was typically the difference between the costs of living in your city versus others.
That obviously doesn’t work because I don’t spend all my income. For one, the federal and state governments take a cut of my income before I can spend any of it. My pre-tax salary includes more cash than I ever get to spend.
Even when I could find a cost of living calculator that had me enter my after-tax income, it didn’t account for the fact that I don’t spend all my income.
After-tax income vs pre-tax income
The reality is that we all spend after-tax dollars (disposable income). Therefore, you have to earn enough pre-tax dollars (gross income) to cover that spending. Obviously, if you need to spend more in a new city on an after-tax basis, you have to earn more. This is in order to cover the income taxes at the federal and state levels (in most states).
This is why it’s so important to start the computation with spending. The way you spend your after-tax income is what defines your standard of living. Did you choose to rent a smaller home in a more expensive neighborhood? Or are you someone who chose a less expensive neighborhood so that you could get that extra bedroom?
Maybe you’re the type who wants to pay a little less in rent so that you can spend more on organic groceries at Whole Foods. No matter what your unique spending decisions are, a cost of living calculator should account for them!
This is especially true for housing which is easily the biggest after-tax expenditure for most people.
Accounting for life’s biggest expense: Housing (rent or mortgage)
No cost of living calculator could measure the cost of housing as accurately as it should. Right there was the first need. We needed to create one that accounted for the size of your home and the ZIP code where your home was located.
With that information, an equivalently sized home in an equivalently priced neighborhood could be compared in a different city. I needed to develop an algorithm that could locate the median prices (or rent) for homes with same number of bedrooms as my own home in my current ZIP code. From there, I needed to calculate how much more or less I actually pay for my home vs that median. Lastly, we I needed to apply that percentage above/below the median in a new ZIP code that was equivalently priced.
Calculating income taxes based on spending, and grouping all forms of taxes
After arriving at a comparison between the after-tax income needed in each location, income taxes were next. In other words, you first need to know how much you need to have left after taxes to pay the bills in a new location. Then you need to know how much you need to be paid before taxes so the after-tax paycheck covers all the spending and savings.
Simpy put, your salary needs to be enough in a new location so that after all the deductions the net amount allows you to buy everything you’re currently buying in your present home.
Moreover, these income taxes need to be grouped with the other main forms of taxation (property taxes and sales taxes). This is the only way to obtain a true comparison because a different neighborhood could have a very different tax structure.
One place might have no income tax but high property taxes. Another location could have the opposite structure. This is why they need to be presented together. Now you can see the total taxes you currently pay versus the total taxes you’ll likely pay in a different city.
A Different Cost of Living Calculator
Again, no other cost of living calculator could perform this complex computation automatically. That is why Wahrheit Ventures decided to develop the technology. Now City Vs City is the only cost of living calculator with the patent pending technology that can perform such intricate and precise calculations.
It’s finally possible to discover what your lifestyle costs in a different city! All you have to do is enter a few of your unique spending habits. From there, you can start exploring how much they’d cost somewhere else you’ve been thinking about.
City vs City is a new kind of cost of living calculator. It goes beyond averages and median and looks at your real cost of living. If you’re considering a move, don’t forget to grab City vs City first.