How to FIRE In a High Cost of Living Area


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Places like NYC, San Francisco, and Seattle are a dream situation for an aspiring Money Habiter. There are fantastic job prospects, amazing experiences to be had every day of the week, and all kinds of diverse people who can broaden your view of the world and add richness to your life. The one downside? The cost.

Fortunately, you can counter this issue with some judicious compromises. Below are the tactics I used to FIRE while living and working in New York City.


Big Opportunities First

If you can make the compromises in the biggest buckets of spending, you will see the most dramatic improvements. That means we start with housing.


The trinity of factors in housing are price, location, and size.

hcol edited

You can have any two. You cannot have all three.

Want to have a big place that’s cheap? That’s fine if you’re willing to commute for an hour each direction. Want a perfectly situated and spacious apartment? It’ll cost you.

My decision to live in New York City was about valuing the amenities. Because of this, location was paramount in my decision. As FIRE has been my goal for years, price was the obvious other non-negotiable. That’s how we ended up in the current Money Habit pad.

It is an “efficient” 325 square foot apartment in what I wholeheartedly believe is the best neighborhood in the city, the West Village. When I walk out the door, I am instantly surrounded by quaint shops and charming cafes. There are dogs and babies on every street corner. Last week, I had a craving for pizza at 2:30 am on a weeknight. There was a place five blocks away that hooked me up. Paradise!

I pay for it in space. Many people would cringe at the thought of two people and a dog sharing 325 square feet. We have lived in the same building for five years, and it’s been very pleasant.

You need to realize that you are bad at living in efficient spaces because you have very little practice, and you have not learned how to optimize the space.

Just like any skill, you need to invest in it. My source for inspiration is Hong Kong apartments. All you need to do is read four or five articles on space saving tips and you will be well on your way to a comfortable arrangement.

Some of our space saving tricks:

  • Loft the Bed – That’s 150 cubic feet of storage instantly
  • Fill Suitcases – You doubtless have a few bulky items like suitcases to store. Make sure you fill them with other items that need to be stored
  • Thin Hangers – You have no idea how much space they will save you. These literally doubled the amount I could put in the closet.
  • Shelving – You can go to a hardware store and for a few bucks have yourself some floating shelves and extra shelving for your cabinets. One of the biggest wastes of space is the lack of full utilization in your cabinets. You put everything in, and half the height of the cabinet is just empty airspace. You can’t stack things on top because it becomes a messy pile. Solve this with an extra shelf.
  • Expandable Everything – Inflatable mattress for guests, expandable table for when we have company over, you want anything that can expand.


The equally important aspect to living comfortable in a small space is to invest judiciously in design.

With an investment of $200-$300, you can transform a space to make it seem much airier and high-class:

  • Paint – Not just the walls, but learn how to paint basic pieces of furniture. This is an easy way to get all your pieces to coordinate so it doesn’t look like you are a college student with ragged odds and ends. $50 at home depot on paint and supplies will let you get all the pieces to coordinate.
  • Accent Wall – In a small space, you can draw the eye to one wall to make the area seem larger, preferable the wall with the windows. There is super easy peel and re-stick wallpaper options to give it a classy look.
  • Mirrors – Add a few mirrors to the room to make it look larger
  • Pop of Color – Pick a bright accent color which will draw your eye in the room.


Money Habit Pad

Note: The most expensive design element we incorporated into the apartment is that furry dude. We like to call him the moving rug.


  • Ethnic Grocery Stores – One of the benefits of living in your super expensive HCOL city is that it has a diverse set of grocery stores, and your local ethnic stores are where the best deals can be found. I go to Chinatown for all my produce, meat, and seafood. I found my favorite grocery stores on Yelp.
  • Value Grocery Stores – Trader Joe’s is my lifeline. This is where I pick up everything else (frozen meals, milk and eggs, cereal). Between the Chinese grocery store and Trader Joe’s, the hubs and I eat like kings for less than $450 a month.
  • Eating Out Only Socially – We have a budget to eat out with friends as a social experience, and this is basically the only time we eat out. When we arrange a get-together, we often suggest hole-in-the-walls in the East Village where the food is good and cheap, or we pick brunch where we can soak up luxurious ambiance but at lower prices than dinner.
  • Regular Cafe/Coffee Trips – Part of the reason I live in the city is my enjoyment of the ambiance, and there’s nothing like writing on my laptop at a local mom & pop coffee shop. For $4 a week, I can make this a regular occurrence. There are an insane number of unique beverage-focused locales to soak up ambiance. Places that only focus on ciders, roof top bars, beer gardens, wine bars. When I want ambiance at a lower price tag, I opt for something on this list. Not cheap, but definitely workable into the budget.
  • Bonus Tip/The Right Credit Card – The best rewards deal I’ve found for restaurants is the AARP Visa credit card, which gives you 3% back on eating out. You do not need to be an AARP member to apply. I delight in this card, because every time I pull out the card, it reminds me of my FIRE goals. An excellent reinforcer of judicious restaurant spending. (Note: I don’t receive any compensation from the company, it’s just something I enjoy and wanted to pass along).


Purchase on Craigslist

When you are making a purchase, use the advantages of your city (density, diverse incomes) to scout for great deals on Craigslist.

You can get a one year old Crate & Barrel couch which normally costs $2000 for $600. You can score a bike which retails for $500 for $200. Your fancy neighbors in the Upper East Side or Tribeca have tons of expensive gadgets they no longer have uses for and will sell them to you gently used.

One guy who bought a PC part from me told me he always tries to buy his stuff from the fancier neighborhoods. His reasoning was actually quite sound, and you’ll find steals in the thrift stores in the fancy neighborhoods, since that is where they donate all their gorgeous, perfectly usable stuff.

Keep your eyes peeled around typical move out dates, which tend to be at the end of the month. There’s nothing like the prospect of dumping a piece for $0 the next day to make a motivated seller out of someone.


couches nyc

Look at this couch-apalooza on Craigslist! Any of these can be had by you for a fraction of retail price because of the beauty of density in big city living.


Discounted Entertainment

One of the huge benefits of living in your fancy city is the amenities, so use them! I’ve had my eye on Hamilton tickets, which have an insane scalper market snatching up all the inventory. If you check secondary ticket sites on the day of the event, though, you will see that when it gets to within an hour or two of the event, you can get reasonably priced tickets.  Your entertainment options on Groupon and Living Social are going to be vast and varied. There are also a million completely free things to do like walking the Brooklyn bridge, free museum nights, and new bands to check out.


living social

                      Rescue the Runway Animal Adoption event? Only in New York. Love it.


“Just Enough” For Everything Else

There are a million ways to save on things where you need just enough. For example, I now use MetroPCS and get unlimited data, talk, and text for $30 per line per month. What matters most to me is reliability and coverage, and with just a little research I discovered that MetroPCS was actually faster in NYC for me than my previous carrier, AT&T.

What matters most is coverage in the areas you will be spending the most time, not necessarily a carrier’s full nationwide footprint.

Are you planning to place a ton of calls in Casper, Wyoming? Then what does it matter if your carrier doesn’t have great coverage there?
cell phone  Source: Tom’s Guide



The world is your oyster, even in a high cost of living area. With just a few creative tricks, you’ll be able to sock away the cash while still enjoying a fantastic lifestyle.

Any others currently living in an expensive city? Share your favorite tips in the comments below.


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14 Responses

  1. Very cool! Saw your story on Forbes I think. I retired in 2012 at the age of 34. It was a good 13 year run, but I had enough of the finance industry. Blogging is so much more fun.

    I commend you guys for living in a 325sqft place. I shared a ~600 studio w/ a friend for two years while in NYC. But after I turned 26, I wanted to live a nice life and bought a 2/2 condo w/ a view of the park in San Francisco. Do you guys own the place or rent?

    When do you think your partner plans to retire, if ever?


    • JP says:

      Hey Sam, I’m a huge fan of Financial Samurai so it’s great to hear from you. I will say that the dress code (pajamas) is a lot more comfortable than the dress code in finance.

      We rent our current place but will probably purchase in the next two years. Hard to say when my partner retires – he’s pretty happy doing what he’s doing now. Kids seem incredibly expensive, so it would be nice to have a little extra buffer. We’ll see how it shakes out.

      As someone who also lives in a HCOL area, are there specific ways you try and keep expenses down, or are you more focused on the income generation side via the blog, the rental properties, and the other income streams?

  2. Janet says:

    The link you provided for AARP seems to only offer 3% cash back at restaurants and gas stations! NOT 3% cash back…!

  3. Bd says:

    Just found your blog on Reddit/Forbes. Thanks for spelling it all out in such simple language. You really make retiring early seem doable.

    Have you seen the Costco Citi Visa Card? It has pretty good rewards. Redeemable for cash at the store once a year. No annual fee with membership. It also covers some travel protection/ insurance
    for the first $7,000 per year
    and then 1% thereafter


    • JP says:

      Thanks. Where are you on your FI journey? Do you have a sense for what timeline you’d like to target?

      And that’s a great suggestion. Unfortunately, I live without a car in Manhattan and the nearest Costco is not a feasible regular destination so I don’t have the membership. It’s a great recommendation for 95% of readers though, so I’ll have to make sure to include it.

  4. Bd says:

    Hi JP,
    My husband and I are at an exciting step in our FI journey called…GETTING A REAL PAYCHECK! Woo! (Well I actually worked for 10 years, but have been home taking care of our 2 kids for the past 3 years.) My husband is just finishing up a medical residency (i.e. Already 150k in student debt). I like the idea of him retiring in 15 or 20 years, but with our debt load I don’t know if it’s feasible. Although we will have an approximate starting income of 120k to work with.

    What’s your advice on paying off student loans? Home mortgage loans?
    I’d love to read an entire blog entry on your opinion of paying down loans vs. saving vs. investing.
    Thanks again!
    And btw- I used to live wayyy out Brooklyn (crown heights) and sacrificed location for low rent. Although I would still go to Costco and buy a huge thing of toilet paper that I would have to store under my loft bed. 😉

    • JP says:

      That’s huge and no doubt you guys will have built strong spending habits compared to the rest of the high-earning doctors when your husband starts seeing the cash roll in.

      Student loans vs home mortgage loans vs savings is an interesting question. A very long, involved question that you’ve now got me thinking about for a post (thanks for the idea). I’m not going to do it justice with a quick summary, but my best crack at a short answer is the following:

      Consider the interest rate you pay on your student loan as a guaranteed rate of return. So if your student loan charges 7% interest, paying down that debt is a guaranteed 7% rate of return. You can then compare that rate of return to your other options. What’s the interest rate (and thus guaranteed rate of return) for paying down the mortgage? That, too, can be considered a guaranteed rate of return since if you pay them back now, you aren’t charged that X% in interest, keeping it in your wallet. Now, what do you think you can get in the stock market? Unlike the two above which are essentially guaranteed rates of return, what odds do you put against that estimated rate since it is not a guaranteed outcome?

      For most people, paying down student loans first makes the most sense. Interest rates on homes are still at an almost all time low (3.5-4%) and so I’d generally avoid paying this down or refinance to be at the lower rates of the market today (More here:

      And as for savings, if I had student loans to pay down, I wouldn’t have more than three or four months of absolute bare bones expenses in a savings account before turning around and pouring ever single additional dollar into the loans (assuming they are accruing right now – if they are not yet charging interest your hair is not yet on fire). I know I’m missing some nuance trying to condense things into a short response but I hope that helps.

      • JP says:

        I guess all tiny apartment dwellers think alike. I’ve got the lofted bed and while I don’t make it to Costco since I don’t have a car, I’ve got a nice pile of toilet paper and other goods that I stock under the bed when the local store runs sales.

  5. Bd says:

    Yes it helps! Thanks

  6. LVA says:

    Hi JP, I have a question about your student loan payment comment above. My student loan payment is about $1800/month. (Almost double rent/utilities…oy!) After refinancing last year, my interest rate is 5.5%. I’ve been trying to figure out how much to put in savings vs pay down my loan balance. I contribute to my 401k but want to start building investments with my post-tax income as well. (Right now I’m still working towards saving up a few months expenses. After paying bills and the usual expenses I’m left with about $700/month to save.)

    Any ideas you’d be willing to share?

    Also, I’m really enjoying your blog! It’s inspiring a sharper focus on my finances. I don’t particularly enjoy working, but never thought that I could retire before 60. So much misinformation out there. After reading your posts and exploring other blogs you reference I’ve decided there’s no reason why I can’t retire before I reach 50, or even 45. (I’m in my early 30s.) Thanks so much for sharing your thoughts and research!

    • JP says:

      Glad you’ve found the FIRE community!

      I’d make sure you have 3 months of expenses in something extremely liquid. That would be probably be a money market account. Not sexy, but the point of an emergency fund is security and immediate access. That means you go for an extremely liquid, safe option, which is probably a money market account or higher-yield checking account like Ally Bank that offers 1% a year.

      After that, a guaranteed 5.5% return by paying down your student loans faster is actually a strong way to deploy the $700/month you can save. The CAGR of the Standard & Poor market index is 8.2% from 1996-2015. That’s higher than the 5.5% you’re considering but it’s also much more volatile, which means instead of seeing a clean 8.2% per year you may see -15% one year, then 25% the next.

      I personally would be pretty open to using the savings to pay down the debt faster. But depending on your risk appetite you could park it in a good low-cost index fund (Vanguard’s VTSAX or VIMAX funds are perennial favorites) and hope it exceeds the 5.5% you’re paying to keep that money borrowed and in your hands for longer. Those are the two best options in my eyes.

      And yes, you absolutely can retire by 45 or 50! Hope you keep us posted of your progress as you refine your plan.

  1. October 27, 2016

    […] how to bring the cost down, too, then it would be sheer magic. Alas, I’ll have to make do with these strategies, which keep the costs to a reasonable place. Still. It’s worth […]

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