Cost of Living Conversion

Comparison is the thief of joy, but that doesn't stop most people, even if they are comparing apples to oranges.

One of my big gripes about this sub is it seems like it attracts tons of "I'm 29 and make $400,000 a year and have $3 million, can I FIRE?" which makes the whole thing seem out of reach to folks making more ordinary amounts.
—Average Redditor

This person was exaggerating to make a point, but the irony is that $3 million may not be enough for a couple living in San Francisco with a mortgage. I live in San Francisco, one of the highest cost of living cities in the world/United States, so my numbers may seem foreign to you even if you live in the US. Yes, generally the pay is higher here to compensate for that, which is why the compensation levels may also seem foreign. What is "ordinary" compensation anyway?

In 2023, if you earn $104k as a single person in San Francisco, you are considered low income. In fact, you qualify for some affordable housing programs if you make much more than the median income. Here is an example of a lottery for a 1br apartment for individuals who earn up to $120k. You can browse recent lotteries with other income limits as well.

If you can't stop comparing yourself to people with higher salaries and net worths, then you should at least make sure you are comparing apples to apples.

Comparing Apples to Apples

There is no point in comparing apples to oranges. If someone from Mexico City, Mexico looks at someone from Detroit earning $60k a year, they would think they are well off... if the Detroiter lived in Mexico City. But they don't, they live in Detroit, so their cost of living is different and they are actually middle class.

If you are asking, "who would compare Mexico City to Detroit, they're in different countries!" Well, that is equivalent to someone who lives in Detroit comparing their numbers to someone who lives in San Francisco. Mexico City's cost of living is 60% of Detroit. Detroit cost of living is 60% of San Francisco.

In order to make numbers from San Francisco more intuitive to someone living in Detroit, you can simply reduce all of my numbers by 40%. If I say I'm making 100k in San Francisco, someone from Detroit can think, "hmm, that's like making 60k here." And if my FI number is $2M, they can think, "that's like retiring on $1.2M here."

Cost of Living Converter

To make this thought exercise easier, I've embedded a cost of living converter on all my blog posts. This will automatically convert all my numbers from San Francisco relative to the city you choose. This ratio is based on the cost of living including rent. Some amounts won't be converted if they don't depend on location. Try it out (this will persist across all pages):

The options are ordered by COL and I'm too lazy to turn this into an auto-complete. To find a city, click on the select and start typing out the name of the city. If you can't find your city, try to find an alternative with the closest COL to yours.

Comparing Apples to Apples to Oranges

I think this is generally a better way of comparing numbers, but it's not perfect.

Not all expenses are influenced by geographical COL. For example, iPhones or anything you can buy online costs the same (excluding taxes) in the US no matter which city you live in. But, the biggest expenses most people have are Food, Housing, and Medical costs, which are affected by geography.

You could also use geoarbitrage, earn in a higher COL city and then retire to a lower COL city. That is one advantage of living in a higher COL. This also applies to anyone living in a medium cost of living city, you could retire to a low cost of living city (unless you are at the bottom... sorry, Karachi, Pakistan). In that sense, someone who has an equivalent nest egg in a high COL area really is better off than someone in a lower COL area because they are more likely to be in a better position if they moved. On the other hand, if they were going to move to a lower COL area anyway, they probably could have stopped accumulating earlier.

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There's no way to stop people from comparing themselves on the internet. If you must compare, or can't stop yourself, at least try to put the numbers in perspective. This is my attempt to raise awareness that not everyone has the same circumstances as you, especially when you are comparing compensation, expenses, and net worth across the world.