# High Cost of Living – it’s a State of Mind

## By Mr. Money Mustache

## Sun, 16 Dec 2012 06:47:27 +0000

Avocados: Free

This Hawaii place has quite a reputation to outsiders. You can’t get halfway through the word without people’s eyes fogging up as they start to dream about beaches and scenery and sunshine. And much of it is true – even on my third visit, the magic of this place remains.

For me it’s the temperature, which varies so little from day to night and from season to season, that the only climate control you ever need is deciding whether or not you need a shirt to go with your shorts and bare feet. Even when you’re inside, the windows and doors are always open, so really you are always outside.

But Hawaii also carries a reputation for very high costs. Tourists will lament, “The hotels are three hundred dollars there and the drinks are fourteen, plus gas is five dollars a gallon!”. If you talk about actually living in Hawaii, you’ll get a report like “Houses are a million dollars there! The milk is ten dollars a gallon and electricity is three times the price it is on the mainland!”.

While all of these things are technically true at times, somehow I have managed to live here for almost three weeks so far while spending a grand total of $37.00. And even that was purely optional: a six-pack of gourmet Maui Coconut Porter beer, two pounds of grilled fish and vegetables at an exorbitant late-night Whole Foods buffet, and a flowery lei at the airport to give to Junior ‘Stash as he got off the plane.

“But Mr. Money Mustache, you’re cheating because of the special arrangement you made for your vacation!”, might be the final attempt from an exasperated complainypants.

And indeed, you are right that I made a special arrangement.. but the reason I did it wasn’t to cheat. It wasn’t even to save me a few thousand dollars on accommodations. It was to remind all of us that no matter what you do in life, there are always special arrangements that can be made, given the right Mustachian Mindset. In fact, our entire monetary system, society as a whole, and even our very existence on this Earth, are all what you could call special arrangements. Once you realize that, you can open the door to specialness in all of your activities.

It is quite apt that I ended up in the home of this couple we’re calling John and Jane Aloha* for they are quite possibly the Head Mustachians of O’ahu. After beginning their adult lives in the standard fashion with student loan debts and financed cars, they started a transformation that began with the beginner personal finance advice of Dave Ramsey and Suze Orman. That helped them shed some of the worst monetary habits, and apparently Mr. Money Mustache took over the advisory role once they were ready. So when I showed up here, I found two old 4-cylinder cars in the driveway, two phones running on $10 per month Airvoice plans, amazing home cooking, low energy consumption, and all the other characteristics of an efficient household. On top of that, I’ve noticed that almost every visitor to the house seems to be an MMM reader as well – the Alohas have apparently handled their duty of spreading The Word quite admirably.

When you circulate in a crowd like this, you see a different side of Hawaii. In any “high cost-of-living” area, you will find a few people who are able to beat the system and live a good life more affordably. The basic principles of this are the same in every place, even while the details vary:

Consume less of what is expensive, and replace it with what is cheap and plentiful locally.

For example, Housing is expensive in Hawaii. Back in Colorado, it’s pretty cheap. So if I moved here, I wouldn’t get another 2600 square foot house – we’d be fine with a third of that.

High-cost areas are also usually a good place to be a renter, and a less good place to be a property owner or landlord. So don’t buy a $700,000 house just because everyone else is doing it. If you can rent the same one for only $3000 per month, go for it. Or if you do buy, find a way to rent out space to offset the cost. Just be sure your area will never be subject to a 50% price haircut, leaving you with negative equity (hint: if the prices have gone up significantly in the past 10 years or are affected by oil booms, history shows that your home could be a bubble rather than a permanent store of value).

Similarly, electricity and gasoline cost more – so you might choose to do less burning of those things.

Meanwhile, climate control is free – you never need heat, air conditioning, or high-tech clothing. So you make the most of it – even having most of your living space outside. Bike transportation remains free, and the weather allows it every day of the year. Avocados (322 perfect calories or 1/6 of a day’s food each) and bananas are free, since they grow on trees in your back yard, so you make those a bigger part of your diet. Beach vacations are free, so you consume them daily, while never needing to buy plane tickets.

The thing is, most mainland US residents who move here just attempt to replicate the mainland lifestyle here. SUVs driving pointless laps around the city, air conditioning, and imported food. And they pay accordingly, creating the famous “high cost of living” for themselves.

I find it hilarious to watch all of the tragic caged humans here bumbling around in their smelly traffic jams, unaware that they are on a fucking beautiful little tropical island!!! There shouldn’t even be any personal motor vehicles in this whole damned place – the streets should just be happily lined with bikes.

When you do have to shop, figure out how to do it well.

In my own informal research, I have found that while it is possible to pay $8.19 for a crappy little box of Life cereal, it is also possible to get a lovely tray of fish for grilling for five bucks. And using the little iPhone app that Safeway provides (also available through their website), I was able to find mainland-level pricing on most of the family’s key groceries. Also, the Costco stores in this area seem to set their food prices at almost the same level as they do everywhere else – making that store even more useful than usual.

Use the plentiful wealth that made the area so expensive in the first place, to your advantage.

Why did your high-cost area become so expensive in the first place? Because many high-income people have moved there, and housing construction did not keep up with demand.

What do high-income people do? They buy lots of stuff. Products and services. Then they sell or throw out their almost-new stuff and repeat the process. This means the Craigslist in such an area is well-stocked with nearly new items at low prices – and that is of course where you will get all your stuff. And the market for fancy services at high prices is very strong – if you do part-time work in any of the service industries (from private yoga lessons to plumbing), you will be paid well. There is even a house sitting scene in this area, where rich people allow responsible non-rich people to stay in their houses for free, during the months they are away enjoying their homes on other continents.

In the end, the decision of where to live does not have to be made with cost as the deciding factor. Even the most frugal of early retirees can carve out a great life in an expensive city with proper innovation, as Jacob from Early Retirement Extreme proved by living on $7000 per year in the San Francisco Bay area. Of course, if moneymaking itself is your primary skill, you can also attack a high-cost area by simply spraying money in every direction. It’s just not my idea of a satisfying way to solve a challenge like this.

I’ve already run through the scenario of what it would be like for the Mustache family to move to Hawaii. We could spend more and continue the same lifestyle, or we could shrink our lifestyle and spend the same amount or less than we do now. Since a simpler lifestyle would in no way compromise our happiness, that would probably be the choice we’d make. It only seems right out of respect to an island paradise, to live lightly upon its surface. And indeed on a broader scale, we all live on an island.

*I guess I should I should say trio now, as they had their baby girl this week; happy birthday Baby Aloha!