Real-World Cost of Living Analysis: Los Angeles vs. Madison, Wis.

Awhile back I wrote a post explaining my decision to move from Los Angeles to the Midwest. I’ve now lived in Madison, Wis., for more than five months, and in this follow-up post I’ll do a deep dive into how much money I’ve actually saved since making the move.

Hopefully this can inspire others to look into areas with a lower cost of living. If you’re striving to achieve financial independence as soon as possible, location is one of the most important factors that’s often within your control.

Rent is the obvious money saver, but things like Internet service and car insurance cost way less out here than I anticipated. For this project it made sense to compare the best data I currently have, which is from my last three full months living in L.A. versus my first three full months living in Madison. So, the utilities category is sure to rise in Madison once the February heating bill arrives.

Let’s dive in.

Monthly Expenses


When I left L.A., I was paying $700 a month in rent. This was for a one-bedroom apartment I was sharing with my girlfriend that cost us $1,400 a month in total. I now pay $400 per month for a two-bedroom apartment that costs $800 per month in total.

  • Savings: $300/month


My last three months of utility bills in L.A. averaged $81 per month. They cost $68 per month for my first three months in Madison. But as I mentioned above, this coincides with some very hot months in L.A. and some mild months in Madison, so this is not the best indicator of where there is money to be saved. 

  • Savings: $13/month*


I was paying $56 per month for Internet service in L.A. That dropped to $30 per month in Madison!

But, we also had to buy a new router ($80), because the one we had was not playing nice with Charter. (I wasn’t all that surprised to learn that the technology that worked seamlessly with Time Warner wouldn’t give us a signal on Charter. I can’t wait until Google Fiber is available everywhere.) Still, I’m saving $26 per month now that I’ve broken even on the one-time expense of a new router.

  • Savings: $26/month


This is a big one. Since I’m now working from home and have no commute, my girlfriend and I were able to drop down to one car. We sold her 20-year-old Camry for $1,600, and we kept my 2007 Prius (bought used for $5,000).

My commute to work in L.A. was only 12 miles total, but that adds up. This Lifehacker article details how, when commuting by car and accounting for lost time as lost income, each extra mile you live from work costs you about $800 per year. By that calculus, I’m saving an estimated $4,800 per year just by working from home — although to be fair, this is more the result of a career change than a geographical one. 

Plus, I now fly to New York once a month for work. While my company picks up the tab, I get to book my own flight and hotel, which converts directly into rewards points for me. (I got the Chase Sapphire Preferred® Card to maximize my points on all these purchases.)

Finally, my car insurance in L.A. was $800 per year. That was cut in half, to $400 per year in Madison. (If there is one thing I learned from going through my finances in granular detail it’s that driving is incredibly expensive, even with a Prius!)

  • Savings: $400/month + miscellaneous vehicle expenses

Big-Ticket Items for the Move

These large purchases drove up my expenses in the months after our move, but like the modem, they should only be one-time costs as opposed to ongoing expenses.

Bicycle: $250

Madison is a wonderful biking city, and I wanted to take full advantage of that. But, that meant I had to find a bike. I inherited a nice one from my girlfriend’s sister, which was great. Still, it needed a major tune up, and I wanted fenders to make it more comfortable to ride it during inclement weather. All in all, it set me back about $250.

Winter clothes: $500

My year-round wardrobe in L.A. consisted of a mix-and-match ensemble of three basic items: jeans, basketball shorts, and t-shirts. All old, all comfortable, all perfectly suited to handle perpetually 70-degree days. I hadn’t worn gloves since college and my one winter coat was donated years ago.

Even with our current winter setting records for warmth, I still can’t run around in a t-shirt every day. So, stocking up on good-quality, warm clothes was a big chunk of expenses — though, like the bike, they’re one-time costs I’ve chalked up to the move itself. My jackets, shirts, socks, hats, and long underwear cost me $500.

I have one glaring regret when it comes to my winter clothes purchases. I bought a hat for $150.

No, that is not a typo, and no, the hat did not come with a hundred dollar bill inside it. I really spent that much.

It started so innocently. I wanted to see if I could find a warm hat that wasn’t made out of polyester. I was reading some not so nice things about the process behind making polyester, and how the chemicals can be irritating to some people. If something was going to be on my head for hours a day, I wanted it to be as pure as possible.

Next thing I knew I was whipping out the credit card to pay for a fancy, 100% wool hat. Whether it was excitement over my new living situation, not asking myself the really important questions to consider before a big purchase, or some other combination of factors, I was helpless in the face of this warm, beautiful hat. It looked so soft and comfortable, and I was doing my part to support small businesses! I’d be silly not to buy it!

I regretted it soon after, but it just goes to show that we all make financial mistakes, and it’s important to remain vigilant against the relentless desire to have shiny new things. In that moment, I was just your average “see-it-want-it-buy-it” consumer, and I learned a hard lesson. The hat is nice, but I’m not a millionaire. Thus, I should not be buying hats that amount to half of my monthly grocery bill.

Total Breakdown and Final Thoughts 

Not including rent or transportation, my average overall expenses for my last three months in L.A. were $578. My average expenses in Madison round out to $742 per month, although that includes one-time purchases like the router and, argh, that hat. But I was still surprised by these results — I thought Madison would come in much lower.

However, housing and transportation are two of the biggest expenses in an average American’s budget. Once those categories are factored in, minor differences in the cost of living are almost inconsequential.

Factoring in my higher rent and car-related costs in L.A., my expenses there were closer to $1,700 per month — significantly more than the $1,200 I’ve been dropping monthly in Madison. And once my one-time, big-ticket purchases fade into the background, I should be saving about $700 a month or more on an ongoing basis.

While my expenses have certainly dropped since the move, this exercise has brought to light some issues I need to address. For starters, I would have guessed I was spending less than $1,200 per month — that’s why it’s so important to track your spending. I think it’s time to trim the fat and see if I can get that figure even lower.

Anyone want to buy a $150 hat?

Drew Housman


Drew is a former professional basketball player and a Harvard graduate. He is passionate about writing content that empowers people to improve their careers, save more money, and achieve financial independence. His writing has been featured on MarketWatch, Business Insider, and ESPN.