The “Cheap Neighborhood” Problem

Connie writes in:

Right now, we pay $1,000 a month in rent. About ten minutes away, there are houses available that are as low as $300 a month in rent and they’re perfectly fine houses. The problem is the neighborhood. The area is loaded with people on welfare and most of the yards are really trashy. I don’t want to live there. The constant debate I have is whether it is worth $700 a month not to live there.

Choosing where to live comes down to a personal compromise. On some level, you’re compromising your “ideal” place to live in exchange for a rent (or a house payment) that you can afford. The more you’re willing to compromise those factors in the short term, the lower your rent can potentially be, and the lower your rent is, the easier it is to save for the future.

Like it or not, that extra $700 per month is going to build up quite rapidly in your savings account. You’ll be able to knock down debts and save for a down payment for your own home much quicker if you live there, which is the advantage of living there.

The drawback, of course, is that it is a further compromise on your ideal living situation. We all have this ideal place that we’d like to live in our heads and the further we get from that, the less comfortable we are.

For me, the solution to this problem comes in several parts.

First, I would spend some time thinking about what factors really matter to you. What actually matters in terms of where you live?

For example, my primary concern is crime rate. I want my children to feel safe if they’re playing outside during the day (provided they use basic caution in common situations). I want to feel perfectly safe when I’m outside near my home at night.

I don’t really care too much what my neighbors are doing. Regardless of where I live, I will make attempts to build a good relationship with my neighbors. Everyone has quirks – some are just more visually obvious than others.

The real question is what matters to you? What is an absolute no-no in terms of where you live? Are you drawing an absolute line based on crime rate? Education levels? Income levels in the area? What prevents you from wanting to live in an area?

Second, I would make sure that the image you have in your mind actually matches reality. You’ve drawn some images in your mind about what this place is like, but does it match reality? You can easily investigate most factors about an area – crime rate, education rate, income levels, and so on – online. Compare that data to your own area.

Are you using one or two houses as a negative example of what the entire area is like? It’s really easy to see a negative example of something and use that to paint a broad negative picture of nearby areas. If two or three families in an area don’t care for their yard, it doesn’t mean that there aren’t many houses around the block with well-cared-for homes.

Third, I’d think about my goals. Once you’ve researched an area and have figured out what the true differences are between that area and where you currently live, start thinking about goals. Where do you want to be in five years? How will the savings on rent help me to get there?

Life is a series of compromises, and where you live is certainly one of those compromises. It always makes sense to dig into the facts of the situation before you make a decision – and it also helps to consider how it actually impacts the goals you have for your life.

I don’t know whether Connie will make the move or not, but it makes sense for her to dig further into the facts rather than discarding $700 per month because of a general impression. That’s a lot of money to leave on the table.

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