Guest Post by Kelly from My Friend Kelly .
I’ve always found amusement in the personal finance conundrum regarding low versus high cost of living areas (COLA). Hence, “If you’re in a high COLA, move to a lower COLA to pay less on a house, taxes, groceries, etc.” And the contradicting advice, “If you need more income move to a high COLA to find more jobs. Sure you’ll pay more for gas, daycare and insurance but you’ll be making more!”
As a California resident and now home owner, I’ve found there are ways to thrive financially in an expensive region without a six–figure salary. Here are eight:
1. Ignore the National Averages, they’ll just depress you.
Yes, gas is higher in California than probably 46 other states. The first time this occurred to me was when a friend visited from South Carolina and kept taking pictures of our gas stations. And when gas prices were nearly $5 a gallon, all the news seemed to cover was how cheap it was everywhere else.
So while it may be cheaper to gas up in Nebraska, comparing the two regions is an exercise in frustration. Instead, focus on what you can control, finding the best deal in your city. This doesn’t mean you need a 75-page price book for every item available at Wal-Mart, just focus on the few things you’ll buy over and over again. Use the internet and price-matching sites to get the best idea of merchants that consistently offer the best deal.
You can do this with gas stations, hotels, oil changes, restaurants, pretty much any product or service where you want to cut costs. This chart  shows the average cost for living and housing in all 50 states and if you’d like to see how your expenses measure up regionally check out this site .
2. Work. Really, really hard.
It’s very tempting for me to leave this out of the discussion but for the last year and a half I’ve worked 2 or more jobs simultaneously. At times, that means 80-hour work weeks and 2 days off each month. If it is feasible to pick up a second job, even short term, you will likely find more opportunities in a high COLA. It is not unusual for professionals to have more than one job and as long as you don’t violate company policy, and performance standards are met, employers should understand as well.
High COLA economies typically have more job opportunities because commuters spend more time away from home and tend to rely more on convenience shopping and services. Business and industrial areas have hotels and a variety of restaurants that are supported by business traffic.
3. Hard work goes beyond reporting for duty at a workplace.
If your utility rates are high you’ll want to make your home more energy efficient and monitor your usage. If you are willing to do the work you will enjoy lower costs even in an expensive area. My home is a half-plex and the reduced square footage and shared wall help keep my costs low.
Many of my friends have young children and have made the choice to forgo a career short- or long-term. These moms and dads work very hard themselves. They’re often utilizing “free” time to seek out the best values for their family, helping relatives and friends as needed and focusing an incredible amount of time on raising amazing kids. If you consider the cost of such services if provided elsewhere, you can quickly see how a parent’s hard work for their family will bring about significant savings as well as non-monetary benefits.
4. Control major costs.
Living in a high COLA doesn’t mean giving in to sky-high expenses without thinking. Sometimes when everyone else resigns to paying a premium, smart shopping can reveal lower cost options. Housing, for example, is almost universally more expensive in high cost of living areas and can make a major dent in the most frugal budget.
The cost of my first home was nearly half the median housing cost for my state. Don’t get me wrong, it’s not a mansion and I don’t work in real estate. There are disadvantages to owning a half-plex, but the smaller mortgage is not one of them. When the standard encourages excess, look for reasonable prices and modesty. This might mean a 6-year-old car that was traded in for a new model but has plenty of miles left or a house without all the amenities we’ve come to expect.
When you’re considering your monthly budget don’t just look at where you can save with coupons. Take your top three expenses — usually housing, transportation and healthcare — and examine your options. If you trim even just 5% off major costs the impact will be significant.
5. Embrace your locale.
California is a cornucopia of agriculture. So much is produced here that locals can and should take advantage of it. There are fruit stands in many counties and the grocery stores carry local fresh produce nearly year round. Take some time to identify what your state or county produces in abundance.
In New York City, its affordable entertainment — there are restaurants, live theater and museums for every budget. On Hawaii, it’s fresh air, beautiful beaches and affordable swim accessories. Resident discounts are sometimes available and allow locals to take advantage of parks, recreation, and attractions during the slower off-season.
Check out your city website for festivals, tours, local interests and major industries. Enjoy the perks your community has to offer whether its hiking, music festivals, golf courses, boating, gardening or earning side income from the tourist trade.
6. Know What’s Cheaper
Public transportation is more readily available in densely-populated areas and more employers are increasingly likely to subsidize costs. Zipcars , trains, extensive bus route and bike trails  enable thousands to get around without buying, licensing, insuring and fueling a car. Find out the options in your own area and even if you cannot forgo a car, substitute for other transportation when it is feasible.
Communities with a local university system or community college provide opportunities for low cost continuing education not to mention bring apprentices into your community. Beauty schools often give great haircuts at a reduced price so students can practice. My local community college allowed residents to drop off broken appliances for students to practice repairs. This saved a trip to the dump and provided hands-on experience. And $30 in tuition paid for a summer semester of pool access where students can swim laps for college credit.
Campuses also have a thriving used book market, lots of free boxes the week after the semester starts and a variety of clubs and facilities which may be open to non-students. In my current town the university runs a mobile vaccination clinic staffed with vet students that travels each weekend providing low cost shots and medication under the direction of an experienced veterinarian.
High COLA economies also have an abundance of choice, whether it’s four car dealerships on one block or a page of Mexican restaurants in one zip code. This competition drives down prices. This is a little harder in a rural area when the only shop in town knows you’ll have to drive an hour to gain any significant savings.
It may not be worth your time to find the cheapest taco for date night once a month but if you’re hosting a party or buying a car, the savings could be substantial. Get several quotes for infrequent expenses like landscaping, professional cleaners, painters or large purchases like cars, appliances and computers.
My friend, Andrea, for example, recently purchased a newer car and “basically pitted 2 dealerships against each other and it worked!” She reports the car was “$3500 less than MSRP and $1000 below invoice.” For more tips check out this highly recommended site  to successfully negotiate bank fees, salaries, cable costs and credit card interest rates.
7. Adjust Inflated Expectations
Cost of living is most easily described as the monetary cost of basic necessities: food, shelter, clothing. The measurement also tracks the consumer price index which includes non-essentials. It may be more expensive to get a massage, see a movie and eat out in my city but that doesn’t mean I’m obligated to frequent those businesses.
It may be more expensive to go to the movies in your town but you can compensate by going less frequently, finding coupons, seeing movies when you visit another town, or substituting with rented movies at home.
When it comes to durable goods the internet is the great equalizer on price. Before the popularization of sites such as eBay and Amazon you were limited to the prices set by local merchants. Now we can search to compare apples to apples and given a few days shipping time have the lowest price available. Whether that’s finding the best price on toilet paper or trucks, the internet is in many ways the best marketplace.
8. Try Something New
There will be times, no matter how hard you try or how much you save otherwise, that you cannot cut your basic living expenses. We cannot negotiate with utility providers or get lower insurance rates without risking essential coverage. You may read tips on this site and lament the fact your major grocery chain isn’t featured very often or you don’t have a local CVS.
In those times it will help to get creative and try something new. It may result in a new grocery shopping experiment , giving up paper , or downsizing your home . Living in a high cost of living area can be challenging and it can be rewarding. But don’t be afraid try something new.
Kelly is a 25 year old single homeowner living in Northern California. Despite a high cost of living and tough job market, Kelly has created a cozy home without acquiring debt. Now just $3,000 away from eliminating student loans (the last of consumer debt), Kelly just took her first trip abroad, decorates from the thrift store, and enjoys teaching financial awareness. Kelly blogs at My Friend Kelly .
photo credit: meironke; Ed Yourdon