7 Thoughts on Low Cost Living

Watching your cost of living can accelerate your Financial Independence plans

7 Thoughts on Low Cost Living

We live in a low cost of living city. An hour away from Edinburgh, in Dundee, Scotland.

Dundee has a really bad reputation. Unfairly, in my view.

I’ve lived here for 16 years now, initially living in one of its notorious council estates. Do you know what? It was fine. It was a lovely house, and we never had problems.

Dundee is beautiful. The air is clean. The view from the Law is stunning. Within 15 minutes we can be walking on an isolated beach 3 miles long, not a soul in sight. Or 10 minutes north and we can be in the hills, walking the dog. In the winter, there’s skiing and snowboarding an hour away in the Cairngorms.

View over the Tay
View over the Tay

The people are friendly. It has a vibrant restaurant and music scene. There are loads of small independent shops. And if it’s too small for you, it’s only an hour away from Edinburgh, one of most beautiful European capitals. With an airport with connections to anywhere in the world. I’ve flown out to Singapore, New York, and Tokyo from Edinburgh. We regularly go through to Edinburgh, especially when the Festival is on.

These are huge benefits to the soul: clean air, peace and quiet, and time in our pockets.

Living in Dundee is cheap. Like super cheap compared to major cities. What’s not to like?

1. How expensive is my rent or mortgage?

We bought our house 7 years ago now.

It was cheap as chips. The mortgage on our period 4 bed detached was less than the rent we were paying on our previous 2 bed flat. And the rent we were paying on our 2 bed flat was cheap.

The average house price in Dundee is nearly £100,000 less than the UK average. Compared to London, you’re talking hundreds of thousands difference.

A one bed flat will set you back about £1,400pcm in London. Or about £750-900pcm in Birmingham or Manchester. A 1 bed flat in Dundee is £350-400pcm.

It’s easy to get your housing costs down below a third of your income in low cost of living cities. Without making decisions like this, you’ll need to work hard at increasing your income to get a high savings rate.

2. How expensive is my commute?

Given how small Dundee is, I don’t have to commute far.

I can walk down the road and in 10 minutes I’m in the city centre. Where my office is. The other-MM is a 10-minute drive out of town to work. Even if you live on the outskirts, it’s a 10-minute bus journey to the centre.

A 10-minute & nearly free commute. Compare this to London, where it’s probably 10 minutes just to get to the tube station.

Daily Transport costs are cheap here: I can walk to most places I need to be. There are shops at the bottom of the street. A monthly bus pass is about £40 if I needed to get about further or more frequently.

For many years we didn’t have a car and just got a taxi if we needed to get around somewhere big, like for the weekly shop. It’s cheaper than the operating costs of a vehicle when including depreciation.

But if you do have to commute, the prices of commuter trains to Edinburgh and Glasgow is similar to what you would expect if you were in the commuter areas of London. The length of the journey is similar also.

But we work locally, so have intentionally chosen to avoid long commutes. This is less of an option in big cities.

3. What is the cost of living like in Dundee?

Rent and Property in a major city takes a significant portion of your income. As mentioned above, in low cost of living cities, you can easily get housing below a third of your income.

Unless you were lucky enough to buy in London before massive house price inflation, you’ll now struggle to get on the property ladder. The exception is for those on high income.

But other expenses are less clear cut: I’ve eaten out more cheaply (and better quality) in London than I have in Dundee. As you can imagine, there’s more competition. The average mid-range restaurant is probably about 15-20% cheaper here, and a pint of beer isn’t 5 to 6 quid in Dundee either. But is restaurant food better in Dundee than London? No, it’s not.

Also, there isn’t a significant difference in the cost of food and everyday items, with London being about 5-15% more expensive on average.

The cost of a mobile phone doesn’t change. Neither does the cost of fuel, nor broadband, nor energy. So other living costs are probably going to be about the same, give or take 5-10%.

4. What about your Income? Don’t you earn less?

Income matters. Probably more than anything.

If I worked in London, I could earn more than I do in Dundee, probably about 40-50% more. Maybe up to double if I pushed for it.

From our perspective, the additional earning potential in London does not make up for the extreme increase in the cost of property and rent, nor the loss of quality of life. Almost all my additional earnings would go on housing cost of living. And that’s ignoring tax.

According to Numbeo[], I’d need a 68% increase in earnings to match my standard of living in Dundee. Anecdotally from people I know who have moved to London, I’d say that’s about right if not a little on the low side.

For a 68% increase in take-home pay, I need a 95% increase in salary due to taxation.

And that is to tread water, to stay the same, to match what I have now…

Jobs that are about double what I am on in London are certainly possible. But they come with:

Is it worth it?

I am fortunate to be able to work in a well-paid job, in a growing industry. I’ve been able to have continuous employment in the industry here in Dundee for 16 years, and I don’t see it slowing down. Quite the opposite: the company I work for opened an office in Dundee because talent is here and does not want to relocate.

Tentsmuir beach and forest, not a soul in sight
Tentsmuir beach and forest, not a soul in sight

So no, I don’t think it’s worth the move to ‘big city living’, horrid air, huge commutes, unaffordable 1 bed or studio flats, and… people… Within 15 minutes, we can be on a beach with not a soul in sight. Losing that is not worth double pay.

5. Digital-Nomading in my Geoarbitraged RV

Some take this approach to extremes.

Liquidate all of your assets and become a digital nomad in Chiang Mai. Live off your dividend income and the odd work you do on your laptop.

You can do that, but it’s not for us.

I know one person who has made this ‘digital nomad’ switch, and one who is thinking of it. One is a close friend, the other an acquaintance. Let’s just say, I think it takes a certain type of character to do something so bold. It’s just not in our nature.

Or you could sell all your possessions and live out of an RV. I don’t know where you shower, and where you charge it, but you know, each to their own.

Alternatives are somewhat less extreme, like retiring early to Spain, or Mexico if you are in the States.

Test out your tolerance. Ours landed us in a small city, a very comfortable house we own outright, where I can walk to work in 10 minutes. Yours might be different.

6. What are the downsides to low cost of living cities?

Dundee has a bad reputation. Unfairly, I believe. But this is a matter of perspective.

Dundee does have it’s problems.

It has high unemployment at 5.5% when compared to Scotland’s average at 3.8%. It has a problem with poverty and the social issues associated with that. However, I’ve travelled a lot. To some of the ‘biggest and best’ cities on the planet. I’ve seen more homelessness and poverty in downtown San Francisco than I have in Dundee.

But there is a problem. And it’s a problem that isn’t improving quickly enough. I am sure the recession and shockwave on the back of Coronavirus will make it worse, too.

Also, as it’s a small city there are fewer options. There are fewer restaurants, and fewer pubs, and fewer theatres. If that’s something that you need to keep you happy, then maybe a small city or town is not for you.

7. The Effect on Financial Independence.

Dundee is not unique in the UK.

There is plenty of low cost of living cities that are overlooked because you either haven’t heard of them, haven’t visited, or you’re giving too much credit to a potentially unfair bad reputation.

By choosing to live in a low cost of living area, with a well-paid career, we’re accelerating our financial independence plans. It’s allowed us to clear our mortgage 19 years early, have a Savings Rate of 80% a month, and be on track to retire in our early 40s. Retire early, if we choose to.

It also means that when we do retire, or semi-retire, our cost of living is as low as we want to go!

Subscribe now, follow me on Twitter @moneymagery, stick by your principles and you’ll be mortgage-free in no time.

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Sources and Attribution

  • https://www.numbeo.com/cost-of-living/in/Dundee
  • View over the Tay (c) Money Mage, All Rights Reserved
  • Tentsmuir (c) Money Mage, All Rights Reserved