What’s it like living as a family of four in New Jersey on $150,000?

My friends Joe and Jill (not real names) are hard workers. Joe is an engineer of some sort (don’t ask me exactly what he does) and Jill is a teacher in a low-income area who loves her job and her students.

All together, they take home a joint income of $150,000. And considering that this is about twice the U.S. median household income as of 2022, you can think of it as a fairly large income.

But the biggest reason Joe and Jill struggle financially is because of where they live. Unfortunately, despite a decent joint income, we are barely scraping by.

If you live in a high cost state

A lot of the reason Joe and Jill aren’t in a better place financially is because they live in New Jersey. They’re both from New Jersey, their families still live in New Jersey, and they can’t see themselves leaving New Jersey.

But the reality is that you need a much higher income to live comfortably in the Garden State than in most of the country. Zillow currently estimates the average home value in New Jersey to be $503,432. Meanwhile, the average home value in the U.S. is $347,716. So, in general, homeowners in New Jersey are looking at higher mortgage payments.

Meanwhile, the average New Jersey homeowner’s property tax bill last year was $9,803. However, according to recent figures, the median property tax bill for a U.S. homeowner is $2,971.

The biggest reason Joe and Jill struggle to save money and manage their bills is because housing takes up nearly 40% of their income. This exceeds the generally recommended 30% threshold. Additionally, Joe and Jill have driven older cars for many years, but had to replace one of them a few years ago when vehicle prices were high. So now they also have expensive car payments to pay each month.

Then there’s groceries, which are probably the biggest expense in your budget after housing and transportation. It costs $200 a week to feed a family of four. I shop at discount grocery stores and rarely eat out.

Overall, Joe and Jill have little saved and little money to spend on anything beyond their basic bills. One of their greatest joys is the money they pay for their children to participate in extracurricular activities.

They don’t go on vacation because they don’t have enough money. And although they are known to sometimes get financial help from their parents to cover costs such as home repairs, their parents do not regularly give them money because they cannot afford it. So all told, they are a bit stuck.

Giving up high-cost areas may help.

Joe and Jill feel trapped in New Jersey because they have roots here. Moving to a less expensive state means giving up your support system and struggling to see family. So it’s not worth it to them.

On the other hand, you may be someone who lives in a high-cost state without that connection. So, if your job is to be performed remotely, it might be a good idea to run the numbers and see if it makes financial sense to move to an area with a lower cost of living overall. This can be especially meaningful if you are self-employed. Because your income shouldn’t be determined by where you live.

Now, if you are a remote employee, you may find that your company sets your salary based on your geographic location. So if your current salary is $100,000, your employer could cut your salary to $85,000 if you move to a zip code with a much lower cost of living. However, if you can pay much less for things like housing, you could still benefit financially, so it’s worth looking into.

It’s easy to assume that a six-figure salary will allow you to live comfortably no matter what. But in a state where the average property tax bill is nearly $10,000 per year, this is not surprising.

Joe and Jill are trying to take steps to increase their income and improve their financial situation. If you’re struggling, you might want to do the same. But also, if it’s right for you, consider relocating if the part of the country you currently call home is prohibitively expensive.

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