There’s an old saying, “If you can make it in New York, you can make it anywhere.” The idea is that with New York City being so competitive, only the strongest survive. I worked on the trading floor at one of the most hardcore investment banks around and I can unequivocally tell you that making it in NYC is brutal. The weather beats you up for at least six months a year, the work hours are long, and your money doesn’t go very far.
Two years and 15 pounds heavier I left NYC in 2001 for an easier life out in San Francisco where I didn’t know a soul. I thoroughly admit I didn’t make it in NYC. Perhaps I could have stayed on as a third year financial analyst, but surely Goldman would have made me go back to business school afterward rather than promote me directly to Associate. The thought of returning to school at the time and spending all that money wasn’t appealing.
By spring 2001 it was clear the economy was not in good shape one year after the NASDAQ collapsed. I decided to take matters into my own hands and jump to a competitor for that Associate promotion and raise instead.
Waiting to get let go is like waiting to die.
Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
The Difficult Hawaiian Life
I’ve been coming back to Hawaii for over 35 years because that’s where half the side of my family is from. Ever since college graduation in 1999, Oahu has been tempting me to hurry up and quit the stressful finance life so I can kick back on the beach and live off mother nature. Every year I resisted because I knew that once I moved to Hawaii, there was no going back.
I noticed several childhood friends attend the University of Hawaii and never leave. They’d find stable jobs as accountants, dentists, telecom operators, realtors, car salesmen, and public servants making a healthy $35,000 – $90,000 a year.
Instead of living on their own, they’d continue living with their parents, saving lots of money in the process to one day buy a place if they ever meet someone special. Family (Ohana) is the foundation of Hawaiian culture and having three generations live under one household is not uncommon. Even at our weekly Friday night poker game, a grandma comes to wipe us out ever single time.
In the back of my mind I always knew Oahu would forever be waiting for me. As a result, I didn’t want to permanently return until I could thoroughly see what I could do on my own on the mainland or in a foreign country.
If your first car is a Ferrari, your car driving experience is ruined for the rest of your life. Besides, the speed limit on the H-1 highway is only 50 mph! That’s when you know you’ve literally got to slow down for island living.
I wanted my first car to be a beater with electrical gremlins and funny screeching sounds so I decided to start my career on the East Coast and gradually move my way West as my energy for work faded. The hope was that by the time I could move back to Hawaii, my finances would make up for my lost enthusiasm to be somebody’s whipping boy.
Motivation To Become Financially Independent Is Hard
When it costs nothing to surf or hike, it’s really hard to get motivated to make a lot of money. As a local, you get Kama’aiana rates which gives you further discounts on hotels, services, and golf rates. There are loads of parks all around the islands where you can play tennis, soccer, and basketball for free. Best of all, every beach is open to the public, even the ones with multi-million dollar mansions behind them.
There is a strong feeling that everyone in Hawaii is on vacation because of the large tourism industry that dominates the economy. If every other person you meet is from Japan, Europe, or the mainland hanging loose for a week or two, you’re going to feel mighty compelled to also get into vacation mode. You start thinking, If they are enjoying life on vacation, why can’t I? Hawaii’s biggest import product is other people’s leisure!
When it’s 70-88 degrees every single day, it’s hard to motivate yourself to work inside a cubicle for 8+ hours for a better life when a better life is waiting for you right outside. There’s no point saving for retirement!
New York City’s grey skies, muggy summers, and frigid winters made it EASY for me to work 14 hour days at 1 New York Plaza. We had computers, free internet, a small shopping arcade, a gym, and free food. What more do you need?
Saving money and working like a dog came naturally on the East Coast because all I could think about during the winter was buying a plane ticket to somewhere warm and never working another day again.
Hawaii Makes You Easily Satisfied With Life
I remember vomiting junior year of high school after an intense training session in track. My teammates and I were practicing for the 4X200 meter relay for Districts and we pushed ourselves to the max because we were never satisfied.
As I was barfing my lungs out my coach told me, “That a boy. You haven’t really tried your hardest until you start vomiting all over the place!” She sounded cruel at the time, especially since she was extremely out of shape. But I took her words to heart and aimed to vomit all over her shoes every single day!
Major cities in the mainland propel you to want more, more, more. There’s never an end to the amount of money you can make in New York City or the number of startups you want to kill yourself over in San Francisco. Hawaii gives you the entirely opposite effect of making you slowdown and appreciate all that you have.
I knew if I returned to Hawaii early I’d be absolutely satisfied with a $50,000 a year job working 9-5. Of course there’s nothing wrong with a $50K a year job and regular work hours, I just wanted to test my limits. The only way I could thoroughly enjoy Hawaii was to make my fortune elsewhere and come back without having the need to work 40+ hours a week. The temptation to slack off would be just too great.
I’m keenly aware that locals hate it when non-locals go away and come back to the island with their flashy cars and fancy homes, making things more expensive in the process. This is why I’m happy to just live in an old home I’ve been coming back to since I was a kid and drive an old car. It’s all about rolling in a hatchback or old truck to blend in.
Hawaii Is Expensive Once You’re On Your Own
The median home price is about $750,00 in Honolulu according to online estimates in 2019. Based on my conservative 30/30/3 rule of home buying, this means you need to make roughly $250,000 a year (house max price is 3X annual salary) and have $225,000 on hand in cash (30% of house in cash for 20% downpayment and 10% cash buffer) to be able to buy a home. To get a home in a desirable area, you probably have to spend at least $1,000,000 nowadays.
With the median household income of around $78,000, Honolulu households are making good money compared to the national median of $62,000.
But when the median house is 8X the median salary, the income isn’t that great if you’re looking to buy. So how does the typical Hawaiian buy a median priced home? The answer is with a lot of help from family.
The majority of my Hawaiian friends end up living at home with their parents after college until marriage. As a result, decent sized nest eggs should grow over a five-to-eight year period when the children typically tend to move out to start their own family.
But even with $50,000 – $70,000 saved up during this time period, that’s still short of the $115,000 downpayment on a median $575,000 house. In every case I know their parents pitch in to cover the rest of the downpayment or more. (See: How Much Money Should I Have Accumulated By Age?)
To corroborate my anecdotes, I sat down for lunch with a Prudential partner one day. He mentioned at least 50% of his friends before they were 30 lived with their parents, and 25% of his friends still live with their parents over 30. In other words, generational wealth plays a huge part in the home buying process. For real estate investors out there, the partner sees houses on the Waialae Nue Ridge as good relative value.
Gas prices are on the high end at $3.70 for normal, $3.80 for premium, and $3.95 for super. But food prices is what really stings. Because over 80% of the food consumed in Hawaii is imported, prices are regularly 10-30% higher than the mainland. You may want to change your diet to something more locally oriented such as eating papayas, mangos, poke, laulau, and poi to save money.
If you come to Hawaii from foodie havens such as New York City or San Francisco, you may be disappointed with the cuisine. It would be one thing if the comparable cuisines were the same price, but if food costs 10-30% more than the mainland, your expectations are for 10-30% tastier food. When you don’t get that, it’s disappointing.
The main cuisines revolve around Korean BBQ, Chinese, Japanese, Hawaiian, and fast food. It’s the same five things over and over again. If any entrepreneur wants to open up an incredible Mexican or Malaysian restaurant, the opportunity is wide open. Some good restaurant choices in Honolulu include: Ono’s, Salt, Yakiniku Camelia, Doraku, Morimoto’s, and Uncle Bo’s.
Due to high living costs, Hawaii makes it much harder to leave your parents as an adult. If you become overly dependent on your parents then it becomes very difficult to stretch to do other things because you’re already stretching to survive.
Hawaii Life Will Test Your Resolve
Everywhere you go in Honolulu, the city is booming with people. Tourists are flocking back to the islands in droves now that world economies are back. Even with all the tech and internet fever in San Francisco, San Francisco sometimes doesn’t feel as busy.
To give you an example of how strong the economy is, we hosted a team building offsite at The Kahala Hotel & Resort during off peak season in November and the standard rooms with only partial views were going for $600 a night!
The hotels in Waikiki were also packed with average room rates of over $250 a night. The Kahala Hotel & Resort is my favorite resort in Oahu due to its location and very tranquil setting (top picture). I just can’t afford to stay there for very long! Shout out to Shane Lani, the manager from the Seaside Grill for taking care of us for lunch. The service is always fantastic.
A booming economy does make doing business theoretically easier due to higher demand, but Hawaii is still tiny compared to the immediate publicity you might get from starting a business in New York City with 10X the population.
Just open a BBQ joint and you could easily see lines around the block if it gets profiled by a major food blog like Eater. If you want to start a tech company in San Francisco, you’ve got unlimited resources to do so.
Enjoy A Better Life In Hawaii
Hawaii is a magical place that promises to make you happier. The people are friendly if you respect the culture. There is also a tremendous amount of diversity, which is great if you hate racism, bigotry, and all types of other hate that’s going on the world.
But be careful. Hawaii might make you soft. If you can avoid the temptation of good weather, amazing scenery, and pristine beaches to focus on your career and earn enough to afford a house on your own, you can make it anywhere.
All the glory goes to someone who doesn’t succumb to temptation when temptation is all around!
As a father now, I do find the massive appeal of relocating to Hawaii. The family culture in Honolulu is one of the best, with one of the highest kids per capita in the entire country. I just fear that once my kids know what paradise is like, they won’t have motivation to go anywhere else or do much of anything again.
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Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Updated for 2020 and beyond.