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Why some who cut expenses to the bone still can’t make ends meet

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Editor's note: This article by Len Penzo originally appeared on his blog, Len Penzo dot com. It has been reprinted here with permission.

The other day I was fueling up my car at the local gas station. While I was waiting for the tank to fill, I thought it would be a good idea to get rid of the remains of a ridiculously large bug that was splattered on the windshield.

Unfortunately, the only squeegee I could find was at another pump island that was occupied by a big ol’ cowboy who was filling up his pick-up truck. (Yes, there are a few cowboys in my neck of the woods.) So I walked over to him.

“Do you mind if I use the squeegee?” I said. (I almost ended the question with “partner,” but I figured that would be overdoing it.)

The rancher squinted and then, for a couple of uncomfortable seconds he just stared at me with his steely eyes. Uh oh, I thought. It suddenly crossed my mind that if this guy was in a bad mood and looking for a fight, it wouldn’t be long before that dang bug wasn’t the only thing plastered on my car windshield.

Thankfully, and much to my relief, the wrangler broke into a wry smile. “It’s a free country,” he said.

Well … He’s right about that. It is a free country.

Of course, that freedom extends to how we manage our personal finances too — which is why it almost always surprises me whenever I hear people making excuses for why they can’t make ends meet.

I don’t care how much money you’re earning; unless you’ve been struck by a catastrophic medical condition, are stuck in an extended period of unemployment, or blindsided by another unforeseeable event such as a gold-digging spouse who skips town with your life savings, there’s no reason why you shouldn’t be able to balance the bills every month.

Let’s face it, folks. The reason most people get into financial trouble is because they make lousy choices, and one of the biggest choices we all make that affects our standard of living is where we choose to live.

A few years ago, I explained why people who can’t survive on an income of $40,000 per year have nobody to blame but themselves — and one of the biggest reasons is because, well, it’s a free country.

Think about it; most of us have the freedom to live wherever we want — especially in the early stages of our adult life. And yet, there are countless numbers of people who insist on living in high-cost-of-living areas even though they lack the means to afford it. Why?

The most recent data from the United States Census Bureau Cost of Living Index reveals just how much disparity exists in the standard of living for the 325 largest metropolitan areas in America. The index measures relative price levels for consumer goods and services such as groceries, housing, utilities, transportation, and healthcare.

Here are the American metropolitan areas with the ten lowest and highest costs of living:

The nationwide average equals 100 and each score represents a percentage of the national average, so areas with lower scores are more affordable than those with higher scores.

As you can see, all things being equal, it’s approximately 2.6 times more expensive to live in Manhattan, New York, than Harlingen, Texas. That’s a significant differential — and it’s especially important to keep in mind if you’re, say, a twentysomething or somebody who is still trying to figure out where to put down your roots.

Yes, for many people, living in San Francisco (affordability index: 164.0), Lake Tahoe (146.4), Honolulu (165.7) or the Big Apple is a romantic notion — but it’s not the smartest idea if your household income can’t cover the bills. It’s just not.

When it comes to keeping your financial head above water, remember: where you live matters. It really does, folks.

The good news is, it’s a free country. So choose wisely.

Len Penzo is a personal finance blogger with a strong disdain for debt. His blog, Len Penzo dot com, has been featured as one of Kiplinger's Personal Finance Best Money Blogs in 2010 and 2012.