Minimizing total cost of living

My inclination would be that finding the area where you can find the highest income potential, and then living particularly frugally would be the best way to save up. My further guess would be that this area wouldn't be the one with the lowest cost of living. Certain things lend themselves to frugality more than other things. For example, avoiding driving in an area with high parking costs is easier than avoiding living indoors in a place with particularly high rent, but you do have control over how you choose to spend your money.

This doesn't address your frugality, but I've found the Mercer HR index to be much more reliable than CNN or any others. Because they do hiring/staffing, they've got a much more comprehensive understanding/exploration of expenses/taxes/etc. It's probably the most comprehensive cost-of-living study done regularly. According to their survey, the cheapest city in North America last year was Ottawa, where I happen to live, but the Canadian dollar has pushed everything up this year, and now it's Winston-Salem. http://64.233.183.104/search?q=cache:Yc9V5EWH35QJ:www.canadianhrreporter.com/loginarea/members/viewing.asp%3FArticleNo%3D6231%26viewwhat%3DPrint%26subscriptionType%3DPRINT%26callerpage%3Dwhoswho+mercer+hr+cost+of+living+ottawa+109+2007&hl=en&ct=clnk&cd=8&gl=ca&client=firefox-a, hopefully it helps some.

Your optimization problem is missing one important factor, namely your starting salary. Why not apply for jobs all over the country, since you're obviously willing to relocate, and then optimize once you have some offers? What you really want is the ratio of area software industry starting salary to area cost-of-living, but I don't know that information is available.

FWIW, I seem to recall that property - whether renting or buying - is cheapest in Oklahoma. It is also centrally located. Housing is often the largest expense in a budget, so consider OK.

Hmmmm. I agree that if the goal is to save you should focus on income, then live cheaply where you end up. You could live in a big city and spend a lot on rent but save that much back by not owning a car and enjoying cheap and free entertainment. But if you want to live cheap, try the Missouri Ozarks. Pretty too.

If you *really* don't care where you live, you could go live in my hometown of Wayne, Nebraska, where the per-capital income is $13,984 and you can reasonably rent an entire house for $300/month. I'm not sure how close you want to live to a city, or what a "modern" city is, but it would be dirt cheap, especially if you got a contracting job where you could work remotely. There are tons of small towns like that in the Midwest, of course. If you want to live near a big city (Chicago as opposed to, say, Omaha), then a small town outside of Chicago may be your best bet.

You might want to consider also that moving, especially long-distance, is expensive, and it's also a pain in the butt. With that in mind, perhaps you should be making a choice in terms of where you want to live for years and years to come. Your frugal life in the short-term might entail sharing a rentail apartment with roommates. In the long-term, you might want or need to own a condo or house. Take the long-term possibilities into account when you decide. Taking income taxes into account shows that you're thinking of many details, and that's great. You might also want to consider other taxes. For example, some states have sales tax on food; others do not. In some states or localities, there is an ad valorem tax on your car or other personal property. And of course, if you eventually own a house or condo, those property taxes can vary quite a bit depending on state and local financial systems. Here in TX, for example, I have no state income tax, but my property tax is higher than it was when I lived in CA. There's also essentials, such as utilities and insurance, that can vary quite a bit from state to state. This depends not only on the climate (what do you spend for A/C or heating? do you have to have hurricane or earthquake insurance?) but also the state and local regulatory environment. These sorts of calculations can get very complicated. Not knowing you personally, I can't recommend any particular place. This is just my thoughts on strategy. In the long run, though, your happiness and personal satisfaction is what matters most. Although you say that it doesn't matter to you now just where you are located, I hope that you will find a place that you love and where you'll feel at home.

Follow the biggest salary (or most prestigious job that will lead to a big salary), then live frugally. Frugal living is possible in any big city, as long as you are willing to compromise. For example, New York City has one of the highest costs of living, but you can definitely live frugally there. You can still share a nice apartment in Washington Heights or Harlem for http://newyork.craigslist.org/mnh/roo/886776634.html. Your total transportation costs will only be http://www.mta.info/metrocard/mcgtreng.htm#30daywith your unlimited Metro card. All the other necessities in life -- food, clothing, and even entertainment -- can be found just as cheap in New York if not cheaper than anywhere else. And I dare say a picnic in http://www.hhoc.org/fftp/visit.htmlis much more edifying (and cheaper!) than reading the Amazon.com books delivered to your bunker in rural Nebraska where the cost of living is technically lower. You may not want to live this way forever, but now is the time in your life to do it!

Thanks for the great answers, everyone! These were all very informative.