10 cheapest places to live in the USA according to Kiplingers

June 2012
10 Cheapest U.S. Cities to Live In

It's hard to beat the low cost of living in Dixie. Most of the places on our annual list of the ten cheapest U.S. cities to live in are located in the South or Southwest. Four are in Texas, thanks in large part to the Lone Star State’s affordable housing and super-low grocery bills.

We compiled our list based on the Council for Community and Economic Research’s calculations of living expenses in numerous metropolitan areas. (We weeded out cities with populations below 50,000.) Its Cost of Living Index measures relative price levels for housing, utilities, transportation, grocery items, health care, and miscellaneous goods and services.

A Cost of Living Index score of 100 reflects the national average. Little Rock, Ark., and Cleveland scored 99.9 and 100.1, respectively, making them average in terms of living costs. The further a score falls below 100, the lower the cost of living. Population and median household income data are from the U.S. Census Bureau. Average home prices were provided by the Council for Community and Economic Research.

10. Winston-Salem, N.C.

Cost of Living Index: 87.5

City Population: 229,617

Median Household Income: $41,483 (U.S. median: $51,914)

Average Home Price: $199,118 (U.S. average: $283,529)

Winston-Salem is far and away the most budget-friendly big city in the Tar Heel State, with Raleigh a distant second. The average home sells for under $200,000, and a typical apartment rents for just $590 a month. Cheap housing is offset somewhat by the highest grocery and health-care expenses of our cheapest 10 cities. Wake Forest University and cigarette maker Reynolds American are among the area's biggest employers.

9. Springfield, Ill.

Cost of Living Index: 87.1

City Population: 115,121

Median Household Income: $47,209

Average Home Price: $210,673

Costs in the capital of Illinois are low, much lower in fact than in Chicago to the north. Take housing, for example. The average home price in Springfield is $150,000 less than the cost of a typical home in the Windy City. That’s a nice draw for families, as is the area's low unemployment rate. Living is made even more affordable by utilities costs—gas, electric, phone service, etc.—that fall nearly 15% below the national average.

8. Wichita Falls, Texas

Cost of Living Index: 86.9

City Population: 104,066

Median Household Income: $40,670

Average Home Price: $264,000

Wichita Falls has the highest average home price on our list of cheap cities, but low unemployment means more income-producing jobs to pay for those mortgage payments. Alternatively, renting is dirt cheap. A typical apartment in Wichita Falls goes for just $566 a month, nearly $300 less than the national average. To put that figure in perspective, the average apartment in Manhattan rents for $3,777. Other living costs are reasonable across-the-board. Grocery, utility, transportation and health care expenses are all 10% or more below the U.S. average. The Wichita Falls area boasts four airports plus Sheppard Air Force Base.

7. Pueblo, Colo.

Cost of Living Index: 86.2

City Population: 105,957

Median Household Income: $34,323

Average Home Price: $196,330

Although it's just 100 miles from Denver, Pueblo is an economic hub of southeastern Colorado with a much lower cost of living. Homes here are cheaper, on average, than in the rest of the state—and the nation. In fact, you can get a house in Pueblo for $87,000 less than the U.S. average. That’s a good thing since the city’s median household income is the lowest on our list, and grocery, utility and transportation costs are among the highest. There’s no charge, of course, for mountain views, and several national parks and forests are within easy driving distance.

6. Conway, Ark.

Cost of Living Index: 86.2

City Population: 56,255

Median Household Income: $41,917

Average Home Price: $230,199

Conway is just 30 miles north of Little Rock, but it's a world away from the Arkansas capital when it comes to living costs. Nestled between Lake Conway and the Arkansas River, Conway's average home price is $50,000 less than Little Rock's. Other costs in Conway, especially for health care, are lower, too. A visit to the doctor runs nearly 15% less than the national average, and a dental check-up costs almost 25% less. Even a bottle of ibuprofen is priced $1.15 lower than you'd typically find elsewhere ($8.29 vs. the U.S. average of $9.44).

5. Temple, Texas

Cost of Living Index: 85.7

City Population: 63,548

Median Household Income: $47,240

Average Home Price: $206,602

Housing prices in Temple are more than $75,000 below the national average—even though the median household income is the highest on this list. Health-care costs also run low here. One reason: Temple is a regional medical center and has more physicians per capita than any other community in the U.S. Groceries, at 18% under the U.S. average, are the cheapest among these 10 cities. Located 65 miles north of Austin, the state capital, the Temple metropolitan area includes Killeen and Fort Hood, two cities that also score high marks for affordability.

4. Fayetteville, Ark.

Cost of Living Index: 84.6

City Population: 71,770

Median Household Income: $37,113

Average Home Price: $228,200

This low-cost city lies in the northwest corner of Arkansas near the borders of Missouri and Oklahoma. The Ozark National Forest is a short car ride away. But Fayetteville is best-known for being home to the University of Arkansas, a big draw as an employer and an even bigger draw during football season. Unemployment in the Fayetteville area is below the national average thanks to the strong local economy. It doesn’t hurt that Wal-Mart is based in nearby Bentonville.

3. McAllen, Texas

Cost of Living Index: 83.8

City Population: 125,590

Median Household Income: $39,547

Average Home Price: $178,000

You’d better be a fan of Tex-Mex if you live in McAllen. The city is situated in the southern tip of Texas along the Rio Grande. It’s a closer drive to Monterrey, Mexico (about three hours away) than to San Antonio (four hours) or Houston (six hours). Being a far-flung border town has its advantages. Take cost of living. Housing costs are by far the lowest on our list, and grocery prices are among the lowest. Low cost of living has attracted retirees and snow birds. The McAllen metro area, which includes Edinburg and Mission, has one of the fastest-growing populations in the U.S.

2. Memphis, Tenn.

Cost of Living Index: 83.7

City Population: 654,876

Median Household Income: $36,473

Average Home Price: $180,375

Memphis is both the largest city in Tennessee and third-largest in the South. But it doesn't have big-city prices. Housing costs are the second-lowest on this list (after McAllen, Texas). You can buy a home in Memphis for over $100,000 less than the U.S. average. The Mississippi River port city is a hub for the shipping and transportation industries. Memphis is home to three Fortune 500 companies, numerous colleges and universities and, of course, Graceland.


1. Harlingen, Texas

Harlingen Convention & Visitors Bureau
Cost of Living Index: 82.8

City Population: 64,186

Median Household Income: $34,748

Average Home Price: $229,558

Head east from McAllen, number three on our cheapest-cities list, toward the Gulf of Mexico, and in a half-hour or so you’ll run into Harlingen, another South Texas city with ultra-low living costs. Housing prices are a big factor in making it the most affordable city to live in on our list. The cost of groceries, transportation and health care also fall below the national average. But affordability doesn't necessarily equate to prosperity. The median household income for Harlingen comes in $17,000 shy of the U.S. median, and unemployment hovers in the double-digits. Mexico is just a stone’s throw away, as is Brownsville, another border city with similarly low living costs.