Cost Analysis: Living in CA vs the South
Cost Analysis: Living in CA vs the South
My wife and I love Southern California and I think at some point we'll move there. We currently live in a metropolitan area in the South and own a 2600 sq foot home. If we lived in Southern California, we would rent a smaller place -- probably a 2 bedroom about half the size. It would be a tradeoff that we'd be willing to make. I'm wondering how much more it would cost to live in Southern California vs our setup so I'm going to do a quick analysis:
The South:
(Annual Home expenses once our house is paid off)
Home Insurance: $1,200
Real Estate Taxes: $2,400
Home Maintenance: $3,000
House Cleaning: $2,000
Lawn Care: $500
Trash Pickup: $300
Heat/Electric: $2,800
Total: $12,200 annually
Renting in Southern California:
Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
Renters Insurance: $100 (not sure if that's accurate)
Investing money from home sale (dividends to help cover rent): $350k+3.5% dividend = -$12,250 (-$10,412.50 after taxes)
Total: $20,408
Tax Savings: We'd save about $1,200 in state income taxes living in CA. Sales taxes are about the same.
So the difference to live in California for us would be $7,008 annually.
Now if we stay in the south but move to a better school district ($500k comparable home), the difference in the numbers would roughly be:
Home Insurance: + $600
Real Estate Taxes: +$4,600
Trash Pickup: -$300 (included in taxes)
Investing money from home sale: +$4,462.50
Total: +$9,362
So we would save by living and renting in CA about $2,200 a year.
Of course these are real rough estimates and the main factor comes down to our own personal preference. Let me know if you think I should have added or modified any of the numbers.
The South:
(Annual Home expenses once our house is paid off)
Home Insurance: $1,200
Real Estate Taxes: $2,400
Home Maintenance: $3,000
House Cleaning: $2,000
Lawn Care: $500
Trash Pickup: $300
Heat/Electric: $2,800
Total: $12,200 annually
Renting in Southern California:
Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
Renters Insurance: $100 (not sure if that's accurate)
Investing money from home sale (dividends to help cover rent): $350k+3.5% dividend = -$12,250 (-$10,412.50 after taxes)
Total: $20,408
Tax Savings: We'd save about $1,200 in state income taxes living in CA. Sales taxes are about the same.
So the difference to live in California for us would be $7,008 annually.
Now if we stay in the south but move to a better school district ($500k comparable home), the difference in the numbers would roughly be:
Home Insurance: + $600
Real Estate Taxes: +$4,600
Trash Pickup: -$300 (included in taxes)
Investing money from home sale: +$4,462.50
Total: +$9,362
So we would save by living and renting in CA about $2,200 a year.
Of course these are real rough estimates and the main factor comes down to our own personal preference. Let me know if you think I should have added or modified any of the numbers.
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Re: Cost Analysis: Living in CA vs the South
Which state in the south has a higher state income tax than California? Will your income be much lower in California?sunnyday wrote:Tax Savings: We'd save about $1,200 in state income taxes living in CA. Sales taxes are about the same.
720/yr for heat/electric doesn't sound right unless you live in an area where AC is not needed (i.e. SF Bay Area in the peninsula). If you're in a hot area, it could be quite a bit higher with central AC.
Last edited by DSInvestor on Wed Jan 29, 2014 10:03 pm, edited 1 time in total.
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Re: Cost Analysis: Living in CA vs the South
Are these real numbers? Have you found 2 bedroom homes in areas you'd want to live in for just $2500? Are those utility costs researched? They seem very low. $720 per year is just $60 a month. Do you know someone in the area and can see their utility bills?Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
Re: Cost Analysis: Living in CA vs the South
Your Heat/electric is way underestimated, IMO.sunnyday wrote: Renting in Southern California:
Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
CA electricity has tier pricing and is usually very expensive unless you are with a municipal electric utility.
You could easily end up with a $300/month electric bill in the summer.
Your heating costs on the other hand should be minimal in Socal.
It seems to me you are looking at small subset of your costs.
Where are your grocery costs, dining out, healthcare costs ?
You aren't looking at the full picture.
Edit: and your gasoline price, easy for me to forget since I drive electric.
And car insurance prices, since you pretty much have to drive in Socal.
And annual car registration costs (quite high for recent model years).
etc..
Last edited by madbrain on Wed Jan 29, 2014 10:11 pm, edited 2 times in total.
Re: Cost Analysis: Living in CA vs the South
Where are you planning on earning 3.5% on investing the proceeds from your house sale?
Kevin
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If I make a calculation error, #Cruncher probably will let me know.
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Re: Cost Analysis: Living in CA vs the South
A site like this might help compare costs.
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Re: Cost Analysis: Living in CA vs the South
Youre missing a lot in your calculations.
JT
JT
Re: Cost Analysis: Living in CA vs the South
Although I have never lived in Southern California, I have visited many times and plan to visit in the future. As someone from the South who no longer lives in the South, I believe that moving to California will give you a serious dose of sticker shock - in addition to the traffic and other issues that resident Boglehead sensors will delete if I mention them.
Many years ago I told someone, "To me, living in California would be like being married to a very attractive, high maintenance, difficult woman. She may look great, but she's gonna cost a fortune and I'll catch hell every day." All that glitters....
Just one man's opinion.
Many years ago I told someone, "To me, living in California would be like being married to a very attractive, high maintenance, difficult woman. She may look great, but she's gonna cost a fortune and I'll catch hell every day." All that glitters....
Just one man's opinion.
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Re: Cost Analysis: Living in CA vs the South
For what it's worth...I will dispute some of the nay sayers. I live in so-cal, 1400sqft house, about $60 month electric and gas. We have only needed to turn the heat on this winter about 3 nights. We live fairly coastal, so opening windows in the summer usually is enough. Of course double it if you want to keep it chilly. We are in a decent area of San Diego and houses are renting for about $2100. (3B/2BA)
Depending on where you rent, utilities may be included.
Can it be expensive? Yes....does it have to be? No. I have been told the same goes for cost of raising children. It is what you want it to be.
Depending on where you rent, utilities may be included.
Can it be expensive? Yes....does it have to be? No. I have been told the same goes for cost of raising children. It is what you want it to be.
Re: Cost Analysis: Living in CA vs the South
Utility bill savings can indeed be significant in many parts of CA when compared to other parts of the country, including the South. You didn't ask about income (or even mention whether you are working) but of course, incomes can be significantly higher as well, depending on your profession…
I made a similar move almost 10 years ago, after being warned by friends, family, and colleagues that the cost of living would be sky high and traffic would be horrible. I still like visiting back home, but moving to CA was the best decision I've made, personally and financially. I didn't mind downsizing my living space and going from owning to renting, and my career really took off. Of course, everyone's circumstances are different, and your milage may vary.
I made a similar move almost 10 years ago, after being warned by friends, family, and colleagues that the cost of living would be sky high and traffic would be horrible. I still like visiting back home, but moving to CA was the best decision I've made, personally and financially. I didn't mind downsizing my living space and going from owning to renting, and my career really took off. Of course, everyone's circumstances are different, and your milage may vary.
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Re: Cost Analysis: Living in CA vs the South
My parents moved our family to CA from Oklahoma when I was about four years old. Whenever I talked to my Dad about possibly moving somewhere else, he said "You couldn't pay me to move anywhere else". Personally, I fantasize a bit about living in Hawaii, which I love to visit. I think taking longer vacations there may do the trick though.
Kevin
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If I make a calculation error, #Cruncher probably will let me know.
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Re: Cost Analysis: Living in CA vs the South
I live in a 2 br. apt in the City of Los Angeles, so electric is with muni DWP.
Allow $50 a month w/o any AC. If the city picks up your trash, add another $5 a month.
For gas, figure $130 in a very cold month and $15 in a month in which the heat is never used. Average it at $60-70.
Figure total utilities around $120 per month, so $1,440 per year w/o AC.
BTW, you can find nice places for $2,500, but if you're very demanding and want things like garbage disposal, washer/dryer in apartment, etc., you'll be shocked at the rents being asked for some places.
Allow $50 a month w/o any AC. If the city picks up your trash, add another $5 a month.
For gas, figure $130 in a very cold month and $15 in a month in which the heat is never used. Average it at $60-70.
Figure total utilities around $120 per month, so $1,440 per year w/o AC.
BTW, you can find nice places for $2,500, but if you're very demanding and want things like garbage disposal, washer/dryer in apartment, etc., you'll be shocked at the rents being asked for some places.
Re: Cost Analysis: Living in CA vs the South
You can find a 2 bedroom near the beach in Brentwood for 2,500.00TexasPenny wrote:Are these real numbers? Have you found 2 bedroom homes in areas you'd want to live in for just $2500? Are those utility costs researched? They seem very low. $720 per year is just $60 a month. Do you know someone in the area and can see their utility bills?Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
"Don't trust everything you read on the Internet"- Abraham Lincoln
Re: Cost Analysis: Living in CA vs the South
What about other costs of living expenses (food both eating out and grocery, fuel, parking, ect)? I highly doubt Cal can compete.
Re: Cost Analysis: Living in CA vs the South
Regarding utilities, Southern California has a vast difference in climactic zones between the coast and areas not far inland and you don't indicate a specific destination. Del Mar and Poway are 15 miles apart but in summer the high temps may be 20 degrees difference with it being 98 and definitely air conditioning weather in Poway. In winter the lows similarly vary - it might be 35 in Poway and 48 in Del Mar. And further east like Palm Springs the contrast with the coast is even more dramatic. Your low estimate for utilities thus probably is reasonable only if you'll be in a coastal environ.
And I think it's not quite accurate to consider 3.5% income from the $350K equity in your current home as a pure gain from this potential change. Because staying where you are, if your paid-off home appreciates at the rate of inflation, your $350K equity would also increase in value whereas if you spend 3.5% per year your $350K will likely shrink in real value terms (one might argue that you should project it to last only 30 years)... if you don't have a strong bequest motive that may be OK but it's not quite apples-to-apples comparison as you modeled it. Also, you may want to factor in future rent increases. There are many online calculators to help model this, one is: http://www.nytimes.com/interactive/busi ... .html?_r=0 .
And I think it's not quite accurate to consider 3.5% income from the $350K equity in your current home as a pure gain from this potential change. Because staying where you are, if your paid-off home appreciates at the rate of inflation, your $350K equity would also increase in value whereas if you spend 3.5% per year your $350K will likely shrink in real value terms (one might argue that you should project it to last only 30 years)... if you don't have a strong bequest motive that may be OK but it's not quite apples-to-apples comparison as you modeled it. Also, you may want to factor in future rent increases. There are many online calculators to help model this, one is: http://www.nytimes.com/interactive/busi ... .html?_r=0 .
Re: Cost Analysis: Living in CA vs the South
Thanks for the replies. The specific area I'm looking at is Santa Barbara (so not technically Southern California). I've lived there before so have a good feel for the area.
The biggest thing that would probably prevent us from moving out there is if the public schools are really bad. I'm sure a lot of that depends on where you live.
When I rented in Santa Barbara and most places didn't have AC.
The biggest thing that would probably prevent us from moving out there is if the public schools are really bad. I'm sure a lot of that depends on where you live.
California has a progressive income tax. So many states will have a higher income tax depending on how much you make.DSInvestor wrote:Which state in the south has a higher state income tax than California? Will your income be much lower in California?sunnyday wrote:Tax Savings: We'd save about $1,200 in state income taxes living in CA. Sales taxes are about the same.
720/yr for heat/electric doesn't sound right unless you live in an area where AC is not needed (i.e. SF Bay Area in the peninsula). If you're in a hot area, it could be quite a bit higher with central AC.
When I rented in Santa Barbara and most places didn't have AC.
I was paying less for a 1br, but my place was right next to the beach, had lots of amenities, it was furnished and everything was included. Someone from Southern CA pmed me and confirmed that my utility bill numbers were accurate. When you have a small place and aren't paying for AC and hardly anything for heat, the savings will add up.TexasPenny wrote:Are these real numbers? Have you found 2 bedroom homes in areas you'd want to live in for just $2500? Are those utility costs researched? They seem very low. $720 per year is just $60 a month. Do you know someone in the area and can see their utility bills?Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
I found restaurants and groceries to be about the same. Gas is more expensive, but we'd be biking a lot more so would save on car expenses. I haven't thought about health care, but it may be cheaper in CA if my wife and I aren't making a lot of $.madbrain wrote: It seems to me you are looking at small subset of your costs.
Where are your grocery costs, dining out, healthcare costs ?
You aren't looking at the full picture.
Edit: and your gasoline price, easy for me to forget since I drive electric.
And car insurance prices, since you pretty much have to drive in Socal.
And annual car registration costs (quite high for recent model years).
etc..
I read that the Vanguard REIT fund has a dividend that returns ~3.5%. Is that accurate? I'm not big into REIT funds, but if I didn't own a house, I'd probably put money in one so it would fluctuate with the market.Kevin M wrote:Where are you planning on earning 3.5% on investing the proceeds from your house sale?
Kevin
I've lived there, have family friends there and have visited many times throughout my life. So I would know what I'd be getting myself intomlebuf wrote:Although I have never lived in Southern California, I have visited many times and plan to visit in the future. As someone from the South who no longer lives in the South, I believe that moving to California will give you a serious dose of sticker shock - in addition to the traffic and other issues that resident Boglehead sensors will delete if I mention them.
Many years ago I told someone, "To me, living in California would be like being married to a very attractive, high maintenance, difficult woman. She may look great, but she's gonna cost a fortune and I'll catch hell every day." All that glitters....
Just one man's opinion.
Thanks for the feedback.lillypie wrote:For what it's worth...I will dispute some of the nay sayers. I live in so-cal, 1400sqft house, about $60 month electric and gas. We have only needed to turn the heat on this winter about 3 nights. We live fairly coastal, so opening windows in the summer usually is enough. Of course double it if you want to keep it chilly. We are in a decent area of San Diego and houses are renting for about $2100. (3B/2BA)
Depending on where you rent, utilities may be included.
Can it be expensive? Yes....does it have to be? No. I have been told the same goes for cost of raising children. It is what you want it to be.
Anything you care to point out? I'm not too concerned about little things -- like say "milk is 20 cents more in California".bottlecap wrote:Youre missing a lot in your calculations.
JT
When I lived in Hawaii many younger people who grew up in Hawaii, talked about wanting to move to California. Kind of funny, I think they would get island feverKevin M wrote:My parents moved our family to CA from Oklahoma when I was about four years old. Whenever I talked to my Dad about possibly moving somewhere else, he said "You couldn't pay me to move anywhere else". Personally, I fantasize a bit about living in Hawaii, which I love to visit. I think taking longer vacations there may do the trick though.
Kevin
Eating out is about the same. Trader Joe's prices out there seem the same. We would probably save a lot at the farmers market -- avocados are dirt cheap out there but really expensive out here. Fuel is more expensive but we'd bike more and drive less. The difference in parking would be minimal+DUSTOFF+ wrote:What about other costs of living expenses (food both eating out and grocery, fuel, parking, ect)? I highly doubt Cal can compete.
That along with schools would be my biggest concern (although many of the schools in the South are probably worse than CA schools) and something I would want to research more. Someone's blog and had a similar comparison and he used with the Vanguard REIT fund. Rent would increase but so would most of my housing costs and hopefully the REIT fund over time. I'm a bit of a nomad, so I wouldn't be too concerned about rent prices 20-30 years down the roadfreebeer wrote:
And I think it's not quite accurate to consider 3.5% income from the $350K equity in your current home as a pure gain from this potential change. Because staying where you are, if your paid-off home appreciates at the rate of inflation, your $350K equity would also increase in value whereas if you spend 3.5% per year your $350K will likely shrink in real value terms (one might argue that you should project it to last only 30 years)... if you don't have a strong bequest motive that may be OK but it's not quite apples-to-apples comparison as you modeled it. Also, you may want to factor in future rent increases. There are many online calculators to help model this, one is: http://www.nytimes.com/interactive/busi ... .html?_r=0 .
Last edited by sunnyday on Thu Jan 30, 2014 8:07 am, edited 1 time in total.
Re: Cost Analysis: Living in CA vs the South
The deep south (where I grew up) is dirt cheap. My parents rent a 3 bedroom apartment on a nice golf course for $650 a month. There is a local southern soul food place where a lunch with country fried steak, green beans, mashed potatoes, corn bread, and a glass of sweet iced tea is $5.50.
I live in the NW and know how I experienced cost of living shock. I have heard CA is a bit worse.
I live in the NW and know how I experienced cost of living shock. I have heard CA is a bit worse.
Re: Cost Analysis: Living in CA vs the South
About Utilities:
I now live in Los Angeles Department of Power and Water (DWP) territory. I am billed every two months, and water, sewage, and solid waste represent 65% of the bill, electricity 35%. I pay about $300 each time ($1800 a year), and I don't run the air conditioner, except when my daughter-in-law comes over, because if I don't turn it on, she will. Gas comes from Southern California Gas billed monthly (stove top, water heater, furnace).
When I was in a one bedroom apartment, the rent covered gas and solid waste, but not water or electricity. Then again, I wasn't watering a lawn in 90+ temperatures, so the water was much less.
The OP's results will depend on what is included in rent and the particular utility companies in Santa Barbara.
I now live in Los Angeles Department of Power and Water (DWP) territory. I am billed every two months, and water, sewage, and solid waste represent 65% of the bill, electricity 35%. I pay about $300 each time ($1800 a year), and I don't run the air conditioner, except when my daughter-in-law comes over, because if I don't turn it on, she will. Gas comes from Southern California Gas billed monthly (stove top, water heater, furnace).
When I was in a one bedroom apartment, the rent covered gas and solid waste, but not water or electricity. Then again, I wasn't watering a lawn in 90+ temperatures, so the water was much less.
The OP's results will depend on what is included in rent and the particular utility companies in Santa Barbara.
Re: Cost Analysis: Living in CA vs the South
Santa Barbara's a nice town and area - as you indicated really more Central California not quite Southern California. San Luis Obispo's even nicer IMO (and even less expensive).
Re: REIT fund, there's no free lunch. Nothing pays 3.5% dividends with high confidence expectation of NAV/dividends increasing with inflation. Else we wouldn't have endless threads on this forum about whether the "safe" withdrawal rate is 3%, we would all just own VG REIT fund . But $22K invested in VG REIT fund in early 2006 became $7K in early 2008, and is just about back there to $22k now (including dividend payout). Which means nominal return 2006 to now is 0% and real-dollar return (accounting for inflation) is negative.
Re: REIT fund, there's no free lunch. Nothing pays 3.5% dividends with high confidence expectation of NAV/dividends increasing with inflation. Else we wouldn't have endless threads on this forum about whether the "safe" withdrawal rate is 3%, we would all just own VG REIT fund . But $22K invested in VG REIT fund in early 2006 became $7K in early 2008, and is just about back there to $22k now (including dividend payout). Which means nominal return 2006 to now is 0% and real-dollar return (accounting for inflation) is negative.
Re: Cost Analysis: Living in CA vs the South
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Re: Cost Analysis: Living in CA vs the South
delete
Last edited by Dave55 on Tue Oct 01, 2019 8:41 am, edited 1 time in total.
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Re: Cost Analysis: Living in CA vs the South
That's the DWP bill and doesn't include the SoCal Gas bill. To answer your questions, no.* My daughter and son-in-law pay double what I pay, but they have five times as many people living in their house and my daughter is always cold.HueyLD wrote:$150 per month for H2O, sewer, trash pickup, electricity and gas is very cheap. Do you ever turn on the light or heat or shower?sscritic wrote:About Utilities:
I now live in Los Angeles Department of Power and Water (DWP) territory. I am billed every two months, and water, sewage, and solid waste represent 65% of the bill, electricity 35%. I pay about $300 each time ($1800 a year), and I don't run the air conditioner, except when my daughter-in-law comes over, because if I don't turn it on, she will. Gas comes from Southern California Gas billed monthly (stove top, water heater, furnace).
* Caught myself lying again. I do use lights, but turn them off as I leave the room. I watch tv and my computer screen in the dark for better contrast. I do shower, but the lawn uses a lot more water than I do.
Re: Cost Analysis: Living in CA vs the South
Good point about the REIT fund. What would you and others consider the opportunity cost of having $500k tied up in a house vs having $500k available to invest? There are a lot of renters on here so it would be especially interesting to get their perspective.freebeer wrote:Santa Barbara's a nice town and area - as you indicated really more Central California not quite Southern California. San Luis Obispo's even nicer IMO (and even less expensive).
Re: REIT fund, there's no free lunch. Nothing pays 3.5% dividends with high confidence expectation of NAV/dividends increasing with inflation. Else we wouldn't have endless threads on this forum about whether the "safe" withdrawal rate is 3%, we would all just own VG REIT fund . But $22K invested in VG REIT fund in early 2006 became $7K in early 2008, and is just about back there to $22k now (including dividend payout). Which means nominal return 2006 to now is 0% and real-dollar return (accounting for inflation) is negative.
Re: Cost Analysis: Living in CA vs the South
That is a whole other thread or six. Some of us split the difference and have mortgages.sunnyday wrote: What would you and others consider the opportunity cost of having $500k tied up in a house vs having $500k available to invest? There are a lot of renters on here so it would be especially interesting to get their perspective.
Re: Cost Analysis: Living in CA vs the South
I live in coastal SoCal; rented here for 8 years before recently purchasing a house. I haven't lived in the South, but I've spent a good half-year of my life there on business trips.sunnyday wrote:My wife and I love Southern California and I think at some point we'll move there. We currently live in a metropolitan area in the South and own a 2600 sq foot home. If we lived in Southern California, we would rent a smaller place -- probably a 2 bedroom about half the size. It would be a tradeoff that we'd be willing to make. I'm wondering how much more it would cost to live in Southern California vs our setup so I'm going to do a quick analysis:
The South:
(Annual Home expenses once our house is paid off)
Home Insurance: $1,200
Real Estate Taxes: $2,400
Home Maintenance: $3,000
House Cleaning: $2,000
Lawn Care: $500
Trash Pickup: $300
Heat/Electric: $2,800
Total: $12,200 annually
Renting in Southern California:
Rent: $2,500/mo = $30,000 annually
Heat/Electric: $720
Renters Insurance: $100 (not sure if that's accurate)
Investing money from home sale (dividends to help cover rent): $350k+3.5% dividend = -$12,250 (-$10,412.50 after taxes)
Total: $20,408
For the question boiling down to - can we drastically lower our standard of living (house, maid, gardener, spend less on utilities, little car usage, etc.) relocate to CA, and come out ok financially - the answer is yes. $60/month for utilities is definitely on the low end, but if you're coastal and don't use AC/heat or watch much TV/use the computer then it's doable IF you have a landlord who is also paying water/trash/sewer. Those latter utilities alone work out to about $70/month in a 2-br apartment with no lawn.
Renters' insurance will be cheaper than you assume, unless you're insuring a couple hundred grand of stuff. I believe we were paying $300/year on $35 grand (should've had a little more coverage; didn't increase it as we accumulated).
Groceries are more expensive here. My midwestern relatives are always shocked when they visit. Restaurants are more, but not exceedingly so if you stick to the national chains and hole-in-the-wall joints. Entertainment costs more (movies, shows, anything really). Gas is more (State tax of $0.57 I believe, plus the cost of doing business in CA). Vehicle taxes are high, as are traffic costs (tickets, parking and such). State Disability tax taken out of your paycheck is not insignificant either - a few hundred dollars to over a thousand/year depending upon income. All of these things probably add up to a couple grand per year in extra cost - not enough to change your analysis, but you should consider them. Your dividends are also taxed at your full marginal state rate (and for REITs, your full marginal federal rate as well); it looks like your tax rate on your dividends is much too low.
Now, if you actually compared a similar living arrangement in each area, your comparison would be blown out of the water. Framing it in this specific way and downsizing your living standards, you can make it work, I'm sure.
Retirement investing is a marathon.
Re: Cost Analysis: Living in CA vs the South
I live in inland San Diego and I think $2500 is plenty for rent.
A nice 2 bedroom 1000 sq ft condo inland (near I15) runs about $1500-1600. You can definitely find a nice condo near the coast for below $2500.
Our utility bill is averaging about $50/month for a 1 bedroom 700 sq ft which includes gas and electricity so I don't think your estimate is off by too much.
As previous posters have posted, the utility cost will likely be a function of how far you are away from the ocean. The further away, hotter it gets in the summer but then your rent tends to be lower.
A nice 2 bedroom 1000 sq ft condo inland (near I15) runs about $1500-1600. You can definitely find a nice condo near the coast for below $2500.
Our utility bill is averaging about $50/month for a 1 bedroom 700 sq ft which includes gas and electricity so I don't think your estimate is off by too much.
As previous posters have posted, the utility cost will likely be a function of how far you are away from the ocean. The further away, hotter it gets in the summer but then your rent tends to be lower.
Last edited by jda on Thu Jan 30, 2014 10:57 am, edited 1 time in total.
Re: Cost Analysis: Living in CA vs the South
For what it's worth, the CNN cost comparison claims that living in Atlanta, GA versus Orange County (probably similar in costs to Santa Barbara) is:
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
Retirement investing is a marathon.
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- Location: Los Angeles, CA
Re: Cost Analysis: Living in CA vs the South
In general terms, you would be moving from one of the most affordable parts of the country to one of the most expensive. And Santa Barbara is one of the most expensive regions in the state; it is a very sought-after location so competition necessarily drives up prices. I'm skeptical you'd come out ahead. Between the state personal income tax (including tax on capital gains) and the regional sales tax, I cannot imagine a Southern city being as expensive as Santa Barbara. And for the most part, the labor to get things done (plumbers, painters, etc.) is higher as well. If you're looking at a financial ledger in this detail, I suspect you will be really scrimping if you don't anticipate shelling out a lot more money to live here.
Re: Cost Analysis: Living in CA vs the South
A quick craigslist search shows that you can get about a ~1000 sf 2-br apartment in Santa Barbara a couple miles inland for $2500.jda wrote:I live in inland San Diego and I think $2500 is plenty for rent.
A nice 2 bedroom 1000 sq ft condo inland (near I15) runs about $1500-1600. You can definitely find a nice condo near the coast for below $2500.
Our utility bill is averaging about $50/month for a 1 bedroom 700 sq ft which includes gas and electricity so I don't think your estimate is off by too much.
As previous posters have posted, the utility cost will likely be a function of how far you are away from the ocean. The further away, hotter it gets in the summer but then your rent tends to be worse.
If you look at a cheaper area - further up the Central Coast, your dollars should stretch more. Santa Barbara is not cheap.
Retirement investing is a marathon.
Re: Cost Analysis: Living in CA vs the South
Just break it down into cost per awesome weather day - kinda hard to beat the value that Santa Barbara offers when you look at it like that!
I've lived in SB County my whole life and am happily renting a 1br apt in SB with no thoughts of purchasing. Santa Barbara is great and you should find a 2br condo for $2500 month fairly easily.
Enjoy your life, make the move!
I've lived in SB County my whole life and am happily renting a 1br apt in SB with no thoughts of purchasing. Santa Barbara is great and you should find a 2br condo for $2500 month fairly easily.
Enjoy your life, make the move!
- Artsdoctor
- Posts: 6063
- Joined: Thu Jun 28, 2012 3:09 pm
- Location: Los Angeles, CA
Re: Cost Analysis: Living in CA vs the South
And this is true. There are many, many reasons to move to California. But saving money is definitely not one of them--unless you're coming from Manhattan or London. But the South? I'm really skeptical.surfstar wrote:Just break it down into cost per awesome weather day - kinda hard to beat the value that Santa Barbara offers when you look at it like that!
I've lived in SB County my whole life and am happily renting a 1br apt in SB with no thoughts of purchasing. Santa Barbara is great and you should find a 2br condo for $2500 month fairly easily.
Enjoy your life, make the move!
Re: Cost Analysis: Living in CA vs the South
sscritic wrote:That is a whole other thread or six. Some of us split the difference and have mortgages.sunnyday wrote: What would you and others consider the opportunity cost of having $500k tied up in a house vs having $500k available to invest? There are a lot of renters on here so it would be especially interesting to get their perspective.
Thinking a bit more about this, I could estimate that my house would keep up with inflation and my portfolio will grow at 3% after tax and inflation. In that case, my numbers in my OP seem accurate, if anything, maybe an under estimate on the opportunity cost side
Re: Cost Analysis: Living in CA vs the South
I am skeptical, in my experience groceries are cheaper in So Cal (closer to the source) than the rest of the country.kenyan wrote:For what it's worth, the CNN cost comparison claims that living in Atlanta, GA versus Orange County (probably similar in costs to Santa Barbara) is:
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
"Don't trust everything you read on the Internet"- Abraham Lincoln
Re: Cost Analysis: Living in CA vs the South
I agree. I lived in the south much of my life and 5 years in southern California. Sticker shock for sure!mlebuf wrote:Although I have never lived in Southern California, I have visited many times and plan to visit in the future. As someone from the South who no longer lives in the South, I believe that moving to California will give you a serious dose of sticker shock - in addition to the traffic and other issues that resident Boglehead sensors will delete if I mention them.
Many years ago I told someone, "To me, living in California would be like being married to a very attractive, high maintenance, difficult woman. She may look great, but she's gonna cost a fortune and I'll catch hell every day." All that glitters....
Just one man's opinion.
In fact, when I left SoCal (double wide trailer was all I could afford) to move back to the south (very nice brand new 3 BR house with yard and mature trees), I took a significant cut in pay and never even noticed. In fact, I was "richer" even though I made less money.
A couple of weeks ago, I traveled from AZ to CA. The price of gas went up about $1....
Link to Asking Portfolio Questions
Re: Cost Analysis: Living in CA vs the South
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Last edited by HueyLD on Sat Feb 07, 2015 8:39 pm, edited 1 time in total.
Re: Cost Analysis: Living in CA vs the South
When I moved from the "Inland Empire" to Newport Beach, I noticed a huge increase in grocery costs. Of course, it doesn't help that most of the grocery stores around here are higher-end (Gelsons, Bristol Farms, Whole Foods), but even Ralphs here seems more expensive than Vons in the IE.denovo wrote:I am skeptical, in my experience groceries are cheaper in So Cal (closer to the source) than the rest of the country.kenyan wrote:For what it's worth, the CNN cost comparison claims that living in Atlanta, GA versus Orange County (probably similar in costs to Santa Barbara) is:
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
Re: Cost Analysis: Living in CA vs the South
Well, the Inland Empire is obviously the literal source of the agriculture in California internally , but regardless I am skeptical per CNN that groceries are more expensive in SoCal than the "South" broadly speaking, especially not when it comes to fresh fruits and vegetables which maybe doesn't make a large part of the diet of the typical consumer.tj wrote:When I moved from the "Inland Empire" to Newport Beach, I noticed a huge increase in grocery costs. Of course, it doesn't help that most of the grocery stores around here are higher-end (Gelsons, Bristol Farms, Whole Foods), but even Ralphs here seems more expensive than Vons in the IE.denovo wrote:I am skeptical, in my experience groceries are cheaper in So Cal (closer to the source) than the rest of the country.kenyan wrote:For what it's worth, the CNN cost comparison claims that living in Atlanta, GA versus Orange County (probably similar in costs to Santa Barbara) is:
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
"Don't trust everything you read on the Internet"- Abraham Lincoln
-
- Posts: 414
- Joined: Sat Oct 19, 2013 1:45 pm
Re: Cost Analysis: Living in CA vs the South
We took 10K pay cut to move from Northern CA to Texas. And it was one of the best decisions we ever made so far. Here are a few things that we save on:
15K a year to California state income tax.
Our 350K house in Texas equals 800K house in the bay area (equals in term of school district not the size of the house since everything is bigger in Texas).
With 20% down for the house in Texas is 70K and 160K in California
At 4% interest, the annual percent interest for Texas is 11K on 280K principle 30 years fixed.
At 4% interest, the annual percent interest for California is 25K on 640K principle 30 years fixed.
We are paying $6228 a year in property tax in Texas. For California, at 1% on 800K home is 8K a year.
Daycare is $800 a month for an infant in Texas and minimum $1200 a month for California. We have 2 little kids.
15K in state income tax
14K in interest for the house
1.8k in property tax
10K in child care (estimated figure)
Total saving a year: 40K
15K a year to California state income tax.
Our 350K house in Texas equals 800K house in the bay area (equals in term of school district not the size of the house since everything is bigger in Texas).
With 20% down for the house in Texas is 70K and 160K in California
At 4% interest, the annual percent interest for Texas is 11K on 280K principle 30 years fixed.
At 4% interest, the annual percent interest for California is 25K on 640K principle 30 years fixed.
We are paying $6228 a year in property tax in Texas. For California, at 1% on 800K home is 8K a year.
Daycare is $800 a month for an infant in Texas and minimum $1200 a month for California. We have 2 little kids.
15K in state income tax
14K in interest for the house
1.8k in property tax
10K in child care (estimated figure)
Total saving a year: 40K
Re: Cost Analysis: Living in CA vs the South
I suppose I can't compare to the South, since I haven't bought many groceries there, but they're definitely much more expensive in Los Angeles than in the Midwest. "Closer to the source" is applicable for a small subset of groceries, and transportation only represents a fraction of the cost (could be a reasonably large fraction for certain perishables). Increased rents, taxes, labor costs for grocery stores in coastal CA drown most of that out, I'd think. Of course, the midwest produces more food than California, but I have my doubts that a couple of anecdotes are necessarily more accurate than CNN's numbers - not that those are gospel.denovo wrote:Well, the Inland Empire is obviously the literal source of the agriculture in California internally , but regardless I am skeptical per CNN that groceries are more expensive in SoCal than the "South" broadly speaking, especially not when it comes to fresh fruits and vegetables which maybe doesn't make a large part of the diet of the typical consumer.tj wrote:When I moved from the "Inland Empire" to Newport Beach, I noticed a huge increase in grocery costs. Of course, it doesn't help that most of the grocery stores around here are higher-end (Gelsons, Bristol Farms, Whole Foods), but even Ralphs here seems more expensive than Vons in the IE.denovo wrote:I am skeptical, in my experience groceries are cheaper in So Cal (closer to the source) than the rest of the country.kenyan wrote:For what it's worth, the CNN cost comparison claims that living in Atlanta, GA versus Orange County (probably similar in costs to Santa Barbara) is:
Orange County
Groceries 10% more
Housing 171% more
Utilities 19% more
Transportation 16% more
Health Care 7% more
...and a wage of $50,000 in Atlanta is the same as a wage of $75k in Orange County.
Retirement investing is a marathon.
Re: Cost Analysis: Living in CA vs the South
SF Bay area groceries are about the same price as groceries in Charlottesville Virginia from my casual observations. Of course that excellent VA ham is cheaper in the east but chili peppers, persimmons, artichokes, etc are less in CA.
Re: Cost Analysis: Living in CA vs the South
You're using California and Southern California interchangeably, which kind of bothers me as someone originally from Northern California. I realize the thread is specifically about Southern California.mlebuf wrote:Although I have never lived in Southern California, I have visited many times and plan to visit in the future. As someone from the South who no longer lives in the South, I believe that moving to California will give you a serious dose of sticker shock - in addition to the traffic and other issues that resident Boglehead sensors will delete if I mention them.
Many years ago I told someone, "To me, living in California would be like being married to a very attractive, high maintenance, difficult woman. She may look great, but she's gonna cost a fortune and I'll catch hell every day." All that glitters....
Just one man's opinion.
In general California is a high cost of living state, and most of the South has a fairly low cost of living. But there are exceptions: where I now live (technically the South) has a significantly higher cost of living than where I grew up in California. For that matter, Atlanta is probably more expense than Barstow.
I agree what the biggest difference is probably cultural, and this is liable to outweigh the financial aspect.
Best wishes,
Brad
Most of my posts assume no behavioral errors.
Re: Cost Analysis: Living in CA vs the South
I live in the South (Tennessee)
1500 sq ft home
Home Insurance: $576.00
Real Estate Taxes: 667.00(just paid today)
Home Maintenance: minimal so far
House Cleaning: Do It Myself
Lawn Care: Do it Myself
Trash Pickup: $180
Heat/Electric: $1400
1500 sq ft home
Home Insurance: $576.00
Real Estate Taxes: 667.00(just paid today)
Home Maintenance: minimal so far
House Cleaning: Do It Myself
Lawn Care: Do it Myself
Trash Pickup: $180
Heat/Electric: $1400
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: Cost Analysis: Living in CA vs the South
FWIW, my daughter pays $1,500/month (split with her roommate) for a 2BR, spacious apartment in SB that's basically across the street from the city college (SBCC), which is across the street from the beach. There are no amenities, and I think this is about the best deal one can find in town.
RE: REITs, from Vanguard, unadjusted and adjusted effective yields
I own some of the VG REIT fund, but would not put the proceeds from a house sale into it unless it represented a relatively small portion of my net worth. My REIT value is less than 10% of my stocks. There has been some talk here about REITs being overvalued.
Kevin
RE: REITs, from Vanguard, unadjusted and adjusted effective yields
REITs own commercial real estate, which is not necessarily correlated to residential housing, and certainly not with any particular single house. REITs can be quite volatile--we have experienced daily moves of +/- 10% in the last few years (the Vanguard REIT fund). A REIT fund is a risky asset, but then so is a house.The current unadjusted effective yield is 4.13% as of 12/31/2013, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).
The current adjusted effective yield is 2.83% as of 12/31/2013. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years. (These percentages are 28.85% for 2012 and 32.19% for 2011.)
I own some of the VG REIT fund, but would not put the proceeds from a house sale into it unless it represented a relatively small portion of my net worth. My REIT value is less than 10% of my stocks. There has been some talk here about REITs being overvalued.
Kevin
If I make a calculation error, #Cruncher probably will let me know.
Re: Cost Analysis: Living in CA vs the South
Regarding earning 3.5%, silly me--the 30-year Treasury is yielding about 3.6%; but then it was yielding about 3.9% at the beginning of the month.
Kevin
Kevin
If I make a calculation error, #Cruncher probably will let me know.
Re: Cost Analysis: Living in CA vs the South
Don't forget, California has some beautiful mountains too! Ansel Adams coined the Sierra Nevada the "Range of Light" quite appropriately. Plenty of places for weekend roadtrips from SB - wintertime I head to Joshua Tree, summer, all over the Sierra (climbing!). 6hrs from SF, Yosemite, Vegas - all easily accessible for weekend trips.
- TimeRunner
- Posts: 1939
- Joined: Sat Dec 29, 2012 8:23 pm
- Location: Beach-side, CA
Re: Cost Analysis: Living in CA vs the South
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Last edited by TimeRunner on Wed Dec 12, 2018 10:41 am, edited 1 time in total.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
Re: Cost Analysis: Living in CA vs the South
That $7,500 difference is 50+% more than current living expenses. What would happen if your expenses went up that amount where you live now, plus the amount you appear to have underestimated?
Tim
Tim
-
- Posts: 45
- Joined: Sat Aug 18, 2012 11:27 pm
Re: Cost Analysis: Living in CA vs the South
As someone who is contemplating moving from San Diego to Indiana in the near future your numbers have to be off.
For the same exact square footage I go from 789,000 to 109,000 in mortgage.
Gas and food is cheaper. The state income taxes are less, the vehicle taxes are less. Everything seems to be less except heating costs.
For every 100K in income that I make here and I could live in Indiana for 37K with the same quality of life. If we bank the difference and I keep my current pay with a transfer it works out to 20 years faster to retirement.
For the same exact square footage I go from 789,000 to 109,000 in mortgage.
Gas and food is cheaper. The state income taxes are less, the vehicle taxes are less. Everything seems to be less except heating costs.
For every 100K in income that I make here and I could live in Indiana for 37K with the same quality of life. If we bank the difference and I keep my current pay with a transfer it works out to 20 years faster to retirement.
Re: Cost Analysis: Living in CA vs the South
a low-risk 3% real return on funds in a taxable account, eh? still seems optimistic to me. 10-year Treasuries are 2.75%, take off tax and 1.5% inflation and you'd be lucky to net any positive real return this year, much less 3%.sunnyday wrote:.... I could estimate that my portfolio will grow at 3% after tax and inflation...
again if we could all predict an average 3% real growth (esp in a taxable account) no one would be arguing whether 3.5% is a 30-year safe withdrawal rate we'd be debating between 4.5% and 5%.