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lots of examples, each very dependent on your situations.
My current home property taxes used to cost less than my groceries ~$3/ day for family
Today, the same (more worn out) home property taxes cost me 14x my daily cost of groceries.
Just set your priorities.
Eat... or feed the insatiable government.
Or pass Prop 13 for WA.
Or live on a boat, campervan, smallish condo or barndominium.
The quote of the day from WA Rep. Jim Walsh:
My constituents constantly ask me, as well as people from all parts of Washington, why we can't have a 'California Proposition 13' type of property tax system in this state. A system under which your property taxes are fixed, or fairly fixed, at one rate as long as you own your house or property. When I explain in order to do that, we would have to amend the Washington State Constitution, the response I usually get is, 'OK, let's do that.'
Maybe the sweet spot for Oregon is middle to lower income households due to its progressive tax structure, to TexasDiver's point. Whereas in WA its regressive, so possibly better for mid-higher income earners or even the wealthy.
This seems to be the case. Oregon is reducing the cost of consumption, while Washington looks to be reducing the cost of investment (not sure about the 7% capital gains surtax, though!).
Quote:
Originally Posted by MtnSurfer
Retirees with paid off homes really do have a big tax advantage in CA especially those on lower fixed incomes (low property tax, low income tax).
Prop-13 rewards lower-income people who bought a house during the notorious troughs in California housing prices, who stretched to buy, and then held-on and retired in place. So for somebody who bought in say 1993, Prop-13 is great. It's brutal for a hedge-fund magnate relocating from Manhattan, who gets hundreds of thousands of dollars in dividend payments annually, and wants to retire in Malibu in 2023. Maybe he can afford a $10M mansion on a hillside, but he's going to get brutalized with property tax and especially income tax.
Quote:
Originally Posted by StealthRabbit
lots of examples, each very dependent on your situations.
Your postings show a history of a creative and innovate ways of living life and managing its costs. Creative people may find that shortcuts that have been lucrative for them, suddenly get canceled or reversed, and thus, their costs suddenly balloon. Those of us who aren't as innovative or perspicacious, who live more quotidian and banal lives, who pay retail for everything, who buy houses and cars and whatnot in the conventional way, who don't avail ourselves of shortcuts, are less likely to sustain sudden and malign changes.
An example might be agricultural rollbacks on property taxes. For a dumb city-boy with idle cash burning a hole in his pocket, who buys 50 acres at full retail price, through a real estate agent, who can't even spell "agriculture" and for whom the only viable crop is poison ivy, the fact that agricultural exemptions or timber exemptions do or do not exist, is irrelevant.
The same holds as we climb up the income/assets range. As some people get more affluent, they get more creative in managing their taxes, in finding alternative investments, in networking, in prospecting for leads and clients and associates and so on. Others, who manage to rise financially, may nevertheless never change their habits or graduate from their comfort-zone. So a fellow who starts out with nothing but then is co-founder in a tech start-up and cashes out with a huge windfall, might still be living a lower-middle-class lifestyle, not because he's cheap (though he may be), but simply because at heart he's still a broke college student, and remains thinking like a broke college student. So he might still do his income-taxes by hand, in ink, on a printed form, perhaps missing vast amounts in legal and accessible deductions.
The point is, that creative people may find clever ways to thrive and to save money despite living in high-COL areas, or having other direct disadvantages arrayed against them. Less creative people are going to be more dependent on obvious and generic factors. To say that clever shortcuts are conceivably available, isn't going to help them. And to note rapacious money-grabs that obviate heretofore lucrative shortcuts, isn't going to hurt them.
The Property Cap ended up being dismissed by WA Supreme Court, then becoming a total county-wide-cap, NOT a residential property cap, so... Commercial interests were able to benefit greatly, and residential properties bear the weight. It is very easy to argue commercial / income property assessments. Residential is not worth your time / money. As the Assessor tells me at each hearing... "You're always going to lose. We get to apply Multiplication and Division, residential properties only get to use addition and subtraction." A very slight incremental win one yr (for homeowners) will result in a multiple victory for assessor the next year (and subsequent decades).
You WILL pay, until you leave.
Leaving is not easy when you have a farm (Decades of improving soils, building barns, fences, water systems, ecology projects, orchards, and many semitruck loads of equipment and livestock and gear. ...)
Your postings show a history of a creative and innovate ways of living life and managing its costs. Creative people may find that shortcuts that have been lucrative for them, suddenly get canceled or reversed, and thus, their costs suddenly balloon. Those of us who aren't as innovative or perspicacious, who live more quotidian and banal lives, who pay retail for everything, who buy houses and cars and whatnot in the conventional way, who don't avail ourselves of shortcuts, are less likely to sustain sudden and malign changes.
An example might be agricultural rollbacks on property taxes. For a dumb city-boy with idle cash burning a hole in his pocket, who buys 50 acres at full retail price, through a real estate agent, who can't even spell "agriculture" and for whom the only viable crop is poison ivy, the fact that agricultural exemptions or timber exemptions do or do not exist, is irrelevant.
The same holds as we climb up the income/assets range. As some people get more affluent, they get more creative in managing their taxes, in finding alternative investments, in networking, in prospecting for leads and clients and associates and so on. Others, who manage to rise financially, may nevertheless never change their habits or graduate from their comfort-zone. So a fellow who starts out with nothing but then is co-founder in a tech start-up and cashes out with a huge windfall, might still be living a lower-middle-class lifestyle, not because he's cheap (though he may be), but simply because at heart he's still a broke college student, and remains thinking like a broke college student. So he might still do his income-taxes by hand, in ink, on a printed form, perhaps missing vast amounts in legal and accessible deductions.
The point is, that creative people may find clever ways to thrive and to save money despite living in high-COL areas, or having other direct disadvantages arrayed against them. Less creative people are going to be more dependent on obvious and generic factors. To say that clever shortcuts are conceivably available, isn't going to help them. And to note rapacious money-grabs that obviate heretofore lucrative shortcuts, isn't going to hurt them.
So an idiot savant may or may not benefit from all those creative methods depending on his area of genius. And for the rest of us average bears that pay retail or use real estate agents, we'll wind up somewhere in the middle. Either that or we 'buy the book' and hope the formula hasn't changed including old tax loopholes until after we attempt to execute on the recipe resulting in either great success or tremendous failure.
The point is, that creative people may find clever ways to thrive and to save money despite living in high-COL areas, or having other direct disadvantages arrayed against them. Less creative people are going to be more dependent on obvious and generic factors. To say that clever shortcuts are conceivably available, isn't going to help them. And to note rapacious money-grabs that obviate heretofore lucrative shortcuts, isn't going to hurt them.
If incomes in a HCOL area are as proportionately higher as costs then are are actually very real advantages that can be gained by living in a HCOL area. That is because incomes tend to be more fixed than costs.
For example, if you earn $100K in a HCOL city your income is pretty fixed, by your costs are not. You can always find ways to reduce costs by renting a smaller place, sharing space with roommates, buying cheaper foods in bulk, buying cheaper clothing, commuting by bike rather than an expensive car, etc. etc. Maybe if you are clever you can figure out how to live on $50K/year and then save the entire remaining $50K/year for retirement.
But if you earn only $50K in a LCOL city, there is not much you can do to increase your income. And you will still have many costs. So unlike in the HCOL city, it will be completely impossible to live on $0 per year and save your entire $50K salary. Maybe if you do all the same things you might be able to save half like in the HCOL city, but then you are only saving $25K per year and twice as far away from retirement or early retirement.
There is a reason why most rich people get that way living in cities, not rural areas.
If incomes in a HCOL area are as proportionately higher as costs then are are actually very real advantages that can be gained by living in a HCOL area. That is because incomes tend to be more fixed than costs.
For example, if you earn $100K in a HCOL city your income is pretty fixed, by your costs are not. You can always find ways to reduce costs by renting a smaller place, sharing space with roommates, buying cheaper foods in bulk, buying cheaper clothing, commuting by bike rather than an expensive car, etc. etc. Maybe if you are clever you can figure out how to live on $50K/year and then save the entire remaining $50K/year for retirement.
But if you earn only $50K in a LCOL city, there is not much you can do to increase your income. And you will still have many costs. So unlike in the HCOL city, it will be completely impossible to live on $0 per year and save your entire $50K salary. Maybe if you do all the same things you might be able to save half like in the HCOL city, but then you are only saving $25K per year and twice as far away from retirement or early retirement.
There is a reason why most rich people get that way living in cities, not rural areas.
While this is generally true as an old rule of thumb, new dimensions have been added to the economy which change the current playing field. A big one is WFM where the home office is in a HCOL city but you can live anywhere. And the pay is still much higher than most other cities. In my case, I had to start in that HCOL area to establish myself, then ask for an exception to policy. Now, its standard protocol for many large companies and not so hard if permission is needed.
For example, my son just graduated from UW and wanted to stay in the Portland metro. His best offer right out of school was from a big CA tech co. and at least double anything locally. While he would have loved to work here, it was just too good to pass up for the many benefits gained. So, he lives in Vancouver still with us and works for a large tech firm that don't even have offices here. They pay for everything including travel, gym membership and many other cool perks.
While this is generally true as an old rule of thumb, new dimensions have been added to the economy which change the current playing field. A big one is WFM where the home office is in a HCOL city but you can live anywhere. And the pay is still much higher than most other cities. In my case, I had to start in that HCOL area to establish myself, then ask for an exception to policy. Now, its standard protocol for many large companies and not so hard if permission is needed.
For example, my son just graduated from UW and wanted to stay in the Portland metro. His best offer right out of school was from a big CA tech co. and at least double anything locally. While he would have loved to work here, it was just too good to pass up for the many benefits gained. So, he lives in Vancouver still with us and works for a large tech firm that don't even have offices here. They pay for everything including travel, gym membership and many other cool perks.
Derek
All true. Times are changing. But not all professions are that portable. If you are say an orthopedic surgeon you pretty much have to live near where you work.
The larger point being, you generally have more flexibility in taking the higher salary compared to the lower salary.
If incomes in a HCOL area are as proportionately higher as costs then are are actually very real advantages that can be gained by living in a HCOL area. That is because incomes tend to be more fixed than costs. ...
Excellent points! But to add, a high-income person is going to be dependent on narrow employment opportunities. If you’re a hedge fund manager, you’re probably going to be limited to NYC. Maybe Boston or Chicago or SF. Probably not the Vancouver WA area. People who earn high incomes have to find comparably lucrative jobs first, and then relocate. They will have micro-relocation-decisions (Felida vs. Ridgefield vs. Camas vs. Washougal), not macro-relocation-decisions (WA vs. CA vs. NY).
Instead, the wide-eyed “where the heck should I live” question is more salient, I think, to retirees or incipient retirees. They no longer care about careers or workplace options. These may be people with a lot of passive investment income. That income will persist, whether they move to Ethiopia or Monaco or Portland Oregon.
I don’t want to make some bogus bombastic personal assertion of wealth, but let me ask the more innovative people here, like Stealthrabbit, a provocative question: suppose that you were a billionaire – yes, a billionaire! – with no roots, no family, no allegiances and no obligations, AND a desire to save money. Where would you move?
Quote:
Originally Posted by MtnSurfer
...new dimensions have been added to the economy which change the current playing field. A big one is WFM where the home office is in a HCOL city but you can live anywhere. ...
For example, my son just graduated from UW and wanted to stay in the Portland metro. His best offer right out of school was from a big CA tech co. ...
How does your son avoid paying nonresident income taxes to CA? WFH is great from the viewpoint of pursuing a lucrative and rewarding career even while living in a smaller city with fewer local employment options. But it won't solve the state income tax dilemma for W2 or 1099 employees.
I don’t want to make some bogus bombastic personal assertion of wealth, but let me ask the more innovative people here, like Stealthrabbit, a provocative question: suppose that you were a billionaire – yes, a billionaire! – with no roots, no family, no allegiances and no obligations, AND a desire to save money. Where would you move?
Most every city is nice if you have unlimited wealth. If it were me, I'd buy some beautiful home in some major city in a beautiful neighborhood with lots to do nearby (preferably walkable) and near a major airport. That would be my "home base" and then when I wasn't home I'd just to extended travel around the world and save money by not buying multiple homes. Have a permanent housekeeper and a property manager so I can hop a plane for a month overseas and not have to worry about bills, maintenance, whether the lawn is getting watered, etc. I'm more of a city person so would get bored on some giant ranch in Montana that is 100 miles from the nearest good Thai restaurant.
Then when I'm not home do things like rent some fabulous pad in Barcelona and spend a month there. Rent some beautiful estate on a beach in Costa Rica and spend a month there, etc. Pop in for a week in Paris or London when I feel like it.
Any good city would work as such a home base. Portland, Seattle, Los Angeles, San Francisco, Chicago, New York. With that much money you life will be great anywhere and you'll have lots of beautiful living options.
What I wouldn't do is dump money on yachts, properties, planes, etc.
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