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I don't understand the personal economics of California
Old 06-16-2015, 04:00 PM   #1
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I don't understand the personal economics of California

I was just visiting San Diego and was surprised to see luxury cars everywhere, not necessarily lower-end ones everywhere. How do so many people do it down there? The cost of living is high with outrageous housing costs. Are there that many high-end jobs down there to support that kind of spending? There can't be that many successful business owners... Curious of your thoughts & experience.


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Old 06-16-2015, 04:14 PM   #2
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If you think SD is bad try Dallas - the land of the $80,000 millionaires


(it used to be $50,000 back in the mid 90s but I adjusted for inflation)
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Old 06-16-2015, 04:43 PM   #3
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Maybe they are all stolen.
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Old 06-16-2015, 05:05 PM   #4
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I was just visiting San Diego and was surprised to see luxury cars everywhere, not necessarily lower-end ones everywhere. How do so many people do it down there? The cost of living is high with outrageous housing costs. Are there that many high-end jobs down there to support that kind of spending? There can't be that many successful business owners... Curious of your thoughts & experience.
We live in California but were surprised at the dramatic increase in super high end cars we saw on vacation around San Diego - until we realized our hotel was near an exotic car rental agency.
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Old 06-16-2015, 05:24 PM   #5
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Where in San Diego were you? I live here and haven't noticed any greater number of luxury cars here than I see in Phoenix. Certainly I notice a lot more fancy cars in Las Vegas than in San Diego, but when I'm there I tend to be in places where fancy cars are more likely to appear. Could that be what happened to you on your visit to San Diego?
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Old 06-16-2015, 05:54 PM   #6
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Old 06-16-2015, 06:12 PM   #7
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I was just visiting San Diego and was surprised to see luxury cars everywhere, not necessarily lower-end ones everywhere. There can't be that many successful business owners...
What makes you think there can't be successful business owners?
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Old 06-16-2015, 06:55 PM   #8
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Born N Raised in so cal. Most Mfg jobs have left, so with some exceptions, it's becoming a 2 class system, wealthy, not wealthy. The middle class is slowly diminishing. Many wealthy residents are from abroad , and Mission Bay in SD is arguably the best weather in the United States ( most sunny days from weather data).

Much of the " Wealth " is from those with disposable income, and or credit buying and selling real estate during rising prices, kind of like owning a money printing machine, as long as you don't get caught long when prices drop, ya not immune to recessions . Build or add upscale construction for $200 / sq. foot then sell for $600- $1,000 sq./ft, all because of " LOCATION "

We also have nearly 33 % of the total public assistance recipients in the United States with only 14% of the US population - that's not a typo.

The above is empirical data from over 5 decades in the tarnished golden
state.

PS , Near my brothers house , A new Ferrari dealer just opened, 2 story showroom with car elevator, and a Maserati dealer is under construction 1,000 feet down the blvd.

PPS Just ask RODI about another feature of San Diego - the Traffic
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Old 06-16-2015, 07:47 PM   #9
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I think people live WAY beyond their means.
I used to joke that all the transplants to San Diego felt entitled to the "three B's"... Beach house, BMW, and Blonde on your arm. I saw coworkers (engineers) get in way over their head financially trying to live up to that image.

That said - there are a lot of engineers and other upper middle class types who managed to parlay their qualcomm options into paid off Carmel Valley homes. There's also the factor that folks who've lived here longer didn't pay full retail for their (now) million dollar homes.

And a lot of folks treat their home equity like an ATM... the heloc cash out is starting to become common again now that housing has recovered.

I live on a street with houses ranging (current prices) from 600k to 1.2M. But there are mostly mini-vans, nissans, and toyotas in front of the houses. A few beamers, and the obnoxious realtors at the end of the street has several fancy cars... But keep in mind that there are a number of folks who've lived here 20-50 years... So they paid less than 1/10 of the current values.
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Old 06-16-2015, 08:07 PM   #10
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I know a few folks who moved there for mega corps and got a house subsidy from them.
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Old 06-16-2015, 08:14 PM   #11
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There are two reasons I can think of for seeing so many high end cars in San Diego.
1. The dotcom millionaires of the Silicon Valley move there after making their fortunes.
2. Housing is so expensive, most folks just rent and can therefore afford to spurge on a luxury car.

San Diego isn't really a place to get rich, it's more a place to go after you get rich.

I sent both my sons to San Diego for college. It's got to be the most desirable area in the country to live. You gotta spend some time there to realize it. Both my boys, after only 4 years of college living there, are determined to end up some day living there. In the meantime, they are making their FI happen in less desirable areas of the world. One in San Francisco and the other in New Zealand.
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Old 06-16-2015, 08:14 PM   #12
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Confirmation bias. We're a big, rich state mostly built after the wars. We have little public transportation and a whole lot of cars. Currently the Tesla is the "it" car, but there is plenty of exotica where I live on the fringe of Rancho Santa Fe.

Additionally, California has the eighth largest economy in the world (1). That's the size of Brazil with only a tenth of the population. We're also the state with the largest total number of billionaires (2) and millionaires (3).

We have a huge and young population and a generous public assistance program -- most PA benefits children. The most recent data shows that one in six, not one in three, Californians receives some form of public assistance (4). We have a fairly progressive tax structure and we pay for our safety net support ourselves. We get a lot of money from the Federal government (don't forget that money is not just "welfare", but also goods and services as well as farm support) because there are so many of us, but we are merely #6 on the list with 44 states receiving more Federal money per capita (5).

1) http://www.ccsce.com/PDF/Numbers-Jul...kings-2013.pdf
2) https://en.m.wikipedia.org/wiki/List...f_billionaires
3) Millionaires of the 50 States, Listed by Number Per 1,000 Households in a State, from NETSTATE.COM
4) https://www.census.gov/content/dam/C...acsbr13-13.pdf
5) 2015’s States Most & Least Dependent on the Federal Government | WalletHub®
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Old 06-16-2015, 09:03 PM   #13
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Seems that many of us equate fancy cars with success. It's good advertising even if you can't really afford it.
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Old 06-16-2015, 09:27 PM   #14
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Seems that many of us equate fancy cars with success. It's good advertising even if you can't really afford it.
This.

Millionaire Next Door comes to mind.
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Old 06-16-2015, 10:48 PM   #15
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Where in San Diego were you? I live here and haven't noticed any greater number of luxury cars here than I see in Phoenix. Certainly I notice a lot more fancy cars in Las Vegas than in San Diego, but when I'm there I tend to be in places where fancy cars are more likely to appear. Could that be what happened to you on your visit to San Diego?
I think it's mostly a Sorrento Valley thing, maybe also around the Mormon temple?

Tech jobs here pay pretty well, comparable to silicon valley, and there are a lot of them packed together so plenty of German and Italian iron crawling down the onramps to the 5/805 at 5pm. Housing may be pricey by national standards, but it looks reasonable here after living in San Jose since the 1980s. A couple of decades ago Q was giving new grads fresh out of college a year's pay in NQSOs (shares x strike), then it lit up 30-fold in a few years. So lots of engineers got company-provided housing. These people can afford to drop six figures on their wheels.
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Old 06-16-2015, 11:49 PM   #16
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I would bet that most of the high end, expensive cars are leased as those who drive them can't lay out $100K (or more in many cases) to purchase some car that in a couple of years needs maintenance or is out of fashion.
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Old 06-17-2015, 12:06 AM   #17
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I don't remember noticing so many nice cars last time I was in downtown San Diego, but we have family in La Jolla and, wow, there are some seriously nice cars cruising around there. Of course there are plenty of very expensive cars on the roads around Silicon Valley too, especially on the weekends. And I am not talking about "entry" luxury brands (like Benz, BMW, etc...) either. Those are some very wealthy enclaves that are not representative of California as a whole.


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Old 06-17-2015, 12:10 AM   #18
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I don't remember noticing so many nice cars last time I was in downtown San Diego, but we have family in La Jolla and, wow, there are some seriously nice cars cruising around there. Of course there are plenty of very expensive cars on the roads around Silicon Valley too, especially on the weekends. And I am not talking about "entry" luxury brands (like Benz, BMW, etc...) either. Those are some very wealthy enclaves that are not representative of California as a whole.
That is where we saw so many cars compared to up here - and then we noticed the exotic car rental agency. We were seeing the same cars over and over.
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Old 06-17-2015, 06:05 AM   #19
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I don't remember noticing so many nice cars last time I was in downtown San Diego, but we have family in La Jolla and, wow, there are some seriously nice cars cruising around there. Of course there are plenty of very expensive cars on the roads around Silicon Valley too, especially on the weekends. And I am not talking about "entry" luxury brands (like Benz, BMW, etc...) either. Those are some very wealthy enclaves that are not representative of California as a whole.


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Agree. Nice places attract wealth. Wealth is often displayed via nice cars. Same as Scottsdale, Palm Springs, Palm Beach, Naples, etc. it's the American Way. We can speculate all we want about whether "they" can afford it or not, generally they can.
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Old 06-17-2015, 06:30 AM   #20
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If a household is spending 400k a year on consumption and taxes, but is earning 500k a year, they are is LBYM.

Even better, when they cash out and retire young in a low cost geography, they can retire with the same lifestyle for 200k a year. The downside is, at least for Silicon Valley is you are working too many hours to enjoy the toys much.




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