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Old 12-04-2016, 12:35 PM   #121
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Well it may be worth to fork extra few thousand dollars for place with great weather, walkable neighborhood, highly educated workforce, access to Ocean and Mountains, nice historic neighborhood, good quality healthcare etc etc.

It is also about what you get for your money
One thing to factor in is appreciation potential, though that is a bit of a wild card, since home prices here can be a bit boom and bust. Our house in California cost more than our previous home in a lower cost of living state, but it has also appreciated a fair bit while our previous home went down in value (with inflation taken into account).
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Old 12-04-2016, 12:39 PM   #122
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We're the same in the Bay Area except substitute Grocery Outlet for Amazon. I started to do the food stamp challenge just for a little hobby project, and realized we could actually eat pretty healthy on a food stamp budget in our area. I spent $246 on groceries last month for two plus a house guest for one week. We get organic meat from Costco and buy extra for a chest freezer. For fish, a mix of organic and nonorganic produce, organic eggs, yogurt, beans, rice and most everything else, I shop at Grocery Outlet and stockpile the best deals, so we spend around 60% less than the local Safeway prices for the same types and brands of food.
We have enjoyed shopping for bargains too, for the thrill of the hunt though we do save some money.

It's too bad we do not eat much anymore. It would have helped a lot more 15 years ago, when we still had two teenagers at home.
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Old 12-04-2016, 12:59 PM   #123
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One thing to factor in is appreciation potential, though that is a bit of a wild card, since home prices here can be a bit boom and bust. Our house in California cost more than our previous home in a lower cost of living state, but it has also appreciated a fair bit while our previous home went down in value (with inflation taken into account).
I hate to say it but just as we see growing income gap we see growing housing recovery gap. So in that respect owning house in Silicon Valley is great thing.

That ultra expensive Palo Alto CA or Greenwich CT are in much better position for future price appreciation then cheap Lincoln NE. Now I took extremes just to make a point.
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Old 12-04-2016, 01:35 PM   #124
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We have enjoyed shopping for bargains too, for the thrill of the hunt though we do save some money.

It's too bad we do not eat much anymore. It would have helped a lot more 15 years ago, when we still had two teenagers at home.
The thrill of the hunt for sure. I'm probably not that frugal in an absolute sense as we spent more on restaurant meals last month than our grocery bill, but I like the bargain hunting part. (BTW I checked my spreadsheet and we spent a bit less for groceries, actually $234, but more than that on restaurants.)
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Old 12-05-2016, 08:25 AM   #125
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I live off around $28k per year, about 40% of that is rent.

I have taxable investment income of around $24k per year. Goal is to get that to $27k next year. I'm 40, not married, no kids. I have 15 years and counting in a state pension, low six figures in 401k/Roth IRA.

I'm thinking of retiring in the next 4 years at age 45. I'll have 20 years in pension by then. Should have investment income over $30k and a paid off house as well. Living expenses will probably drop to $18k or so once I stop working.
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Old 12-05-2016, 08:59 AM   #126
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ESRwannabe - might caution you on your numbers after retiring - does that $18K include health insurance premiums? Or does state job provide that after retiring?
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Old 12-05-2016, 09:10 AM   #127
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That's what I think [a lot of effort to spend that much a month]! Except that we're foodies.
Hah! Depending upon where you live (and where you travel interstate for restaurants), that is one quick way to run the spending up!

Like spending on "fine" wine/liquor, though, it is very easy to cut when needed. (Easy, but not fun.)
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Old 12-05-2016, 09:18 AM   #128
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ESRwannabe - might caution you on your numbers after retiring - does that $18K include health insurance premiums? Or does state job provide that after retiring?
Yup I include health insurance. I would get one with a very high deducible or I would go expat in another country if the US cannot get health care prices under control.

I am willing to abandon the US if I have to for reasonable health insurance. I hope other people will "go galt" and leave.
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Old 12-05-2016, 09:25 AM   #129
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Hah! Depending upon where you live (and where you travel interstate for restaurants), that is one quick way to run the spending up!

Like spending on "fine" wine/liquor, though, it is very easy to cut when needed. (Easy, but not fun.)
I recently found a box red wine that I like as a daily drinker. The more robust wine is often too much for my everyday food. This box wine even saves me the trouble of pulling the cork (I drink about 1/4 a bottle a day). Plus, there's less hassle of storing the bottles, and the trouble of going to the stores to get them. Of course, the cost is lower.

I also have been experimenting with less popular brands of Cognac from France. Some are just as good as the popular bottles of Remy Martin or Martell I have been drinking all my life. Maybe my palate has degraded, but if you cannot tell, why pay more? Some of these bottles have to be labeled brandy as they are produced outside of the prestigious Cognac region, but should I care?

"It’s just as easy to live well when you’re poor as when you’re rich - but when you’re poor, it’s much cheaper" -- Andrew Tobias
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Old 12-05-2016, 11:38 AM   #130
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Current budget spreadsheet is at $8500/mo. We live in a much bigger house than we need to in New England and don't deny ourselves much in terms of travel and dining today. Retiring in THREE WEEKS but DW will work 3-4 more years. Real Estate Taxes and Utilities/Homeowners insurance are big items.

We have been "practicing" the budget last couple months, esp. watching the discretionary things and getting a "not even trying to cut anything" baseline. But also eyeballing the budget closely and known that when the trimming starts, where it will start first.

Not planning on downsizing for 5-10 years or so. Don't need this big of a house, but really enjoy the town, large wooded lot and mancave/shop for my vintage car hobby.
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Old 12-05-2016, 11:48 AM   #131
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My expenses are running about $3K per month. I am single and living in San Francisco Bay Area. Property tax around $1K per month and occasional local or overseas travels (one-two per year) are included, health insurance is excluded (I have it at work).
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Old 12-05-2016, 12:21 PM   #132
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I hate to say it but just as we see growing income gap we see growing housing recovery gap. So in that respect owning house in Silicon Valley is great thing.

That ultra expensive Palo Alto CA or Greenwich CT are in much better position for future price appreciation then cheap Lincoln NE. Now I took extremes just to make a point.
For as long as the status quo is maintained. If California's taxes etc get even worse and convince a bunch of companies to move (and take their highly compensated employees with them), I'd expect the real estate market in many places to plummet.
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Old 12-05-2016, 03:12 PM   #133
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For as long as the status quo is maintained. If California's taxes etc get even worse and convince a bunch of companies to move (and take their highly compensated employees with them), I'd expect the real estate market in many places to plummet.
Yes real estate market eventually will go down, but not exactly because of tax or highly compensated workers moving to less expensive places. Chinese investors are contributing a lot to the housing boom we currently see in California, Seattle and recently Florida. The next downturn will most likely start when those investors will run out of money or there will be some other actions taken by American or Chinese government to limit it.
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Old 12-05-2016, 03:39 PM   #134
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We moved to semi-retired this year (both 54). Currently budgeting $10k/mo for our expenses with no debts. That's pretty high but we are paying full boat on healthcare and have a very high budget for travel, dining & entertainment (1/3 of the budget). Those could easily be suspended if needed as well as additional cutbacks.

If we cut out "all" of the extras we'd be at about the level of our rental property income (after expenses) each month so the numbers work as long as the rental market doesn't collapse. If it does we will adapt.
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Old 12-05-2016, 06:35 PM   #135
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Currently my expenses, not including income tax or payroll tax, are about $4500 a month. A good chuck of this goes to maintaining an older home that is larger than I need and not energy efficient. I'm retiring next year and will be relocating to a more expensive state, renting at first and then buying a smaller home. I'll have $6000 a month available and plan to spend more on travel and entertainment if the rent doesn't take too much of it. My net income basically goes up in retirement since so much of my current salary goes towards savings and taxes.
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Old 12-05-2016, 07:11 PM   #136
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I was doing fine until I took a vacation to Napa Valley, went to all of those wine tastings, and signed up for the wine clubs. Didn't know that this hobby would topple my budgets! But, I've got some GREAT wines in my new wine fridge, and more on the way.......
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Old 12-05-2016, 09:01 PM   #137
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What are your numbers?

We are not yet retired but my goal is a budget of $20k per month. We probably won't spend nearly that much in most months but when I know that I can spend that every month, with essentially zero risk of failure, then even a risk averse guy like me will feel comfortable. (I do realize that we could live quite comfortably on much less).
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Old 12-05-2016, 09:27 PM   #138
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Thanks. It helps that we cook most meals at home and my main fun activities are free (walking the dog on the beach and doing my free senior water fitness classes). And it helps we have older, paid for, cars.



Housing is a huge expense in SoCal... We get by with the lower spending numbers because the house is paid for and we've got prop-13 locked in low property taxes and none of the dreadful mello roos taxes/bonds. I couldn't afford to stay retired if we still had a mortgage payment.
We plan on having our rental property cover the expenses of both houses by then - we are paying off it's mortgage but not the primary house.
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Old 12-05-2016, 10:03 PM   #139
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Old 12-06-2016, 09:04 AM   #140
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