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Old 04-14-2008, 03:05 PM   #101
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Not that wages are completely ou of the picture. Here's SF's stepsister (some say ugly) city across the Bay.

Columnist decides: I wanna work for Oakland

How many city workers in your town make this kind of money?

NOT that it's a competition. It just is what it is. I'm taking the historical and current economic realities and projecting them out to the future while trying to account for the factors that will enhance or diminish the returns.

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Old 04-14-2008, 03:13 PM   #102
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Originally Posted by honobob View Post
Here's one way how SF deals with "poor" people who want to own property.

You can try to win the housing lottery! The below market rate lottery. Are you a poor single if you're in Chicago or Seattle making $60K? Ha Ha, are you dating poor old/young ladies?

Mayor's Office of Housing : 2007 Income Limits for Qualifying to Purchase a BMR Unit

A one person household can make no more than $60,550
A two person household can make no more than $69,200
A three person household can make no more than $77,850
A four person household can make no more than $86,500
A five person household can make no more than $93,400
A six person household can make no more than $100,350
A seven person household can make no more than $107,250
At first glance at their calculator, it looks like every $100,000 in savings adds $10,000 to the income test. The Sunday paper prints stories about people who "won" this type of lottery only to not have enough resources to keep it up. Condo-style fees can wipe them out.

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Old 04-14-2008, 04:02 PM   #103
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Not very indepth. I'm sure there's a better study somewhere.

San Francisco is the extreme example of a superstar city: Since 1940, housing prices have increased 2.1% more each year than they have in other cities. As a result, you see increasingly rich people moving in and relatively poor people moving out.

Big Cities, Bright Prospects - October 1, 2005
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Old 04-14-2008, 09:33 PM   #104
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Originally Posted by RLCMA View Post
I just started investing a few months ago and have been able to max out my 2007 Roth IRA, put 10% of my net income in mutual funds, and put 6% in my 401k since my company will match 50% up to 6% I put in. I'm saving up some money to invest in Real Estate down the road as well. My goal is to be worth $10 million by the time I'm 60. Do you think my current plan will allow this? Any advice about a great personal finance plan is much appreciated. Thank you.
My recommendation is to acquire financial literacy and one fun way to do that is to play the Cashflow 101 and Cashflow 202 games several times. The idea of these games is to have enough investment income to exceed your expenses (101) or twice your expenses (202). Then you can live on your investment income rather than having to work for a living (unless you choose to continue to work for the fun of it).

There may be meetups (Meetup: World's largest community of local Meetups, clubs and groups! - in your area where the Cashflow games are played. Or you can find a game in your area on the Community page of the Rich Dad site (Rich Dad - Welcome to Rich Dad!).

Based on the Work Less, Live More method using publicly-traded equities, if you need $40 thousand a year to live on, then you need $1 million of assets at a 4% safe withdrawal rate. At a 3% rate of inflation and a 1% annual cost to manage your investments, your $1 million of assets have to grow at least 8% (4%+3%+1%) a year on average to have their purchasing power keep up with inflation.

The point is though that it's not the market value of your income producing assets (i.e., $1 million versus $10 million) that matter; rather, it's how much net cashflow do they produce relative to your expenses that determines whether you are financially free or not. There are many different strategies for achieving financial freedom. Real estate and starting or acquiring businesses (the focus of the Cashflow games) is one way, while investing in publicly-traded equities (the method described in Work Less, Live More) is another way. The Automatic Millionaire by David Bach also provides some valuable wealth-building insights. You have to decide which approaches are best for you.

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