I don't understand the personal economics of California

[Bamaman]

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.

In the past, we didn't see so many Californians moving to ultra low cost of living states. Now, an incredible number are moving to Texas for the improved quality of life and no state income taxes. There are so many entertainers, movie stars and musicians living in Nashville, Tennessee that they call it "The Third Coast."

But getting back to the personal economics of California. It's obvious that those luxury cars are leased. Another observation is husbands are often working second jobs and wives are also working to just maintain what would be a normal lifestyle in other states.

I've visited a number of relatives in the Los Angeles basin, and I honestly don't know how they afford to live there.

If I had three times my current income, I would love to move to California. However I would still be lowering my standard of living substantially.

 

[FireBug]

when times is hard you can sleep in your car but you can't drive your house!

LOL...ok, I'm stealing that line!

 

[dvalley]

I've been in NorCal and SoCal pretty much all my life and I've seen Orange County become what it is now compared to when I was in college. Same with SD and many parts of NorCal (from Gilroy and Morgan city to Tracy).

However, when you really think about it owning fancy cars these days is extremely easy, $1500 down and $300 a month lease will get you into a decent brand new car. If you can afford $500 a month a BMW...so it's become a monthly payment game and leasing has really took on. And why not? lease a car every three years and never worry about maintenance or car bills. The shiny new car trend (down to the gardeners) really started in 2009-2010 and after the cash-for-clunkers program. Until recently my gardener (Escalade- his family car vs. the Toyota Tundra which is his work truck) and a couple of college kids living with parents had better cars (BMW M1, and a Subaru STi) than me...some still do. Then again I owned a couple of exotic cars in the dot com boom era...even though I was renting a town home...you gotta know your priorities especially when single in the mid 20s lol

 

[Lakewood90712]

I've been in NorCal and SoCal pretty much all my life and I've seen Orange County become what it is now compared to when I was in college. Same with SD and many parts of NorCal ........... when single in the mid 20s lol

Oh don't get me started about Orange County, where an upscale area high school parking lot is loaded with late model Audi's and BMW's, THE STUDENT LOT, NOT FACULTY !!!!

 

[NW-Bound]

Places like Paradise Valley, AZ or Palm Springs or Beverly Hills where the rich people live of course will have the more fancy cars like Maserati and Ferrari. Those people can afford them.

About lesser luxury cars like the BMW, Audi, Lexus or Infinity, persons with reasonable means can own them. It is a matter of priority, whether the car is more important than something else.

When I was in school, I thought to myself that when I got out, I would get a 7-series BMW. And then, I got married and loved to have a home instead. So, I kept my 280Z, and bought a used pickup as the 2nd vehicle to haul construction material for DIY landscaping. The desire to own a luxury sedan vanished. Somewhere in the age of 30s, my interest in fast cars was also gone.

Now, if I had a lot more money, I would get a luxury sedan because it would give a better ride and more comfort than my run-of-the-mill clunkers. But I would have to be sufficiently rich that a dent or a scratch on that car would not bother me. I would have to be able to call the dealer and request that a new car be delivered to my door, and that scratched car be taken away out of my sight.

 

[Danmar]

Places like Paradise Valley, AZ or Palm Springs or Beverly Hills where the rich people live of course will have the more fancy cars like Maserati and Ferrari. Those people can afford them.

About lesser luxury cars like the BMW, Audi, Lexus or Infinity, persons with reasonable means can own them. It is a matter of priority, whether the car is more important than something else.

When I was in school, I thought to myself that when I got out, I would get a 7-series BMW. And then, I got married and loved to have a home instead. So, I kept my 280Z, and bought a used pickup as the 2nd vehicle to haul construction material for DIY landscaping. The desire to own a luxury sedan vanished. Somewhere in the age of 30s, my interest in fast cars was also gone.

Now, if I had a lot more money, I would get a luxury sedan because it would give a better ride and more comfort than my run-of-the-mill clunkers. But I would have to be sufficiently rich that a dent or a scratch on that car would not bother me. I would have to be able to call the dealer and request that a new car be delivered to my door, and that scratched car be taken away out of my sight.

Agree. It really depends on what's important to you. When I was younger in my 20-30's I drove old beaters because my priorities were elsewhere and money was scarce. Once I got to the point where I could afford nice cars, I went a little overboard. I really do like driving a sporty sedan and my M5 is a lot of car for the price.
By the way, in many wealthy areas like Paradise Valley, the cars of choice seem to be Bentleys. BMW's/Mercedes/Audis are very common. Sporty exotics like Ferraris are rare, maybe because the demographic skews pretty old, and us old guys have trouble getting in and out of them.

 

[Spanky]

Oh don't get me started about Orange County, where an upscale area high school parking lot is loaded with late model Audi's and BMW's, THE STUDENT LOT, NOT FACULTY !!!!

Not just in CA - this is also true in our city also. DW always comments on how cheap my car (2000 Toyota Corolla) is in comparison to the cars parked in the student's lot of our local high school.

 

[explanade]

Shoot I go to Chipotle, which I reserve for once a week at most, and there are high school kids eating there every day, with Lexus and BMW key fobs.

Then they go to Jamba Juice.

In high school I was putting up with shitty school cafeteria food.

Or running home for lunch to grab leftovers.

 

[travelover]

.............In high school I was putting up with shitty school cafeteria food.........................

Cafeteria food?! Such luxury! I had stale bread sandwiches with generic brand peanut butter and no jelly. Washed down with warm water - no money for ice.

 

[hnzw_rui]

I don't get the sportscar thing at all. You cannot tow a trailer, haul a load of free firewood scrounged on craigslist or go down Forest Service "roads" with those things. And I would hate to think what a trip with the dogs or a successful deer hunting trip would do to the upholstery...

If in SoCal, what would you need firewood for? Most fireplaces in SoCal are just there for display. Besides, not everyone is interested in camping, hunting or having kids or pets. Mind, I don't own a sportscar nor would I care to buy one but different strokes for different folks.

I've got a co-worker who's stingy as hell in most things but drives a couple of nice muscle cars. Uses a dumbphone on prepaid and never goes on vacation but frequently does upgrades and tinkers with his cars.

 

[BBQ-Nut]

This is almost like reading what earthlings think life on a distant planet must be like

Sorry...gotta run...my limo is here to take me to the tanning salon and then champagne brunch....

 

[marko]

The Chicago snow means the Ferrari keeps getting stuck due to the low clearance, so not a good choice.

That's why if you can afford a Ferrari, you have a "winter" car (or two)...maybe a Land Rover.

 

[kcowan]

I had a 3yo BMW convertible that I bought from the dealer with dealer warranty and 39 month lease. When I retired, I sold it after a year because it was not getting used much.

Four years later when we had acquired our second home, we bought a 3yo high mileage Escape (50k miles), and now, 5 years later, it has another 4000 miles added. Granted we only use it 5 months. Turning high mileage vehicles into low mileage...

 

[brewer12345]

If in SoCal, what would you need firewood for? Most fireplaces in SoCal are just there for display. Besides, not everyone is interested in camping, hunting or having kids or pets. Mind, I don't own a sportscar nor would I care to buy one but different strokes for different folks.

I've got a co-worker who's stingy as hell in most things but drives a couple of nice muscle cars. Uses a dumbphone on prepaid and never goes on vacation but frequently does upgrades and tinkers with his cars.

Different strokes for sure. Several posters have espoused the view that socal is heaven. Not for me. I hope the people who live there do enjoy it so that they stay there forever.

 

[ExFlyBoy5]

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.

New Zealand undesirable?! I would definitely take NZ over California (and just about every other state in the Union)! Perhaps I missed the sarcasm...



Sent from my mobile device so please excuse grammatical errors.

 

[kcowan]

New Zealand undesirable?! I would definitely take NZ over California (and just about every other state in the Union)! Perhaps I missed the sarcasm...

SF and NZ! Yes that was sarcasm!

 

[Big_Hitter]

Different strokes for sure. Several posters have espoused the view that socal is heaven. Not for me. I hope the people who live there do enjoy it so that they stay there forever.

I know a ton of ppl that have moved here from socal and none of the inverse.


they do all drive nice cars though, at first, then they get scoobs

 

[Andre1969]

About 25 years ago, I remember reading a story about a guy from some ritzy area of California that was having a 1959 DeSoto Firedome convertible restored. One of his friends told him that for what he was paying for the restoration, he could've bought a Ferrari. His response was "yeah, but everybody around here drives a Ferrari. People will notice me in this!"

 

[HFWR]

After too many years of driving beaters, held together with coat hangers and duct tape, with a gallon of no-name oil and/or transmission fluid in the trunk for frequent refills, I'm happy with a car that goes "vrooom" when I ask it to. Well, that, a stereo, and a/c.

 

[NW-Bound]

... By the way, in many wealthy areas like Paradise Valley, the cars of choice seem to be Bentleys. BMW's/Mercedes/Audis are very common. Sporty exotics like Ferraris are rare, maybe because the demographic skews pretty old, and us old guys have trouble getting in and out of them.

If I were that rich, I would not want to drive. And a chauffeur will also keep the car dust free when he is not driving me to places.

My son, a young engineer, bought an Audi S4 because he drove his cousin's (a young pharmacist) and loved it. He kept it nice and clean for the first few months, but it is now left dirty. Told my wife earlier that he should get it out of his system, so he can grow out of it.

About owning a nice car, I prefer to use the money for vacations or to maintain my 2nd home. Or just to keep that money so it shows up in Quicken for counting pleasure. If I had more money, I might change my mind, but at this point, I pay no attention to luxury cars on the road, nor am curious about what they cost. It came as a surprise to me how much a lower German luxury sedan costs, and how much they go up to. Also, how fast they depreciate!

 

[Sue J]

I am FAR from San Diego or any other high cost of living area, yet I see the same 4 Jaguars at the drop off and pick-up at the elementary school. Who in my area is driving a Jaguar? A couple of them seem to be driven by grandparents and two of the Jaguars are older body styles.

I also see a lot of current model Lexus SUVs decked out with all the trim extras. I assume many of these are leased. After my sister got a new Subaru Forester ($32,000) I noticed how many of those in my area, too.

Then there is the Testarossa that we see occasionally.

It seems odd in our very middle class neighborhood. Maybe these folks can afford these things because of the low cost of living here. Or maybe they are like so may others who just lease because they want bigger and better right now.

 

[Marita40]

In my experience people who drive flashy and expensive cars are:

 

[explanade]

When I last shopped for a car almost 10 years ago, I was reading Edmunds and other cat sites, for info about German cars.

Ended up getting a Honda and spending less than half of what I would have spent.

I'd read somewhere how much each $10k not spent on more costly car would return in 10, we or more years.

As it turned out, I'd have been all right spending more money then. OTOH, still have the Honda and it only has about 30k miles and not putting too many miles on it even After RE.

 

[Andre1969]

I've actually seen lease advertisements for Jaguar and other brands that make them seem surprisingly affordable. I haven't read the fine print, but I seem to remember some lease on a Jag that was around $459/mo.

I'm sure there are all sorts of mileage restrictions, and perhaps a big up-front payment, but it seems like a pretty cheap way to look rich, if that's something you care about. For comparison, I remember the payment on my old 2000 Intrepid, purchased November 1999, was $347.66/mo. Adjusting for inflation and that's about $496 in 2015 dollars.

So, if you want to convolute the logic a bit, you could argue that a new Jag can be cheaper than a 15 year old Intrepid!

 

[Sojourner]

In my experience people who drive flashy and expensive cars are:

Hahah, love that cartoon. But I can't agree 100% with the sentiment, since I actually drive a pretty flashy German sports car and yet I'm not one of those "no cattle" types. I bought the car used several years ago and got a good deal on it, so I honestly don't feel like it was such a frivolous extravagance (well, maybe 20% frivolous or extravagant). Considering that my net worth is over 100x what I paid for the car, I think the pleasure I get driving it on warm spring days with the top down can be reasonably justified as "worth it" to me. I tend to keep cars for over 10 years, so shelling out once every decade for something snazzy and stylish and fun to drive seems like an OK use for a small percentage of my money.