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Ceptorman

Am I Crazy for Considering Moving to Los Angeles

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  • The median income in California is about $64,000 before taxes.  By definition, of course, half of the people are making less than that.    The mean income is about $92,000, clearly showing why the mean is a poor measure of central tendency when there is a very wide range.
  • We moved out of California (mainly due to traffic and crime, not finances), and landed in a state that had slightly lower income tax, slightly higher property tax on a percentage basis, but marvelously lower property tax in dollars, because the houses are much less valuable.  The rule of thumb when we moved was you could expect a house twice as large at one half the price.  We have no sales tax, while California cities have about 9% or 10% sales tax, depending on where you live (varies by city/county).
  • Only the wealthy in California have a total tax of 50%, although I've heard that figure bandied about.  I have had only a nodding acquaintance with two such individuals in my ~~ 55 years in California.  The wealthiest person I knew well in California paid about 38% total taxes, I think.
  • My family knew a Californian -- I'm pretty sure he was a Republican -- who said he was proud of paying high taxes, because that served as an indicator of high achievement financially -- it was sort of a badge of honor to him, and he said it was the price of living in a decent society.  He, indeed, was a high achiever, and sought challenges.  He once walked from Oakland to Yosemite, possibly on the John Muir Ramble Route, and returned with a few missing toenails. 

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We get plenty of crazy mailings here. They just get torn up and tossed in the trash.

 

 

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19 hours ago, Jeff Matthews said:

When they start a new life, they need to change everything, including their political philosophy.

They are subject to an irrational mental conflict. They love the power voting for big government gives them to get freebies and to forcibly control those who do not think like they do.They don't want to win the debate they want to make you do as they say. Then they remember how nice things used to be and move somewhere that is like where they lived used to be to recapture that. Rinse and repeat. I figure a reasonable person would hit their hand with a hammer once and decide that is enough but these are not reasonable people.

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22 hours ago, Ceptorman said:

Total tax is around 34% based on what I'm expecting to make, slightly higher than where I am now. 

Consider your take home pay and increased expenses for housing, etc. 

 

Then factor in your age, you will want to retire and need to create income if you are self employed.  Will you be comfortable retiring in CA on your retirement income or will you need to move yet again?  Is the increase in income enough to put away enough money to retire?  Will your standard of living go down? 

 

Then consider the traffic, crime, etc. 

 

Tough decision. 

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2 minutes ago, tigerwoodKhorns said:

 

Consider your take home pay and increased expenses for housing, etc. 

 

Then factor in your age, you will want to retire and need to create income if you are self employed.  Will you be comfortable retiring in CA on your retirement income or will you need to move yet again?  Is the increase in income enough to put away enough money to retire?  Will your standard of living go down? 

 

Then consider the traffic, crime, etc. 

 

Tough decision. 

No tax is too high to make $40k a month insufficient to live well and stash for retirement.

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17 minutes ago, Jeff Matthews said:

No tax is too high to make $40k a month insufficient to live well and stash for retirement.

Sure it is, when you consider the whole picture. 

 

I assume the OP is in his 50s as we are all old farts here.  Maybe lives in a $500K house in Indiana and owes $200K. 

 

Move to LA and a replacement house is $2M for something similar but with a much smaller yard.  Much higher property tax I assume.  Int rates are low, but he doesn't have 30 years to pay it off, he has maybe 10.  So you now need to make up about $1.7M to own the house free and clear in 10 years.

 

Then there is retirement income.  He may now need $150K or more with a paid off house to have the same retirement standard of living as $75K would have provided in Indiana.  So another $2M or more for investments for passive income if he plans to stay.  Factor in the crime, fires, population density and it gets hard to justify unless he really loves it there. 

 

Consider that he is also in a much higher tax bracket, and 1099 so he also pays all of his SS tax, high income earner tax, health insurance, etc.  This all adds up very quickly.  Make quarterly payments and you really get to see how much you are paying.  I am guessing about $15K per month in income taxes. 

 

I do need to say that I do believe in paying taxes as we need to pay for govt services.  My accountant always get mad at me but its true.  Can't get something for nothing. 

 

He may very likely be better off where he is making a few hundred thousand less each year as it probably will provide a higher standard of living. 

 

Like I said, tough decision. 

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5 minutes ago, oldtimer said:

Retiring there was never in the equation.

 

That is tough.  Multiple moves.  You make new friends, places to visit, restaurants, lifestyle, then leave all of it behind in your 60s. 

 

If this is a 5 year plan to live very cheaply and sack away as much cash as possible and invest and move on, I can see it if the numbers play out, even with the taxes.  I just hate moving but that does make sense.  

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40 minutes ago, tigerwoodKhorns said:

 

That is tough.  Multiple moves.  You make new friends, places to visit, restaurants, lifestyle, then leave all of it behind in your 60s. 

 

If this is a 5 year plan to live very cheaply and sack away as much cash as possible and invest and move on, I can see it if the numbers play out, even with the taxes.  I just hate moving but that does make sense.  

I'm looking at this as a short term venture, 5-8 years, stash some money for retirement, then move back to Indiana (in the house I have now) or to south Texas. I won't change my lifestyle much, and save all I can. I'm 57 now. 

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5 minutes ago, Ceptorman said:

I'm looking at this as a short term venture, 5-8 years, stash some money for retirement, then move back to Indiana (in the house I have now) or to south Texas. I won't change my lifestyle much, and save all I can. I'm 57 now. 

Keep your house and live in an apartment or rent a casita in a nice neighborhood in LA.  Just don't be shocked when you make your quarterly tax payments. 

 

Some advice, create a separate bank account to link to the IRS for payments and deposit the appropriate amount of cash in there every month.  The cash will be sitting there for the payments and you will not be shocked when you have to pay. 

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3 hours ago, tigerwoodKhorns said:

Sure it is, when you consider the whole picture. 

 

I assume the OP is in his 50s as we are all old farts here.  Maybe lives in a $500K house in Indiana and owes $200K. 

 

Move to LA and a replacement house is $2M for something similar but with a much smaller yard.  Much higher property tax I assume.  Int rates are low, but he doesn't have 30 years to pay it off, he has maybe 10.  So you now need to make up about $1.7M to own the house free and clear in 10 years.

 

Then there is retirement income.  He may now need $150K or more with a paid off house to have the same retirement standard of living as $75K would have provided in Indiana.  So another $2M or more for investments for passive income if he plans to stay.  Factor in the crime, fires, population density and it gets hard to justify unless he really loves it there. 

 

Consider that he is also in a much higher tax bracket, and 1099 so he also pays all of his SS tax, high income earner tax, health insurance, etc.  This all adds up very quickly.  Make quarterly payments and you really get to see how much you are paying.  I am guessing about $15K per month in income taxes. 

 

I do need to say that I do believe in paying taxes as we need to pay for govt services.  My accountant always get mad at me but its true.  Can't get something for nothing. 

 

He may very likely be better off where he is making a few hundred thousand less each year as it probably will provide a higher standard of living. 

 

Like I said, tough decision. 

 

That sounds like something Mitt Romney would say.  "$400 million just isn't what it used to be."  LOL.  $40k a month, man!

 

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4 hours ago, tigerwoodKhorns said:

Keep your house and live in an apartment or rent a casita in a nice neighborhood in LA.  Just don't be shocked when you make your quarterly tax payments. 

 

Some advice, create a separate bank account to link to the IRS for payments and deposit the appropriate amount of cash in there every month.  The cash will be sitting there for the payments and you will not be shocked when you have to pay. 

Pretty much what I do now, just on a larger scale, hopefully.

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2 hours ago, Jeff Matthews said:

 

That sounds like something Mitt Romney would say.  "$400 million just isn't what it used to be."  LOL.  $40k a month, man!

 

A part of me actually finds this a little hard to believe, but I don't see why he would bullsh*t me. The business owner is forced to do sales calls, and said last week he had two deals that would pay a salesman 20k each. I will go there with an open mind, and give it my best shot. I feel like if he can do it, I can do it, maybe even better. I really don't feel like there's any pressure on me, I have plenty of work scheduled in November back home if I need it. I'm going there mainly for the money, but I have to admit, I do look at this as a challenge, and getting paid for what I know instead of what I can physically build will be nice. 

 

I was originally offered a director of operations position there, but after we met, he said he had another position he thought I would excel in....sales. He has made the comment that if I didn't like the sales position, he would put me somewhere else. He also claims the right sales person could make considerably more than the director position, which has a 300k salary (which might not go far in their economy) He knows I won't drag my family 2200 miles to break even.

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20 minutes ago, Ceptorman said:

last week he had two deals that would pay a salesman 20k each

the owner of the business  sees that the sales are lagging , he's betting that your experience and his combined can generate 2x the current  sales 

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13 minutes ago, RandyH000 said:

the owner of the business  sees that the sales are lagging , he's betting that your experience and his combined can generate 2x the current  sales 

I asked him last week if he had the manpower to handle the additional work he's about to receive. He said they can.

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25 minutes ago, Ceptorman said:

I asked him last week if he had the manpower to handle the additional work he's about to receive. He said they can.

it's perfect timing ,   a  new top Operations manager  with 30+ years of experience ,  how often does that happen-

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8 hours ago, RandyH000 said:

the owner of the business  sees that the sales are lagging , he's betting that your experience and his combined can generate 2x the current  sales 

I think it's more about taking himself away from all the sales calls, than adding more work. He is venturing into the general contracting business, but has to keep the masonry side flourishing. 

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23 hours ago, Ceptorman said:

A part of me actually finds this a little hard to believe, but I don't see why he would bullsh*t me.

When you are a frog in the pan of warming water you miss a lot. This guy is so used to all the burden of living out there that he thinks it is the way life is and things that will be new expenses to you he accepts as being normal everywhere. Intent to deceive may not be there but glossing over bad things will be. You can visit the ocean and see the mountains with snow on top for skiing sounds really good and those things are there. Then you have to pay rent and gas to drive and sit in 10 hours of traffic  to enjoy those things. Natives are so used to this stuff that they don't factor in how negatively this effects the outcome.

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We've talked quite a bit about the differences of working in Indy vs LA, my drive time, material prices, labor cost, pretty much everything in regards to running a business. He likes the idea that I have to do it all, from the first sales meeting to cleaning up the job at the end. He also knows that I'm concerned about what my wife and daughter think of this venture...if they aren't on board, then I'm not either. If they don't feel safe, or my daughter can't find a school within our budget or a safe distance, or if they can't overcome being homesick, and want to go HOME,  I'm out. I will not put their their well being on hold for a fat check. Even if I love it, they will then come out to see if they like it. They are my number one priority. We ALL know he needs me more than I need him. 

 

He normally requires a new sales person to commit to 4 weeks minimum, 1 week sales training, 1 week to shadow him, at least 1 week of supervised sales calls, then they turn you loose. I've already told him I will commit to the 4 weeks, but my lodging and car rental is for 1 week, if I don't like it, I'm out. I'll take it 1 week at a time. He's paying me well for the 4 weeks, but my time is worth more than the money. He's condensing his normal training routine for me, and thinks I'll be on my own after 1 week. He has also said it's a little dangerous to base my opinion on a short sales period....I could get an instant sales commissions, like the 65k commission his junior sales guy had on one job last month, or I could not sell anything for a week or two. My first idea was to go there for 2-3 days to see if I fit in. Now I see that's probably not enough time to make a proper judgment. 

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