Should I Stay In California?

[firehawkocean]

Hello all,

With the new prop 30, which taxes 250k + earners even more in state income tax, I was thinking of moving out of state. I greatly enjoy the Austin, TX area. However, I know they Texas has approximately 2% property tax vs my areas 1.25% tax rate. Also, the direction CA is going with regards taxes, schools, and bureaucracy is scary.

Any thoughts?

[bjl584]

That's a pretty vague question.

There is more to life than taxes.

Are you happy where you live? Are your friends and family there? Do you like the weather there? Do you have a good job there?

[firehawkocean]

LOL Brian, I guess it is kind of vague.

Friends...eh

Work...can find a job in the field I work in fairly easily...plus income is not from job.

Weather...I'd rather live by the coast but not going to spend that type of money.

Also concerned about CA schools!!!

[bjl584]

LOL Brian, I guess it is kind of vague.

Friends...eh

Work...can find a job in the field I work in fairly easily...plus income is not from job.

Weather...I'd rather live by the coast but not going to spend that type of money.

Also concerned about CA schools!!!

I guess it comes down to your overall level of happiness. If you truly aren't happy where you are and you think that your interests will be served better elsewhere, then I see no problem with moving. But, moving is a large endeavor. Be absolutely sure that you will find affordable housing, a safe neighborhood, a good school system, and employment before you pick up and move half way across the country.

And something to think about, just because taxes are lower in Texas today, it doesn't mean that they wil be low in 5, 10, or 20 years from now.

[dawnwes]

We left CA about 7.5 years ago. I didn't want to move. Dh did. It has taken me a LONG time to adjust, but our kids think NC is home now. I still miss CA many times.

There are good schools in CA. You just need live in the right area or choose private.

It really comes down to where you want to be.

[rxtrom]

My advice would be to move where you like the area and culture and NOT solely on financial reasons. Moving just for money or a job will quickly get old if you are accustomed to certain cultures or amenities. In this instance it sounds like being land locked would annoy you and you would eventually wish you lived on the coast.

By the way the overall taxes may be less in TX but the education also suffers.

TX is 31st
CA is 34th

This info is based on the SERI report.

[humandraydel]

From a financial point, I would leave California in a heartbeat.

This pretty much sums up my view as well. Granted, I've never lived in Paradise, so maybe the taxes are worth it?

Personally, I don't think I could live in ANY high COL area - the math just doesn't make sense in my head. I guess I'm just too (fiscally) conservative.

[BMEPhDinCO]

Keep in mind that if you move, your salary may be lower, since usually CA and NY have higher salaries than other places, especially Texas.

Also, if you are really concerned about education, why not move somewhere that is ranked highly, like CT (which also keeps up the salary more) or Mass. You should also look for tax rankings and compare to education (I think you'll see generally, better states for education also have higher taxes). Another option is to research good private schools and move near one of those, good of course being subjective.

If you like Austin, also look into Boulder, Ann Arbor, SF (to stay in CA), Chicago, Baltimore, etc.

Good luck.

[snafu]

Moving is the 5th most disrupting change/challenge life throws at you. I'd look at all the taxation rates income, state, property/municipal, hidden like gasoline, luxury etc. to compare with CA. There is a lot of information about school ratings available. How will paying for private school impact your decision? What activities make you happy? Are they readily available in Texas or your next choice?

[AccountantSalary]

If you can keep your same income if you move to another state, move by all means to a cheaper location. You'll be able to keep more of your hard-earned cash and invest it.

[MonkeyMama]

We moved within California (to significantly lower cost area). I didn't find moving to be as traumatic as predicted. BUT, that said, a number of friends have moved out of state and returned over the years. I am not sure all their reasons, but employment, family and weather seem to be the biggies. I have very intelligent family friends who bought a house in Arizona and have since they decided it's "too hot." Seems you'd figure that out first. HA! But now the house is upside down and what a mess... I do understand the siren song of low taxes and cheap real estate though.

I once read that weather was the least important factor to consider when moving. Another "HA!!" For us it is the only thing we do not like, and the weather difference is negligible. When you leave paradise I think it's hard to adjust to any other climate. I am used to "70 degrees year round." I am adjusting, but it is the one and only reason I'd ever consider moving back - is the only think I dislike. It is the primary reason people pay the BUG BUCKS to live in the Bay Area.

It's been interesting to reflect on the reasons we stay in California as we did seriously consider leaving at some point (our low-cost-area move was so successful and our home value got so high 5 years ago that we very seriously considered making that move again - cashing out our equity). We were only like 27 at the time. In the years since we are glad we did not move because our family has taken far higher precedence. I used to think we'd have the money to fly in whatever (all that equity) but both us and our parents have suffered some major medical stuff and it was so important to be close to support each other. I often thought, "Thank goodness we didn't move," and figured we'd be like all our friends moving back...

Likewise, I have come to appreciate being so close to some of the highest medical quality and care in the world. Education is another that seems to be a bargain in California (if nothing else, bigger cities and larger populations means more choice. I don't know anyone who actually just attends their assigned public school - so many charter schools and magnets). {Fair enough that we can have a far higher quality education living in a low-cost haven. This is one thing I have noticed in particular}. College tuition is very inexpensive in-state and a lot of choices that won't require room and board expense. Finally, we can go on the most exotic vacations it feels like, in just a 2-hour drive. This has been a biggie for us with small kids. We don't have a big vacation budget, but the things to see and do in our own backyard feel infinite.

So these days when people ask why on earth we live in California, these are the reasons I give. In addition, our income is on the low side (spouse not working - living in lower cost region) and so we don't particularly pay a lot of taxes. Thanks to the progressive income tax structure. (We pay less than 1% when I divide CA income taxes by gross income). & this also remind me the short-term state disability system is pretty awesome (especially for anyone having kids). Being young and lower-income we have a lot of benefits living here, but don't pay in so much for those benefits.

Did I mention the weather?

None of this may be relative to you, but what I have generally observed. One train of thought I've had lately is I could never have offered my kids the quality education they are getting now if we hadn't of moved. It's as simple as a $50k income can buy us a home in one of the most wealthy neighborhoods. Back home, we were going to be in the worse neighborhoods with twice or triple that income (both having to work). Period. I am definitely "over" the more expensive parts of the state. All we'd get would be having to work 2-3 times as much, a bigger mortgage, a smaller house, and a crappier K-12 public education. Meh. WE often drive over on the weekends to enjoy the perfect weather. win-win.

[SeanH]

Austin's a great place, but make sure your recollections of Austin match the reality. Austin, San Antonio, the hill country, etc. have had a net influx of people and a lot of the empty spaces are being filled in. I have family members who moved that way only to get there and find out it wasn't as they remembered. The food is still great, the political climate will never change, and the scenery is great, but there are a lot of new houses going up on hill tops.

[firehawkocean]

Thanks for your responses everyone.

Some things I am taking into consideration are:

1) Austin area has 2.75-3% property tax rate!

2) New propositions in CA will move my income tax up even more.

3) Possible loss of tax write offs from state/local property/income tax.

4) Texas has zero income tax and I am in a position where I can anywhere and still keep my income.

[humandraydel]

4) Texas has zero income tax and I am in a position where I can anywhere and still keep my income.

Have you looked at the list of states with the highest and lowest tax burdens? California is 4th highest and Texas is 6th lowest. At a high level, there is no doubt that Texas should be cheaper than California. Have you considered creating a very detailed spreadsheet to determine the true cost? The last time I considered moving it was from a low COL state to a high COL state. Despite a 15% pay increase, I would've had less money each month, essentially due to state and local taxes. Needless to say, I didn't move.

[TBH]

Moving is the 5th most disrupting change/challenge life throws at you. I'd look at all the taxation rates income, state, property/municipal, hidden like gasoline, luxury etc. to compare with CA. There is a lot of information about school ratings available. How will paying for private school impact your decision? What activities make you happy? Are they readily available in Texas or your next choice?

Good points.

I would try to talk to others who have made a similar move and see if it really is cheaper.

I am from the Bay Area and now live in a lower COL east coast city. It has been very hard leaving the weather and the natural beauty of California. And it's interesting--it's really not that much cheaper here. The ONLY thing that's cheaper is housing, and yes, that's huge, but it's not our only expense. My house would cost 4-5 times as much in California. But I pay extremely high utilities, and food and insurance are so much more expensive here. Everything else is about the same. Even taxes are higher here, although it sounds like that won't be the case for the OP.

In my field, salaries would not be any higher in California, so I'd have much less buying power.

For me, it makes lots of sense financially to stay away. I'm staying for other reasons--my house, my spouse, other relatives who have moved here since I moved here.

Good luck with your decision.