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Old 03-08-2016, 06:36 PM
 
133 posts, read 149,389 times
Reputation: 137

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100k per child for college... I attended a local community college then transferred to a local state college. My total college tuition expense was like under 25k and I have a better job then my friends who went to "better" universities with higher tuition who also have to pay rent since they lived away from their parents. I think going to an expensive colleges is a luxury especially away from home so I did not include that.

I think for retirement the family will do fine. They can rent out their house and move to a lower cost of living area. They can sell house and buy a condo or house in a lower cost of living area and possible buy another property as a renter. You can also get social security which helps (assuming that will exist). I feel like 401k is a gamble so I did not include that. I think this family can retire 20+ years.

I can find 700k homes/townhouses in San Jose in decent location with decent schools (around 800 API). I do not know why you want to commute to Palo Alto or San Francisco but I am assuming that you mean the individual works at Palo Alto and San Francisco so they need to commute (There are also good jobs in San Jose by the way). The furthest area I looked at with potential real estate for 700k was 25 miles away from palo alto. I think a 40-60 minute commute going 1 way is about reasonable.
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Old 03-08-2016, 09:56 PM
 
Location: Palo Alto, CA
901 posts, read 970,282 times
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I was talking about 100k for Cal State or UC. Yes, tuition and housing will add up to that in 2016. Don't agree with you at all on retirement outlook for this family, I don't think they have nearly enough savings (and 401k are absolutely needed - I have zero chance of retiring without one - you can choose low fee index funds) , or schools (k thru 12, 7+/10 or better for every school in district) and the specific housing qualities I pointed out (sq footage, location, and primarily SFH) , but good discussion.

I do believe one gets a much better education than community colleges at a cal state or UC, and historically UC and Cal State have not been luxury schools, but that is not to say some community colllege grads can't be successful. Heck, there are college dropouts who are successful.
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Old 03-08-2016, 11:13 PM
 
133 posts, read 149,389 times
Reputation: 137
houses/townhouses with decent schools <=700k:

1626 Ralene Ct, San Jose, CA 95131 | MLS #81562972 | Zillow

673 Apache Ct, San Jose, CA 95123 | MLS #ML81549295 | Zillow

490 Auburn Way APT 18, San Jose, CA 95129 | Zillow

329 Ribbonwood Ave, San Jose, CA 95123 | MLS #ML81562519 | Zillow

657 Easton Dr, San Jose, CA 95133 | MLS #ML81563501 | Zillow

*A condo IN CUPERTINO SCHOOL district!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!*
490 Auburn Way APT 18, San Jose, CA 95129 | Zillow


Retirement (lets assume no social security and your 60 years old):
savings: 440k
house: 700k
net worth: 1.14 Mil.

Lets rent the property you own for 2750 a month and buy a retirement house in la quinta, CA for 250k
Savings: 190k
house: 250k
renter property: 700k
yearly income: 31k
after tax income: 27k (rounded down and after property tax write off)
yearly spendings: 37,236
yearly loss per year: 10,500 (rounded up)

Lets add 10 years (age 70)
savings: 85k
house: 250k
renter property: 700k
net worth: 1.035 mil

Okay so lets say you bought a new car for 30k and spent 15k on random things:
savings: 85k - 30k - 15k = 40k
house: 250k
renter property: 700k

Now lets sell your renter property and buy a new one for 600k (lets assume you sell the house above 700k but gave all the new capital to your real estate agent to pay their commission):
savings: 140k
house: 250k
renter property: 600k (lets rent this property for 2500 a month)
income: 28,500
after tax income: 25k (rounded down and property tax deductions applied)
yearly spendings: 36,240
yearly loss per year: 11,500 (rounded up)

Lets add another 10 years (age 80)
savings: 25k
house: 250k
renter property: 600k
net worth: 875k

There you go, this person has retired for 20 years and can go on for another 10, heck you might even have some money to pass down to your two kids!

San Jose State tuition is like 8k a year, so 4 years = 32k *2 = 64k. That should be affordable for this family!

I have provided housing, retirement plan (I think I gave the retires to much to spend), and school tuition to a local California State University.
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Old 03-09-2016, 02:12 AM
 
Location: "Silicon Valley" (part of San Francisco Bay Area, California, USA)
4,377 posts, read 3,339,316 times
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chuck5000 I think they are talking about doing your lower division work at a community college to save money. I don't have a degree but I have over 70 units of college from De Anza College in Cupertino. I've taken English 1A,1B and 1C (this is EXACTLY the same course content that one would get at UC Berkeley et al and it is transferable there), philosophy, renaissance art, history of western culture, middle eastern history, sociology, etc. Some of that was right after college and some was more recently, using the GI Bill. Although I had to quit because when I was using the GI Bill, one summer they didn't have the right courses (fewer courses in summer), so no GI Bill and no GI Bill housing assistance.

I don't know if I will go back to college. I'm trying to figure out which direction to go between trying for IT again (using certifications like CCNA instead of degree...much cheaper, CCNA = $150) or merchant marine. Possibly both, since if I do merchant marine I would have to go pay for the STCW95 class which is $900+ at CSU Maritime in Vallejo. Just stuff that I already learned in the Navy, but the puddle pirates (USCG lol) require people to take the class even if they were in the Navy. The Navy has Military Sealift Command, which would pay for the STCW95 class at taxpayer expense (non-combatant ships staffed by non-combatant Merchant Mariners doing non-combat missions for the Navy) but they aren't hiring entry level right now. You would have to already be an officer in the Merchant Marine. Anyway right now I'm making $11.25/hr so I'm looking to go in a better direction for myself.
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Old 03-09-2016, 02:03 PM
 
Location: Palo Alto, CA
901 posts, read 970,282 times
Reputation: 1168
plot, thanks, I wish I agreed with your numbers. It would be great news for me. I don't agree. I don't agree that owning at all costs is better, particularly at marginal locations with limitations. I suspect you don't agree on what is marginal or not.

I don't think these standards of commute and house quality are up to snuff. Good finds re: school quality. And believe me, people like me and Ceece, and others on this forum, are not luxury seekers. We all believe there are limits to stretching, and what is worth the money and what isn't.

I think renting 4k per month and having adequate location and space is better than owning inferior size and location with upgrade limitations, even at lower monthly cost. Again I am NOT talking luxuries.

E.g.

1626 Ralene Ct, San Jose, CA 95131 | MLS #81562972 | Zillow
Nice listing price. could hit 800k after bids, though. Only 1000 sq feet. That is not good for family of 4. Need to immediately do a 125k to 200k addition. 6k sq foot lot may have limits preventing good additoins. This is not a tremendous deal for a family of 4. Commute at rush hour is on 237 - very irregular, and can easily top 1 hour to University ave in palo alto. Forget about this house to SF. Great for SJ proper, though. But that's a small radius.

I could pick apart each of the others, though they are all good deals for 1 child couples or empty nesters with short nearby commutes.

Sure these are "acceptable" dwellings. But for what *everyone* I know who wants 1300 to 1500 sq feet (not a huge house) SFH and reliable commuting in a good location, the price tag is 1.1 to 1.3 foor the "nice bottom end" on the peninsula or SJ.

Part of the problem in the region is that traffic has reduced the acceptable radiuses to where you can commute.
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Old 03-09-2016, 05:53 PM
 
133 posts, read 149,389 times
Reputation: 137
When I was living with my parents we lived in a home with less then 1k sqft (Family of four). I thought it was perfect. When we moved into a house with 1.7k sqft it was way to big. One room was completely empty! I do not think the bids on that house will hit 800k since many other properties what are 2k sqft+ get sold at that around 800k, but hey someone can offer 800k for it, the buyer will happily take it.

I work in San Jose and commute has been very easy for me. Lot of my friends/buddies work in San Jose with the exception of 1 who works in mountain view for some tech company but is willing to commute from San Jose to Palo Alto in horrible traffic. If you are working at Palo Alto and want decent commute then ya you will probably need more then 150K, since real estate near palo alto is expensive. Adding reliable commute to the formula differs from person to person especially if you are trying to reach a particular destination. I felt that the radius is good enough for fair amount of people and the radius offers a fair diversity of jobs for people to take advantage of. If one works at tech in palo alto or san francisco they can look for tech jobs in San Jose or near San Jose.

1 hour commute does not sound bad to me (it is at the tip of what I consider bad though). Assuming you have a 1 hour commute and a 9am - 6pm job. You would probably wake up 7 am You will leave your home at 8am and arrive home 7pm and would probably go to bed at 10:30pm (assuming you need 8 hours of sleep). Now lets say you have now reduced you commute to 30 minutes. You will wake up 7:30am, leave to work at 8:30am, arrive home at 6:30pm, go to sleep at ll pm. With your 30 minute commute you gained an extra 1 hour to fool around. But the thing is to acquire that 30 minute commute you have to fork over more cash so you probably have less money to spend on entertainment. With the 1 hour commute you probably had money to eat out over the weekends, take some nice vacations once in awhile, watch some movies, go to trips to local areas, the kids get to play their new games/toys or hang with their friends at the movie theater and restaurants, etc. I do not necessarily think that shorter commute means your quality of life will be better. I rarely do anything fun during the weekdays (just watch some TV, eat dinner, look at some numbers from work and go to sleep), its all about the weekends for me. Long commute in traffic is an annoying experience though.

As you suggested in order to live in the shorter commute areas you need more money. Usually the higher paying the jobs are the more demanding and time consuming they are. So that added time you saved commuting does not really save you time because now you are spending more time working (unless you sold a company and living off the gains). Lot of big CEOs and executives live in Palo Alto, Atherton, Los Altos because they spend a lot of time at work so they can't afford to lose time for long commutes but they can afford to fork over the cash to live in these areas. I think most people have issue with money not so much with time so the long commute is more "affordable" versus a shorter commute.
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Old 03-09-2016, 08:20 PM
 
115 posts, read 301,783 times
Reputation: 88
plot, what you're describing sounds "reasonable", but it doesn't sound "comfortable" as in the title of this thread.
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Old 03-09-2016, 09:33 PM
 
133 posts, read 149,389 times
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How is it not comfortable...

In my example were I show a family with 2 kids brining home 150k end up owning a 700k home and 440k in savings by 60. That gives them a net worth of 1.14 million. The kids also attended a decent high school. I also showed a break down of their retirement and they were able to retire fine for 20 years and more without social security. Lot of people depend on social security but that family did not!

Apparently it is not comfortable because apparently people only work in San Francisco and Palo Alto and the commute is really annoying. Which blows my mind because 90% of people I bump into work in San Jose (is it because I know almost no one in the tech business?). I do always see traffic heading towards west bay in the morning. Why would one choose to work in an area that pressures them to spend significantly more in order to have a reasonable commute and living? In that case that job is not worth it if its making a big dent in your wallet! Another thing is that this is not a bay area only problem. Many other major business areas also develop a lot of traffic.
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Old 03-10-2016, 07:02 AM
 
169 posts, read 189,354 times
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[quote=plot;43288051]A 30 year old man with a wife + 2 kids.

household income: 150k
after tax: $9442 a month. (include tax deductions on property tax and mortgage interest)

Monthly spendings: $8120
yearly savings: $15,864
principle yearly: 18,000

How do you come down to $9442 /month with income 150K/yr.

$150K/yr = $12,500/month. After tax, you take home $9442 ? What kind of tax and where is it? California or Texas?
With income 150K/yr, the Federal tax rate is 25%, that already chop $2500. California tax is about 10%. Security tax is 6.2%. Medical tax ~1.5%. Property tax for the average 700K house is about $800/month. All the taxes add up at least $4500-$5000/month.

My household income 200K... and for the last 4 yrs.. my bank balance is flat... I wish I could have yearly saving = $15,000. I have only 1 kid.
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Old 03-10-2016, 10:48 AM
 
133 posts, read 149,389 times
Reputation: 137
[quote=Lanienguyen;43305878]
Quote:
Originally Posted by plot View Post
A 30 year old man with a wife + 2 kids.

household income: 150k
after tax: $9442 a month. (include tax deductions on property tax and mortgage interest)

Monthly spendings: $8120
yearly savings: $15,864
principle yearly: 18,000

How do you come down to $9442 /month with income 150K/yr.

$150K/yr = $12,500/month. After tax, you take home $9442 ? What kind of tax and where is it? California or Texas?
With income 150K/yr, the Federal tax rate is 25%, that already chop $2500. California tax is about 10%. Security tax is 6.2%. Medical tax ~1.5%. Property tax for the average 700K house is about $800/month. All the taxes add up at least $4500-$5000/month.

My household income 200K... and for the last 4 yrs.. my bank balance is flat... I wish I could have yearly saving = $15,000. I have only 1 kid.
I also deducted mortgage interest since the person qualified for that deduction (thats about $950 month).

All deductions:

Mortgage interest + property tax: $19,400
Personal deductions (with 2 kids): $16,000 (federal deduction)
personal deductions : $850 (state deduction)

total federal deductions: 35k
total state deductions: ~20k

Taxable federal tax income: ~114k
Taxable state tax income: ~129k

Tax owned:
Federal: ~20k
State: ~7k
Social Security tax: 7.3k (Social security tax is applied on 118k so those big CEOs making 20+ million a year only pays ~7.5k to social security).
medical: 2.1k

Total federal: 29.5k
Total state: 7k
total: 36,500

150k - 36.5k = 113.5k
113.5k / 12 = ~9.4k <- Monthly income


We should probably do something with that social security issue. I think Mark Zuckerberg made about 11 billion last year but according to the social security cap he only has to pay like 7.5k. Anyways that was my small break down of how I got that monthly income. If you see something strange let me know, I could be wrong.
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