Life on the west coast, lounging by the beach, looking at the sunset, living the dream. My wife and I live in Southern California and we love it!
But isn’t California expensive?
Yes, it is. And as a physician, I am well aware that living in California doesn’t make financial sense. Through geographic arbitrage, physicians can both increase income and reduce living costs by relocating to places like the Midwest or the Great Plains. But the fact of the matter is, money can’t buy sunshine; and we have a lot of that here. There are so many justifiable reasons why living in California is awesome despite the high cost of living. I love the fact that I live where people vacation. I love traveling and when I come home, I still feel like I’m on vacation! And of course the biggest reason for us is that most of our family and relatives live near by. This is important because our ultimate goal in attaining financial freedom is having the ability to spend more time with the ones we love.
How much house can we afford?
Three years ago as a newly-engaged couple we were both excited and apprehensive. We had no idea what we were looking for and what the home buying process was like. Housing prices in California were expensive (and it’s even crazier now). We had no idea how much we could afford. After reading a lot of finance blogs we came to the conclusion that our price range should not exceed 2.5 times our annual gross income and our monthly mortgage should not exceed 20% of our monthly gross income. With this as our guideline, it would be easier to continue saving at a rate of 40-50% of our income. Fortunately, we were able to find our dream home that fits the bill!
The benefits of home ownership
- Mortgage interest rates are a tax write-off (can be huge savings for high income earners)
- Eviction is not an issue (you will always have somewhere to live)
- Monthly payments are stable (I have friends who live in the Bay Area and can no longer afford the increasing rent where they live)
- Gaining the mentality of an “owner” and not a “renter” makes your more mindful of where you live and to better take care of your living space
- Home becomes your sanctuary after a tough day at work (leaving work and coming back to a wonderful home is priceless)
What do you think? Do you have any guidelines for home affordability? What benefits have you noticed from owning your home?
Dan says
Beautiful sunset!
drmcfrugal says
Thanks!
Lily | The Frugal Gene says
I grew up in San Francisco during my teen years and it’s really spoiled me compare to other places. Especially the food, I think real estate is expensive because gosh darn it besides NY – there’s no better Asian food in the country! It’s tempting to relocate but I feel the same as you, a home should be about comfort than cost.
drmcfrugal says
Thanks for stopping by! Totally agree with you, real estate is crazy here… especially in San Francisco. Even the Pacific Northwest is getting up there 😉
That Frugal Pharmacist says
I have family that still owns a home in Whittier CA. They’ve owned it since the 50’s. I sure wonder what the value on that is today… and what will happen to it when the only relative still living there, with no children passes! I hope it doesn’t go to the state!
My husband’s grandparents owned a home in the East Bay that was sold by another family member, same situation, owned since the 40’s or 50’s. I shudder to think how much that actually sold for (surprise, the family member didn’t share that information).
But if you can afford, and get your foot in the door early to take advantage of the ever increasing home values, CA is certainly a place to be. Everyone should aim to live where they vacation. That’s how we decided to move when we bought a house and settled down. Nothing so glamorous as SoCal though.
drmcfrugal says
Most of California is very expensive. I’m sure the house in Whittier, CA would sell for a high price!