Episode Transcript
Speaker0: Hey what's going on welcome to the mile high five podcast i'm doug cunnington and mr money mustache is back with me again how's it going today.
Speaker1: I'm great how are you audience good glad to hear it
Speaker0: They're doing amazing and we have a couple voicemails again so, we have one from lauren and one from urov and these are cost of living and geographic based questions, so if you want to have your voicemail featured, you can record it on your phone, just a voice memo, and then email it doug at milehifi.com. The information is in the description there. And one thing I didn't mention the last time you were on is I created a, basically an episode guide an index of the shows that you have been on, the topics and it's all on a web page so i'll put a link to that as well and it helps people not ask the same question just in case or they could like layer
Speaker0: on uh additional ideas on something that we've covered before so, we'll cool we like to have voicemails ads like a little extra texture.
Speaker1: I know it helps us feel like real radio hosts living up our our fantasies are coming true
Speaker0: It i have different fantasies also but like this is a cool fantasy also uh so uh let's hear from yurov first.
Speaker3: Hi my name is yurov and i'm reading a question on behalf of my dad rakesh we live in texas which has zero state income tax and we're currently in our accumulation phase on the journey to financial independence But Texas isn't our forever home. We want to retire somewhere with better weather. And my dad's top pick right now is Colorado. His question is, purely from a tax efficiency standpoint, sending aside lifestyle and outdoor activities, how would you think through choosing a retirement state when you're moving from a no-income tax state like Texas to one that does have income tax? Thank you so much.
Speaker1: I like the way they think. I like how he got subcontracted to his son to read the question to.
Speaker0: He reads really well, too. Yeah. I was like, that's better than a lot of times when I try to read on the podcast.
Speaker1: Yeah, maybe better than his dad. And that's why he's like, you do it. You're an excellent reader.
Speaker0: So what are your gut feelings on this overall question, income tax for states and such?
Speaker1: Yeah, well, I thought my first thought immediately was they're doing it the perfect way because we assume when they're working is when you're earning a lot, which means you're in a higher tax bracket. So you benefit from Texas low sales taxes or low income tax, zero in their case. And then you move to Colorado and you're retiring. So presumably because this is a fire website, not like a super spendy consumer pants show that we're running. Your spending is gonna drop to lower than your income. So in other words, your income is gonna drop in retirement. So taxes don't really matter so much. And he didn't mention what his spending
Speaker1: is, he's planning to have during retirement, but income taxes really aren't much of a thing until you get over about $50,000 for, and for a family, like especially with children still in the mix, it's even higher than that, right? Because the tax brackets are broader if you're a married couple. So I think it's not going to be a big deal. And especially like Colorado itself has a relatively low state income tax. It's somewhere in the fours, I think. It's not like California. And it's also not like New York state, which has higher state taxes as well as city tax. And finally, the thing I thought of is when I remember looking at houses in
Speaker1: Texas, they had really high property taxes as well, partly to make up for those lack of income taxes. And people had $5,000 property tax bills or more on just normal priced houses. And here we have very low property taxes. Just for comparison, a $500,000 house in Longmont has taxes in the 2000s per year. So it's pretty low on a nationwide basis. And that kind of makes up the perfect situation in retirement because income tax doesn't matter as much. Property tax does matter, assuming you want to own a house rather than renting. So it sounds like a perfect little deal.
Speaker0: Well said. And you leave me or you led me to an area that I went to immediately. So I've lived in a couple different states. So Georgia and then Montana, now in Colorado. And if I remember right, Montana doesn't have sales tax. But overall, it made me think, yeah, I mean, they have to get taxes, tax revenue from somewhere. So you really need to look at the overall tax implications. And like you said, there are some states, California, New York, I think Washington, Hawaii, there's some that are like a lot higher. But I still think that's not necessarily a deal breaker if you're like, I really have to live in one of those places.
Speaker1: Yeah, that's the important thing is quality of life should be your first and really only factor because things that cost money, you can always budget for them. People can afford to retire in California. You know, we can all figure out how to do what we want. So money is just like one thing to consider, but it wouldn't be like a big deal.
Speaker0: Totally. Yeah. And I think even though in the question you said ignoring the other things and only considering taxes, we could do that, but that's a poor way to look at the situation because it's not just that, it's a little bit more. And I think, again, if you really wanted to live in a place that's more expensive, that's okay. If you are looking at Colorado, like Pete said, the, income taxes are relatively okay. And I think you could probably assume that specific amount, maybe a little bit less because other taxes are going to be, lower than what they were for you in Texas, most likely. So speaking of which, I think our sales taxes are fairly high around here.
Speaker0: I think it varies. 8, 10%, I guess it depends on what you buy. When i look at a receipt it's more complicated than when i was a kid where it was like five percent like very clear um i feel like it depends on the item it depends on like what city, you're in also so there's a lot of like little extra things that pop up but um that can add up.
Speaker1: Yeah lots of pluses and minuses and also health insurance varies because like when you're retired you're probably buying your own health insurance so aca program and subsidies vary uh even car insurance can be significant in some areas. I think it's relatively cheap here compared to other spots and like your utilities. I know in Texas, people have like $300 air conditioning bills, whereas we don't have that here. It's a lot easier to keep your house comfortable, except like a little bit in the winter, but it's still like a pretty moderate climate. I feel like my house utility bills are always low here.
Speaker0: Yeah, and it's so sunny even in the winter. So even if it's very cold, like it doesn't feel as cold as potentially the same temp in a more humid area.
Speaker1: Yeah, in my frozen homeland, so.
Speaker0: That would be very cold.
Speaker1: So Colorado's good, come on over, lots of room. I'm not one of those people who puts the native sticker on the car to show that people from other states aren't welcome. I think it's great when people move to places they like.
Speaker0: Yeah, I mean, that's how we got here.
Speaker1: Yeah, that's true. Most people are from somewhere else, Colorado. Which is why we're so happy, because we're like, yeah, we moved here on purpose. Yeah. Isn't this great?
Speaker0: So you lived in Canada for how many years?
Speaker1: 25.
Speaker0: And then where'd you move to?
Speaker1: United States.
Speaker0: Okay. What state?
Speaker1: Boulder, Colorado. Okay. So I haven't really moved around much in the U.S. Since I got here. Oh, okay. And I've lived here 26 years now. So pretty much half and half.
Speaker0: Okay, gotcha. I didn't realize you moved straight to the Boulder area. Yeah, so that was, I mean, it's changed so, I mean, so many places have like grown a ton, but I mean, when you first rolled up, like, had you been to like, Boulder before? Had you seen the Flatirons or anything?
Speaker1: I only saw it for the first time when I came down for a job interview. And then I liked the town so much. It was really the town that made me want the job. The job itself was okay. And sure enough, that proved to be a wise choice because I still like Boulder a lot and I like Colorado and I feel like I've had a really good life here.
Speaker0: Yeah, it's pretty awesome. I worked in the National Park for probably around, a couple years later. So I worked there in like 2002. So you had been here for a few years by then, right? But yeah, like coming from Georgia, the mountains were super awesome. The weather was great. and I was like, oh, it would be amazing if I could figure out how to move and live here. Turns out all you have to do is move and then you can live wherever you want. But it took me another 15 years to figure that out, which is weird.
Speaker1: That's one of the things I love about this country and it's better than Canada in that way because you have this whole grid, a big square piece of land that's thousands of miles across. You can go anywhere, you choose any climate and you don't even have to get a permit to move. You just go because it's all one country. You know, the money still works. Yeah. It's easy to get jobs. And so it's kind of a really fun adventure land. And whereas Canada, it's a similar amount of land, but everyone just lives along the borders. So it's more like a string of towns and cities along the southern inhabitable
Speaker1: portion of the country. So it's not a big grid. Yeah. It's not a choice of cold or wet are the two climate options in Canada.
Speaker0: Cold or wet. or maybe both occasionally, but.
Speaker1: Yeah, but like Canadians think of the West Coast, which is comparable to the Seattle climate because Vancouver and Seattle are really close together. Right. I think they're like, it's so warm in Vancouver, eh? The trees still have their leaves on there. And they don't even comment on the rain because the rain is way better than the snow than where I grew up. Like rain is like, you're thankful for that. Just like liquid water. That's the nicest thing I've ever seen in January.
Speaker0: It's amazing.
Speaker1: Yeah.
Speaker0: All right, let's get to Lauren's question here.
Speaker2: Hey, Doug and Pete. This is Lauren. I have a big question for you guys. I have hit my fine number a couple of years ago, and the Mile Hi-Fi podcast, among others, was instrumental in helping me get to that point where I felt like I could walk away and rely on the progress that I've made. I am very interested, though, in the concept of geo-arbitrage. I know that the two of you and a lot of other five folk live kind of in that front range area. And having looked at housing prices, I cannot imagine that that is because it's a particularly cheap place to live, but it is a beautiful place to live. I live in Houston right now, which is not a beautiful place to live,
Speaker2: but I'm very interested in the concept of finding ways to make my fine number work better for me because I live in a lower cost of living area. Is that something that you guys have thought about, explored? Have you found any places that are especially advantaged for a living situation that is a little bit lower than the national median? I'd love to hear about it if you have. Thanks so much.
Speaker1: I love this question because it involves resourcefulness and being open-minded and not just complaining about the place you live. Like many people say, oh, houses are so expensive. You know, the boomers have screwed us over or whatever. But it's not true. Like in the US, there are tons of places you can live. Many, many places that have low cost housing that are pretty nice places. Like the whole Midwest, the whole lot of the southern parts of the country. Even like in the West, there's a lot of small towns that are super affordable. As long as you're willing to be away from the expensive metro areas.
Speaker1: And sometimes they're expensive for a reason. like Boulder is the most expensive place in this region. And it's also like kind of the nicest. So for people who can afford it, it's worth paying like a million and a half dollars for a house. Um, so it really depends on how, how tight your social networks are. Like it's, I would say it's not worth abandoning all your friends just to save money on housing. But if you already kind of feel like I could use a change anyway, then it's fun to just start looking stuff up. I wrote an article about this a while ago that was called how to afford a house these days, something like that.
Speaker1: And it had a little bit of a system on like some ideas for how you can look up and sort U S cities like assuming actually it talked about other countries too um and one of the one of the websites it's good for this it's called the world awaits.com and it's a nice like data aggregating site that lets you search for cities within the u.s and outside and around the world based on whatever criteria you want and that's pretty cool and i'm thinking about this a lot because i just drove across you know i did like 24 hours of driving going east and then west and I saw a whole bunch of like Nebraska and Iowa and Minnesota
Speaker1: And a little bit of Wisconsin. And there's like a lot of cute little towns. Des Moines, Iowa is one of them. It's like a mid-sized city that are way, way cheaper than here to live. But they're quite nice. You know, they got nice downtown, nice river, bikeable spots, super fun restaurants and pubs. So, you know, like if you're willing to move, the places are out there for you. But at the same time, when you say cost of living, housing is just one of those things. And in the expensive places, the rents are usually not nearly as elevated as the housing prices. So like in Denver here, our houses might be double the price of Des Moines,
Speaker1: but our rents are at only like maybe 1.5 times or 1.3 or something. So you kind of get subsidized as a renter in these expensive cities.
Speaker0: So yeah, great, great question. Thanks for listening to the show, Lauren. I think the Midwest, like you mentioned, is a great place to look. I think Omaha has been a place that came up a couple times. I think I interviewed David. I forget his last name right now, but we'll just leave this in. So you could look back at the episode and he was like, yeah, Omaha is pretty awesome. I've heard good things. I've only driven through, but one thing that is pretty important is to like test out the town and just see what you like especially if. I mean even if you know what you like but if you've lived in the same place
Speaker0: for a while things are a little bit different when you spend more time there, and i remember i chatted with rebecca herbst, and she and her family were testing different towns actually checked out Longmont, but it wasn't a good fit for them at the time. And they ended up somewhere in Utah and they had, you know, a weighted decision matrix to figure out like these different aspects to your point, Pete, like, you know, the social aspect, the outdoor, other things that are important to her and her family. But basically you can test places out and just see like how much does it really cost to live there? Do you really enjoy it?
Speaker0: The other is if it is cheap. In Houston, which I mean, it is, it's cheaper in Houston. Um, I wonder if there's any opportunities to like maybe, travel with the seasons a little bit or just get out of town occasionally and still have, you know, the majority of the, you know, cost of living advantage in Houston, but for a few months, a year go somewhere like in the summer, perhaps, you know, head to, uh, Minnesota or something and just, you know, get to experience more stuff. You'll have more novelty more often and get to visit like more people and everyone's style is different, but that kind of slow travel is like a pretty cool way to
Speaker0: just kind of test out and see like where, like what region do you want to live in? Like what's a city? Do you want to live in a college town? You want to live in a town that has like a bunch of sports teams or something like that. So there's all these different ways that you can kind of optimize and figure out like what you want.
Speaker1: Yeah, absolutely. And actually, this might sound a little culty, but nowadays there's kind of a Choose Fi group in almost every city.
Speaker0: Oh, yeah.
Speaker1: So it's kind of fun to just drop in on local events. Like I think most of them are on Facebook, so you could look for Choose Fi Des Moines or Choose Fi Houston or whatever else. So if you're visiting and you want to meet some people, it's like a ready-made group of potential friends, you could potentially make that happen. And it's like an extra bonus for connecting with like some of the values that we might have as this group like you'd find people in that town that have the same thing and they're usually pretty fun people especially in the bigger cities because it's like they're drawing from a bigger pool
Speaker0: Yeah david gillis i think he does the omaha choose fi and i know some of the groups are huge, i'm talking to kristen knapp and some of the folks in st louis i think they have you know meetings that are pushing 50 70 people i mean pretty like they struggle to find a place to even hold the events.
Speaker1: Yeah how interesting yeah we have this um like we have the group on meetup.com that's called noco mustachians that um that's i didn't create but um that one is going to grow really big like almost 3 000 people yeah and i wonder if that's just like a weird anomaly or if if that exists for Chooseify or some other thing in other areas in those big numbers. Because that one is especially magic. Because if you put an event on that, you can get people out for almost anything. And if it's a good enough event, you can get hundreds of people.
Speaker0: Yeah. I mean, I think it is an anomaly. However, I'm sure people use the Chooseify. They have an app. So people download the app and check that out. Okay. I know they're trying to get people to move off of Facebook. That's good.
Speaker1: I hate Facebook.
Speaker0: Yeah, Facebook's a piece of shit. But anyway, yeah, the NOCO is, I feel like there's also people that aren't from within the region that sign up just in case they might be coming through town or whatever, which is really cool because I think, you know, like when the Donegans had their extraordinary event here, whatever, five years ago, there were people that came from all around. And of course the Donigans let people know but you know I think one of the hubs or one of the reasons why so many people found out about it locally was the, NoCo meetup group it's pretty cool, yeah any other advice for Lauren or Urav and Rakesh.
Speaker1: No the questions were pretty short so we don't have a lot of details to go by but you know maybe if they want to contact us separately. We could talk more. Yep.
Speaker0: Sounds good. And if anybody wants to send in your questions, just check the email address below. Thanks a lot, Pete.
Speaker0: Thanks a lot for listening to the show. Remember, it's not advice. We hope it was entertaining. If you did enjoy the show, leave a review over on Apple podcast or Spotify or subscribe wherever you can and if you didn't like the show, sorry to hear that but maybe you could tell an enemy someone you don't like too much get them to check out the show and at least you know you're paying it full thanks a lot we'll catch you on the next episode.
