Hi, first post here - moving to Texas and looking for advice and feedback

[TexasBound]

Hi, I found this website online and liked some of the articles I read. I do not know what it is like to be a moustache but maybe one day I will get there. :)

Here is my current situation. I live in Los Angeles and make $58,000. I am 28 and do not own any property. I owe $11k in student loans at 3%, and $1,800 at .9% on my 2011 Toyota Corolla with 90k miles. I have $4,500 in my checking/savings, and $45,000 in my 401(k). Well, I did before the election .. I haven't looked since :)

I got an unsolicited offer from within the company to transfer to a Fort Worth office, and they would give me a slight pay increase to $60,000, as well as offering $3,000 as a one time relocation package.  I have been looking to get out of CA for a while, and, based on this site, living in LA is probably one of the easiest ways to never achieve financial independence.

With that said, I am just looking for advice on how to handle my finances. My two main goals are that I would like to own property before 35, and would like to try to retire 10 years ahead of the curve, so 52-56. I am nervous as I have no idea how the income tax situation works, or the property taxes, or anything for that matter. I think my situation is pretty good compared to most people, but compared to most on this site is probably lagging behind. I am in no way stressed and know that this is a great opportunity, so just looking for any sort of information that would be good to know or that I should do with my salary in terms of investments.

Thanks!

[trix76]

Welcome! You will find a ton of great info here, so congrats on finding this forum, and on the job offer and relo!

You didn't specifically ask about this, but I would try to negotiate on your new salary, if at all possible. Given that this offer was unsolicited, and the new role involves moving to Fort Worth - which by at least some measures is less desirable than LA - I think you are in a position to ask for more than a $2K/year raise. I'd try for a 10% salary bump, if at all possible. All future raises (and salary conversations) are based on salary, so it's way more important than a one-time bonus.

Related side note: Over time, I've come to realize that I have not negotiated as often as I should've or as strongly as I should've in the moments when I had the power to negotiate. (I am female, and many studies have shown that women do not negotiate as often as men do, which certainly contributes to the pay gap.) So whenever I am mentoring younger women in my field, or really, anyone, I encourage them to negotiate. The worst they can do is say no. I have literally never heard of a job offer going away because you asked for more, especially if it's within the bounds of reason.

I'll let others weigh in on your more general financial situation, but that's my 2 cents on the salary piece :)

Good luck!

[EnjoyIt]

Texas is great. I moved from NY to Texas a few years ago and it was one of the best decision I ever made.  I fully agree with trying to negotiate salary instead of a bonus or I. Conjunction to a bonus. Also since Texas has no state tax your take home will actually be higher. California has one of the most pervasive tax system in the US. Maybe New York City is worse with it's City tax which is added to the state tax. The big downside about Texas especially living in or around a big city is property tax. Expect to pay 2.5-3.5% in taxes. Luckily you should be able to buy a very nice home for $250K or less.  Also cost of living is lower. Gas and rental prices are much less compared to LA.  In all honesty if you play your frugal cards right, there is no reason you can't retire in your mid 40s if not sooner.

Don't be scared of Texas. Not everyone rides horses and carries a gun though talking about guns and shooting is a common topic of discussion. 

Fort Worth is a huge city located adjacent to Dallas with tons of fun things to do. I think moving out of California is the best decision anyone can ever make. That state needs to collapse under its own weight of beurocracy.

[Spork]

Hey there...  I'm an old fart and have lived in Texas all my life -- much of that time in the DFW area. 

First off: Feel free to negotiate, but LA/$58k to TX/$60k is a lot more of a pay increase than you think it is.  As mentioned, there is no income tax, but I also think you'll find the cost of living in DFW is significantly lower.  You will end up driving more... as public transportation is pretty spotty.  But I think you're going to be happily surprised how far your money goes here.

[Rubic]

TexasBound:  I'm a former Dallas resident/homeowner.  Agree with Spork.

Moving to Fort Worth will do wonders for your stache.  When I moved from
California to Tennessee, it was the equivalent of getting an $800/month pay
increase, even at the same salary.

Regarding home purchase: Be sure to factor in property taxes, which can
be all over the map depending on the neighborhood you choose to live in.

[Dezrah]

You've gotten some good advice so far. 

In case you didn't realize, Texas famously has no income tax.  You'll take home more of your check but you'll turn around and spend a bunch on rent/houses with inflated property taxes.

I'll also add that the Dallas-Fort Worth area is one of the hottest sellers markets in the country right now.  It's not Bay Area bad, but it's still rough.  I owned a $118k, 1600sqft house in Arkansas that would go for $375k in bad condition.  Do not expect to pay cheap rent, even with roommates.  Groceries are nicely priced though.

[Bicycle_B]

+1 to Spork, EnjoyIt, Rubic, etc. 

You can buy a house now and it's probably financially beneficial.  Was touring Dallas with a home shopping friend last weekend and was pleased with what I saw (I live in Austin).  Prices are going up so there's a chance that this is the last affordable time to buy, but they'll probably seem cheap to you!

Definitely compare neighborhoods and, to the extent possible, plan commutes.  Meaning, plan for your the commute to your current job, but consider that there could be job changes in future.  There can be big differences in commute time for houses otherwise similar, and big price differences in neighborhoods not too far from each other.  Not too surprising coming from where you are, I guess.

Also, be aware that Dallas has a rail system.  Worth looking for places near a station IMHO.

[Uturn]

The Dallas/Fort Worth area is huge.  Many different places to live, and the areas are very different.  I would suggest renting near your office for a year and learn the area.  You can drive 30 minutes from anywhere and be in a very different place, with different entertainment, restaurants, even political views.   It would suck to buy a house, only to learn 8 months later that you prefer a different part of town.   Much like the LA area, distance is measured in time instead of miles.  From downtown going west, 15 miles could be a 15 minute drive.  Going east, it could take 45 minutes. 

As far as housing, overall it will be cheaper than LA, but will vary per neighborhood.  We have no state income tax, but do have property tax.  These taxes are different per county and per school district.  My street is a school district boundary and I pay more taxes than the house right across the street.  To give you an estimation, my neighborhood is 15 miles from downtown Ft Worth, about 2 mile from a north/south freeway and 2 miles from an east/west freeway, built in 1995, 2300 sq ft, 4/2/2 and it is worth about $210k.   The same house in Keller, about 10 miles away, would go for closer to $275k and just north of Dallas, probably $350k.   

I see no reason why you could not live comfortably on $60k and save a ton. 

[erutio]

One bummer about the DFW area is lack of biking infrastructure.
May not matter to many, but it actually factored heavily into my decision to turn down a great job offer I had in Dallas earlier this year.

[TexasBound]

Thanks for the responses and info. Some of my concerns are that I will need to pay $900-$1,000 a month in rent for an apartment, which is a lot of money. I also do not know the area at all, so cannot buy anything now. But when it comes time to buy, don't I need 20%? Even if I get a cheaper house that is 'only' $150,000, I would need $30,000 saved and I am nowhere close.

How much should I be investing in my 401(k)? What would be my best path to buy a house at this point?

[jtraggie99]

I can relate to your situation.  I've lived the majority of my life in the Dallas area, with stints in Denver and Los Angeles.  In 2010 I moved back to Dallas after 3 years in the LA area (specifically Pasadena).  I'm not sure how much Fort Worth is being affected, but Dallas is being flooded with people causing property values (and rent) to skyrocket.  I had a house I sold in 2014.  I bought it in 2012 for 275, sold it in 2014 for 325, and now the county has it appraised for 360.  This was all due to a divorce and I've been renting for a couple of years now since.  My two kids and I have a 2 bedroom apartment that we currently pay $1300 a month for.  We are in the process of buying a new house though, and it was a major pain finding anything in our area (North Dallas / Plano) in the $300 range.  There's just hardly anything out there for less.  I saw a 3-2, 2000 sqft listed in our neighborhood recently that some idiot had remolded and listed at $485.  Just nuts!  I know it's not California crazy, but it's headed that way.  There's just too many people moving here following all the jobs.

Anyway, that's my rant.  I will say I second the comments on trying to find a place close to work.  Traffic here is getting worse by the day it seems.  I am fortunate that I have a short commute, and I usually work from home often as well.

[Spork]

I can relate to your situation.  I've lived the majority of my life in the Dallas area, with stints in Denver and Los Angeles.  In 2010 I moved back to Dallas after 3 years in the LA area (specifically Pasadena).  I'm not sure how much Fort Worth is being affected, but Dallas is being flooded with people causing property values (and rent) to skyrocket.  I had a house I sold in 2014.  I bought it in 2012 for 275, sold it in 2014 for 325, and now the county has it appraised for 360.  This was all due to a divorce and I've been renting for a couple of years now since.  My two kids and I have a 2 bedroom apartment that we currently pay $1300 a month for.  We are in the process of buying a new house though, and it was a major pain finding anything in our area (North Dallas / Plano) in the $300 range.  There's just hardly anything out there for less.  I saw a 3-2, 2000 sqft listed in our neighborhood recently that some idiot had remolded and listed at $485.  Just nuts!  I know it's not California crazy, but it's headed that way.  There's just too many people moving here following all the jobs.

Anyway, that's my rant.  I will say I second the comments on trying to find a place close to work.  Traffic here is getting worse by the day it seems.  I am fortunate that I have a short commute, and I usually work from home often as well.

I left the area 10 years ago... but I've heard much the same thing from various North Dallas/Plano friends.  You get offers on houses at full price on the first day or so it goes on the market.  I suspect it will settle down and correct itself... just no idea when that will happen.  I also suspect it will bolster the northward sprawl of the Dallas area.

[Uturn]

The good part of the DFW area is plenty of jobs and more companies are moving in.  The bad part of DFW is this draws a lot of people from out of state.  The last number I heard was around 1100 per week.  This means a housing shortage and road construction cannot keep up.  Traffic sucks.  I don't think it is LA bad, but it definitely sucks.  I doubt that housing will ever get as bad as LA, because we don't have the geographic boundaries.   LA has an ocean on one side and mountains on the other, DFW is only limited on how far you want to drive. 

What do you put in your 401k?  As close to $18k/yr as you can get.  Trust me, the sooner you take care of the future, the better that future will be.   In 10 years, you will be very happy with the pile of money, but won't remember the shiny new thing or nights out on the town that took the place of your savings. 

Your first priority is paying your debt.  Interest is awesome when you are earning it, an insidious bastard when you are paying it.  Paying interest just because you want something now is one of the worst things that you can do to your future self. 

Yes, $1000/mo rent is a lot of money, but so is buying a house that you are not ready to.  But when you are ready, there are ways to get into a house cheaper than retail listings.  They are not as easy to find, don't come around as often, and almost always take much more patience, but they are there. 

PM me if you want to talk or meet up when you get to town.  Maybe it will work out and you can rent my spare room for a couple of months. 

[TexasBound]

$18k a year .. wow. How will that interact with the no income tax?

I looked at my 401(k) today and it's gone up 9% total this year, so doesn't this mean I should be prioritizing this over paying off the low student loan debt? That's one reason I have kept it (I previously paid off 7% debt!) and the other is that that is $11k I could put towards property instead.

So I should be putting $18k into the 401(k) and then paying off the debt asap? What kind of timeline for property would I be looking at?

Also, I tried getting an auto quote today and it was about 1.5x as much as what I pay now - the agent said this is because of uninsured drivers. I was not expecting that. Are there good companies which are cheaper? I only went for Geico / Allstate / State Farm etc. but with the big names I'm paying a premium and I don't know local Texas companies.

Thanks!

[Bicycle_B]

$18k a year .. wow. How will that interact with the no income tax?

I looked at my 401(k) today and it's gone up 9% total this year, so doesn't this mean I should be prioritizing this over paying off the low student loan debt? That's one reason I have kept it (I previously paid off 7% debt!) and the other is that that is $11k I could put towards property instead.

So I should be putting $18k into the 401(k) and then paying off the debt asap? What kind of timeline for property would I be looking at?

Also, I tried getting an auto quote today and it was about 1.5x as much as what I pay now - the agent said this is because of uninsured drivers. I was not expecting that. Are there good companies which are cheaper? I only went for Geico / Allstate / State Farm etc. but with the big names I'm paying a premium and I don't know local Texas companies.

Thanks!

I have read that TX auto insurance rates are higher than most states because the state govt is somewhat slack  in regulating the insurance companies. 

Uninsured drivers covers what the other driver would pay if they had insurance; will repair your auto if an uninsured driver damages it; is optional - you decide whether to have that option or not. You are only required by the state to have liability insurance, meaning your insurance pays the other driver if you're at fault in a wreck.

PS.  My friend who's been house shopping in Dallas says there are Ways to Buy a House for 5% down.  I don't claim to be expert on all of the 401k vs down payment vs student loan tradeoffs, though.

[TexasBound]

$18k a year .. wow. How will that interact with the no income tax?

I looked at my 401(k) today and it's gone up 9% total this year, so doesn't this mean I should be prioritizing this over paying off the low student loan debt? That's one reason I have kept it (I previously paid off 7% debt!) and the other is that that is $11k I could put towards property instead.

So I should be putting $18k into the 401(k) and then paying off the debt asap? What kind of timeline for property would I be looking at?

Also, I tried getting an auto quote today and it was about 1.5x as much as what I pay now - the agent said this is because of uninsured drivers. I was not expecting that. Are there good companies which are cheaper? I only went for Geico / Allstate / State Farm etc. but with the big names I'm paying a premium and I don't know local Texas companies.

Thanks!

I have read that TX auto insurance rates are higher than most states because the state govt is somewhat slack  in regulating the insurance companies. 

Uninsured drivers covers what the other driver would pay if they had insurance; will repair your auto if an uninsured driver damages it; is optional - you decide whether to have that option or not. You are only required by the state to have liability insurance, meaning your insurance pays the other driver if you're at fault in a wreck.

PS.  My friend who's been house shopping in Dallas says there are Ways to Buy a House for 5% down.  I don't claim to be expert on all of the 401k vs down payment vs student loan tradeoffs, though.

I'm still just wrapping my head around the $18k into the 401(k) ... that puts my income at $42k. If I then pay $950 for rent (after tax), I end up not really saving a lot.

My other option, which is easily attainable (I think?) is to spend 2017 with the goal of paying down ALL my debt, meaning I only need $11k, or about $1k a month, and then I could enter 2018 in really good shape. I suppose I can see the logic - I'm already investing $18k in retirement, so the fact this is low interest debt is kind of softened. I also vaguely recall reading somewhere that i can't take out of my 401(k) to assist with a down payment unless it's been in there 5 years? I'm only 3 years in, so I can't access that money until very early 2019 anyways.

The auto insurance is a real bummer. I had a ticket on my record I paid for for three years finally fall off six months ago, and now I'm being quoted at basically the same thing. I can't even imagine how much people with a speeding ticket + at fault accident pay.

[Bimmy]

I live outside of Austin, Tx. One thing about big Texas cities- check into living in a nearby city. It may be closer to the new job than living in Forth Worth proper. We live in a small city outside of Austin, but work in Austin and the cost/commute time is less than living in Austin.

[TexasBound]

Any idea what company and rate I should expect to use and pay for electricity? I have seen Reliant Energy with 4 plans ranging from 9 to 12 cents, and a company called Breeze for 7.5 cents, and others. I have never paid utilities before and do not know how much I will use. I anticipate not running the A/C during the day (is this possible in the summer .. ?), and I will be gone about one weekend per month for business.

[Uturn]

Oh the murky waters that are TX utilities.  Basically, Oncor owns all of the power lines.  Each of the many power providers have to pay a surcharge to use the lines, and this is passed to the customer.  Some power providers put this surcharge on their websites in plain view, others hide it to make their rates look better.  Make sure you are factoring in the Oncor charges when choosing your rates. 

As far as not running your AC in the day, this can work against you.  It gets up to about 105 in the summer, sometimes higher.  The inside of your house can get into the 90's if poorly insulated.  You get home in the afternoon to a hot house, turn on the AC, and it can take 4-5 hours to get a comfortable temp.  Best advice, get a programmable thermostat.  I let my place get up to 82 during the day and it starts cooling about 1.5 hours before I get home to a cool 77.  If I leave for a few days, I set it to hold 85.     

[Spork]

Any idea what company and rate I should expect to use and pay for electricity? I have seen Reliant Energy with 4 plans ranging from 9 to 12 cents, and a company called Breeze for 7.5 cents, and others. I have never paid utilities before and do not know how much I will use. I anticipate not running the A/C during the day (is this possible in the summer .. ?), and I will be gone about one weekend per month for business.

Start here:  http://www.powertochoose.org/

It can be really difficult to compare plans.  Everyone charges different amounts for the hookup, different minimum before being billed,  different length of contracts, different everything.  My suggestion is to really look at the company ratings and the complaint history.  If they haven't been around for long enough to have a history: avoid.  There are a bunch of small companies that really suck at customer service.  They'll go out of business, change names and re-open.  If the billing gets screwed up, you'll have hell getting it fixed.  We usually pay around 9c and go with companies that have been around a while. 

[TexasBound]

I went there and it returned over 100 plans for me ...

There seem to be several for 4.5 - 5 cents for 1,000 kwh, but then vary from 5 to 10 cents for 500 and 2000. What is the difference?

This one was rather cheap and has 5 star reviews: http://www1.brilliantenergy.com/

They all seem to have the same $150-$200 cancellation charge, but I can't really see what the 'minimum charge required' is all about. I'm living by myself and will be gone 10 hours a day and home most weekends, I have no clue if that will meet it.

[Spork]

Dear lord, it looks worse than the last time I looked at it...

They seem to work really hard to make it hard to compare plans.  Differences I see:

* locked in rates for a contracted length of time.  (Summer will have higher usage and higher rates)
* less known companies (possibly less history, poor consumer ratings)
* varying rates.  One I looked at :

Energy Charge: 4.708¢/kWh for the first 500 kWh used (1 - 500 kWh)
Energy Charge: -3.840¢/kWh for the 500 kWh used after the first 500 kWh (501 - 1,000 kWh)
Energy Charge: 11.560¢/kWh for all kWh used after 1,000 (1,001 kWh ≤ usage)

If you're in the magic center of that (501-1000kwh) you get charged NEGATIVE 3.8 cents per hour.  But I suspect they've statistically worked this out such that almost no one is in that spot.... but it gives them an average price of 4.6 cents and makes them look cheap.

I can tell you we use Reliant and TXU (we have more than one meter).  I know folks that use StarTex.  For ourselves, we look for less complicated plans ... that don't have wild varying rates.  We look for plans that have at least a year on the contract so we won't get unexpected price changes.