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EU citizen moving to Bay Area - costs, other issues?

EU citizen moving to Bay Area - costs, other issues?

Old Sep 20, 12, 6:45 pm
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EU citizen moving to Bay Area - costs, other issues?

Hi,

I plan to move to the Bay area soon (I have a job offer), and I started to collect data and do the math. All my colleagues tell me that living in SF is the most expensive, so I will likely look for something in South Bay (Cupertino, Fremont, Milpitas, Sunnyvale). Where can I find some up-to-date real costs of living, for a family of 4 (2+2 small kids)? I am basically looking for 2 things:
- Idiot's guide to taxes. If I make with my wife let's say 150k/year, how much do we have to pay as taxes, what would be my net disposable income? I got lost in some many deductions and exceptions
- indicative view on monthly household costs. My current understanding is that we would be looking at a sizeable amount of cost, but I'd like to understand what that amount is likely to be. Can you please add your view on my estimates below?

Home Rent - 2000-2500$ - 2 bedroom apartment or 2 bedroom house in South Bay
Electricity, water, internet - 300$
Car rent (one family car + one small car) - 700$
Car fuel (gas) - 300$
Car insurance - 200$
Health insurance - 300$
Food - 1000$
Travel and entertainment - ~500$
Daycare 2yr old - 700$
Daycare 5yr old - 800$

Thanks a lot in advance for any solid info!
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Old Sep 20, 12, 7:16 pm
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Originally Posted by CAlex View Post
Health insurance - 300$
For a family of 4? My plan, for just me, is almost $700 a month. Coverage for a spouse/partner would bring that up to almost $1,400 a month, and then more with adding on kids. Does your prospective employer offer some type of group plan with high deductibles/copayments that gives you a $300 rate, or are you going to have to go into the marketplace and find your own coverage?
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Old Sep 21, 12, 1:59 am
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I will check details on insurance, that was my understanding about the health insurance rate. Good to know that it can go so high
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Old Sep 21, 12, 3:13 am
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What about your nationality? I can see that you are from the EU. For Danish citizens, you have to pay back all tax you earn in the US if you return to Denmark within 2 years (you don't do that if you move to another EU country, but outside the EU you have to pay your income tax you earned).

That is another thing you might need to find out about - unless you are moving away for good.
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Old Sep 21, 12, 8:07 am
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The plan is to move for good.
I am from RO, and if I understand your message correctly, in case I return home before 2 years, I would pay again taxes in RO on the income in US?
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Old Sep 21, 12, 10:48 am
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Originally Posted by CAlex View Post
The plan is to move for good.
I am from RO, and if I understand your message correctly, in case I return home before 2 years, I would pay again taxes in RO on the income in US?
You might have to check the tax law in RO, but as far as I know you might even have to pay back your income tax if you are returning to any EU country (the topic came up when we told our father-in-law who is a tax auditor, he mentioned something about if you leave the EU, you need to be prepared to leave for a long time in order to avoid any tax issue). AFAIK EU has very harmonised tax rules, and it might be a good idea to find out.
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Old Sep 21, 12, 1:46 pm
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Originally Posted by CAlex View Post
Hi,

I plan to move to the Bay area soon (I have a job offer), and I started to collect data and do the math. All my colleagues tell me that living in SF is the most expensive, so I will likely look for something in South Bay (Cupertino, Fremont, Milpitas, Sunnyvale). Where can I find some up-to-date real costs of living, for a family of 4 (2+2 small kids)? I am basically looking for 2 things:
- Idiot's guide to taxes. If I make with my wife let's say 150k/year, how much do we have to pay as taxes, what would be my net disposable income? I got lost in some many deductions and exceptions
- indicative view on monthly household costs. My current understanding is that we would be looking at a sizeable amount of cost, but I'd like to understand what that amount is likely to be. Can you please add your view on my estimates below?

Home Rent - 2000-2500$ - 2 bedroom apartment or 2 bedroom house in South Bay
Electricity, water, internet - 300$
Car rent (one family car + one small car) - 700$
Car fuel (gas) - 300$
Car insurance - 200$
Health insurance - 300$
Food - 1000$
Travel and entertainment - ~500$
Daycare 2yr old - 700$
Daycare 5yr old - 800$

Thanks a lot in advance for any solid info!
For a family of 4...you need a 2-3 BR house/apartment.

To better measure this I need a better sense of where you will be working...is it downtown SF, Silicon Valley? Someplace else? How much driving will you be doing?

It will likely be cheaper if you live in the suburbs and commute into work via BART/subwayor commuter train.

The health insurance for a family of 4 will likely be higher. The health insurance costs will vary widely.

In Califonia gas is about the highest in the country regularly due to the local costs plus taxes added. How many miles do you see driving daily x $5 (this is to add any maintenance costs).

Living in the suburbs and commuting you wont have the garage parking costs but instead more gas usaeage.

If you plan on living in SF proper...will you need a car? The weekend trips you can just do a single day or weekend car rentals. There are programs in large cities where you share use of a car.

Many employers offer the day care as a pretax payment which will save you some on taxes taken out.

roughly for all states around 33%-40% is taken out in taxes and other pretax payments not including child care tax deferments. so $12,500 gross monthly income will likely equate to about $8000 take home before child care is factored in.

$1000 per month for food may be high...depending on how much you guys go out to eat for lunch/dinner. Will you two go out to lunch every day or bring lunch to work? How much would you guys go out?

For my own experiences ....except for real estate, the cost of living no matter where you live (in terms of cities/suburbs) is about the same. Some places you may have really cheap electricity but have higher food prices. The biggest variable by far is the real estate prices. Ideally you should live in a place where your cost of housing/rent is around 25%-30% of gross pay (before taxes). If you are below that then even better.

For you older son....he should be starting school in a few years. If you find the same day care you may get a cheaper rate.
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Old Sep 21, 12, 2:53 pm
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Originally Posted by djp98374 View Post
For a family of 4...you need a 2-3 BR house/apartment.

To better measure this I need a better sense of where you will be working...is it downtown SF, Silicon Valley? Someplace else? How much driving will you be doing?
My job is basically in Silicon Valley (few clients between Menlo Park and San Jose), with occasional trips to SF. I would be OK to drive ~30 minutes to work, I could not do 60-75 minutes.

The health insurance for a family of 4 will likely be higher. The health insurance costs will vary widely.
I will check what the company will cover. I know from colleagues that they have pretty good family insurance package and they do not pay more than 400$/month. Any online resource to check this?

In Califonia gas is about the highest in the country regularly due to the local costs plus taxes added. How many miles do you see driving daily x $5 (this is to add any maintenance costs).

Living in the suburbs and commuting you wont have the garage parking costs but instead more gas usage.
I am used to 2$/liter gas costs, so driving in California I find "refreshing". Recently I saw it is ~4$/gallon. If my wife will also have a job and we will both be driving, I assume we will easily burn ~2500 miles for work commute (30 miles each way for each of us) and then another 500-1000 miles for personal trips. That's where I think 300$ should be enough for gas, but there's always stuff I might be missing.

If you plan on living in SF proper...will you need a car? The weekend trips you can just do a single day or weekend car rentals. There are programs in large cities where you share use of a car.
No intent to do that yet, although public transport system would be a big plus, we are used to it from Europe

Many employers offer the day care as a pretax payment which will save you some on taxes taken out.
Can you elaborate on what this could mean in terms of cash? Is daycare really that expensive (700-800$)? If it will be pretax payment, this would save me ~150-200$ in taxes on that amount, correct?

roughly for all states around 33%-40% is taken out in taxes and other pretax payments not including child care tax deferments. so $12,500 gross monthly income will likely equate to about $8000 take home before child care is factored in.
Is there any way of significantly driving that number down to ~25%? I'm used to a flat tax rate, and I can't really tell if there is any legal way to reduce tax amount paid. Is everybody in US paying so much tax, when going above 120k/year as a household?

$1000 per month for food may be high...depending on how much you guys go out to eat for lunch/dinner. Will you two go out to lunch every day or bring lunch to work? How much would you guys go out?
We don't go out much (maybe once per week), but my biggest "fear" is and will be food, as we are used to relatively high amount of pork/chicken meat in our regime and also natural fruit and vegetables. I'm not a bio-freak, but I know the taste of home-grown tomatoes, peppers, cabbage, peaches, strawberries; unfortunately except some expensive places I could not find the same taste in California in my trips. In RO we spend about 300-400$ on food, hence my 2-3x estimate in California.

For my own experiences ....except for real estate, the cost of living no matter where you live (in terms of cities/suburbs) is about the same. Some places you may have really cheap electricity but have higher food prices. The biggest variable by far is the real estate prices. Ideally you should live in a place where your cost of housing/rent is around 25%-30% of gross pay (before taxes). If you are below that then even better.
Thanks for the guidance. I actually heard the same from some of my colleagues, but I need to get used to the idea of paying 2.5-3k on rent alone

For you older son....he should be starting school in a few years. If you find the same day care you may get a cheaper rate.
Can you please explain? I was planning to cut that cost completely, once he starts school. I heard good things about public schools in the Valley, we are not planning to send him to private school.
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Old Sep 22, 12, 11:11 am
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CAlex, daycare is likely to cost much more than 700-800 per month. I've been researching it in SF for the past couple of months and feel lucky to have found one for 1250 a month. Average looks to be closer to 1500, with 2000 not uncommon. On top of that, most day cares have long wait lists. Perhaps things will be better in the suburbs, but I would not count on it.

The tax free payment option is something your employer may or may not offer. As far as I recall, you can have up to 5000 per year withheld pre-tax to be used for day care only. That's generally less than half of the actual annual cost of day care, but it's at least a small savings.
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Old Sep 24, 12, 7:10 am
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By the age of your kids, one will go to preschool and the other to kindergarten. In my experience (I lived in the city), preschool was 900 dollars per month, without lunch or extended care (hours were 9am to 3pm).

I also paid a lot for car insurance the first couple of years I lived there, because my American driver's license was new (no California "good driver" discount). But it'll also depend on the Zip code of where you'll live, whether your car has ABS brakes and other safety equipment, etc.

For food, 1,000 dollars for 4 may be enough, if you never shop at Whole Foods.
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Old Sep 25, 12, 12:31 am
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Originally Posted by CAlex View Post
I plan to move to the Bay area soon (I have a job offer), and I started to collect data and do the math. All my colleagues tell me that living in SF is the most expensive, so I will likely look for something in South Bay (Cupertino, Fremont, Milpitas, Sunnyvale).
Just a bit of a geography lesson: Fremont is considered East Bay. In general the East Bay is much cheaper for housing than Silicon Valley cities. But even within Silicon Valley there are big differences. For example, housing in Sunnyvale is about 2/3 the cost of Palo Alto.

- Idiot's guide to taxes. If I make with my wife let's say 150k/year, how much do we have to pay as taxes, what would be my net disposable income? I got lost in some many deductions and exceptions
There are three major tax deductions on a worker's paycheck: US income tax, state income tax, and Social Security/Medicare. (There will be other line items, too, depending on which jurisdiction(s) you live and work in, but these 3 are the big ones.)

For US income tax people often focus on the marginal tax rates such as 25% or 28%, but any person's overall tax rate is lower after deductions, exemptions, etc. For the situation you outlined it is likely that your average federal rate will be around 10%. I.e., a family of 4 with $150k gross salary will owe approximately $15k in federal income taxes.

For State of California income tax figure about another 6%. The top rate is over 9%, but as with US income tax most people pay a much lower average rate because the rates are graduated and there are deductions and exemptions.

For Social Security/Medicare taxes you would normally figure another 7.65% but I'm not sure if you would have to pay them as a foreigner. A bit of quick research I did opened more questions than it answered. For example, the rules are different for different kinds of visas. You should plan on hiring a tax accountant to help you understand how all the rules apply to you. Definitely look for an accountant familiar with taxes for foreigners.
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Old Sep 25, 12, 12:07 pm
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my comments in blue



I will check what the company will cover. I know from colleagues that they have pretty good family insurance package and they do not pay more than 400$/month. Any online resource to check this? It would be through the corporate web site. It is very difficult to check online because each companies policies are different. If its a large employer like google or apple you should get better insurance than if it was a smaller 100 employee company.


I am used to 2$/liter gas costs, so driving in California I find "refreshing". Recently I saw it is ~4$/gallon. If my wife will also have a job and we will both be driving, I assume we will easily burn ~2500 miles for work commute (30 miles each way for each of us) and then another 500-1000 miles for personal trips. That's where I think 300$ should be enough for gas, but there's always stuff I might be missing.

Ideal situation you set it up where you two can commute to work together with one car..not needing two. This may be difficult in silcon valley where you guys may need to have 2 cars in order for each of you to get to work


No intent to do that yet, although public transport system would be a big plus, we are used to it from Europe

In Silcon Valley there are public buses. You may be fortunate to live someplace where its a short walk to a bus that take you directly to a block or two from employment...I wouldnt count on this/


Can you elaborate on what this could mean in terms of cash? Is daycare really that expensive (700-800$)? If it will be pretax payment, this would save me ~150-200$ in taxes on that amount, correct?

It is an employee benfit...not all companies do this...they offer pre tax savings for child care/daycare costs. This happens with the insuance premiums you pay for out of your paycheck...it happens pre tax thus effectivly saving a third of the amount you would have paid. For example say your per pay check amount you had to pay for health insurance was $200. If its after taxes you need to earn $300 to pay that $200 because the rest is taken out for the various taxes by paying for this pre tax it only cost you $200 then the other $100 is taxed so you walk away with an extra $67 in your pocket. The same think applies to child care costs. If the child care costs you $1000/month if it was done after taxes you would need to earn $1500---so it save you that $1000 from being taxes..which means you pocket $333 more money


Is there any way of significantly driving that number down to ~25%? I'm used to a flat tax rate, and I can't really tell if there is any legal way to reduce tax amount paid. Is everybody in US paying so much tax, when going above 120k/year as a household?

Part of that 1/3 are mandatory taxes as well as pre tax payments for things such as health insurance and child care and pre tax 401K retirement contributions that companies match. if you make $120K your tax rate is not 28% for it all...its steps based on your income level are taxes at different rates.


We don't go out much (maybe once per week), but my biggest "fear" is and will be food, as we are used to relatively high amount of pork/chicken meat in our regime and also natural fruit and vegetables. I'm not a bio-freak, but I know the taste of home-grown tomatoes, peppers, cabbage, peaches, strawberries; unfortunately except some expensive places I could not find the same taste in California in my trips. In RO we spend about 300-400$ on food, hence my 2-3x estimate in California.

food prices are cheaper here...look for whole foods and trader joes in california for organically grown stuff. Also in the area you will find farmers markets. By my estimate for a family of four I think $250/week is very high...i think you can budget it around $150/week and be fine. California is a different climate and this is where I was getting about with food prices. Some places its really cheap because of locally grown stuff while the same stuff elsewhere is expensive because shipping costs are added in.


you please explain? I was planning to cut that cost completely, once he starts school. I heard good things about public schools in the Valley, we are not planning to send him to private school. You still have to plan for the summer...schools run from the last week of August to early June then summers the kids are out. You still will have day care costs in the summer for the child---also what about schedules and after school? Some schools do have after school programs for kids to stay in because both parents work.
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Old Sep 25, 12, 12:14 pm
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To calculate your take home pay, something like this may be helpful..

http://www.adp.com/tools-and-resourc...alculator.aspx
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Old Sep 25, 12, 12:24 pm
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Also....the typical trade off in many large cities..including silcon valley/san jose area.....the farther you live from the job center the cheaper it usually is but then the commuting time is longer and public transportation will be minimal.

As the other poster said there is various differences in living costs based on city. Another big driver in housing costs is living in a very good school district.

Because of commuting time manty of the highways and main road ways will have what is called HOV or HOT lanes...

HOV =high occupancy vehicle which will say if its 2+ people requires. HOt is for 2+ people but if you are one person you pay a toll to drive in that lane.

http://www.dot.ca.gov/hq/traffops/sy...Cal_Sept11.pdf

To save money if you live 20 miles away from your job and you and your wife can work in the same area then you can drive to work much faster than if you were driving alone.

For day care for kids keep it close to work. A great bemefit is some companies offer on site daycare for employees.

If your employer is large and its in a large employment area you will see the closer you try to get to your employer for drive time the higher the cost to live there will be. For example you may need to pay $2000+ close but only $1300 far but the trade off is you will be paying more for gas and time driving.
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Old Sep 25, 12, 6:28 pm
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You cannot get a 2br apartment or house that is at all decent in Palo Alto for $2500 a month, probably more like $3500. In return, when your kids are 5 or older, you get to send your kids to the Palo Alto school district so won't need to pay for private schools. Annual tuition at these private schools is currently running $25,000-$40,000 per academic year.
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