Any place has pros and cons. Cost of living, weather, job opportunities, access to airports, access to outdoor recreation, and so on. I recently asked on X what the biggest 3 Pros and biggest 3 Cons are for living in San Diego. I had approx. 45 responses and I think they’re a good summary of factors for living in San Diego. You can check out the thread here:
Meeting a good friend considering moving to SD from Midwest.
Looking for candid input.
– Worst 3 things about SD – Best 3 things about SD
I’d like to add my thoughts on living in San Diego and elements to consider if you are moving here.
The Weather is Awesome – I made fun of how often this gets mentioned the first 3 years I lived here. Now I reference it very often. It is really pleasant, although definitely colder than you probably expect if you haven’t visited here before. It gets chilly in the dark and never really hot.
Water Views and Urban Canyons – these are my two highest rated housing location considerations to look for, and I’d probably put the canyons above water views – mostly because coastal areas are quieter and less interesting. Ocean breezes are also very good, even if without a water view.
Mexico – If you live in San Diego you need a passport and a Global Entry card (with your vehicle SENTRI registered). Go to Tijuana, farther south into Baja or all the way to Cabo, Valle de Guadalupe, and so many other places. You can also fly anywhere in Mexico very affordably via the Tijuana Airport which has a US access point at the Cross Border Express (CBX) airport crossing. It costs approx. $25 each way to utilize, on top of parking.
It’s Early to Bed / Quiet – Trying to match up with East Coast timezones, a lot of military personnel, and surfers / hikers / yoga-ers / Orange Theory and F45 lead to a lot of early mornings. SD shuts down earlier than any other big city I’m familiar with. I don’t mind it at this point in my life, but it was a surprise on arrival.
Less Pretension – Not sure why, but what people do for work or where they went to University are not as prominent as in other places I’ve lived. There is a lot of money and expertise here, it’s just not first topic of conversation.
As with the X responses, it is expensive to live in San Diego. Per one recent study the 8th most expensive place in the US. #1 place to live for the 8th highest price? Sounds like a good deal. #SDlove
typical day in San Diego (Windansea Beach in La Jolla, which is a neighborhood of San Diego)
The term “Latte Factor” was popularized by David Bach in his best-selling book, The Automatic Millionaire. The concept highlights how small purchases everyday add up to big money over time – in this case exemplified by a daily $5 latte. It’s a specific example of how opportunity costs work. When you use your resources for one thing you are giving up alternative uses for that money. Per Webster Merriam the formal definition follows.
Opportunity Cost
– the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (such as another use of the same resources or an investment of equal risk but greater return)
Bach’s book popularized the art of slamming Starbucks purchases as extravagances for spendthrift millennials that have no long-term financial sense. It’s a good concept, and the math works. If you take the $5 a day and instead put it into low-cost index funds or other investments the accumulation over time is enormous.
Here’s a July 2018 example post, using the $5 latte example, from US News. Over 50 years, $5 a day invested across the stock market would yield you an $800,000 portfolio balance. It’s a great, powerful example of how returns compounded over years can add up to big money. The big missing piece of getting these returns, however, rests upon actually investing the $5 a day. Opportunity costs only really matter if the alternative uses are uses that one will actually take. You may not like Starbucks at all so you never spend $5 a day on coffee, or you may have incredible willpower and forego your treasured cup of mocha java daily for years on end. Unless you take those individual $5 savings and everyday invest them you will not see the $800k pot of gold at the end of the 50-year rainbow. If the money sits in your checking account and is then used for a trip to Disneyland, or a shopping trip, or the monthly dozen streaming service bills it has not been saved, nor invested. It’s been spent on a different consumption use. Unless one is very diligent or budget-focused it is hard to monitor each dollar and actively redirect from spending to investing.
I had the Latte Factor in mind when I was considering how to be a better, more consistent investor about a year ago. It was shortly after the New Year and resolutions were on my mind. I decided to use the idea of the Latte Factor in reverse – by starting with investing and making a daily investment the priority. My thinking was that if I made the $5 investment a priority each day, and automated it I would be embracing the investing side of the Latte Factor which is the most important part. Getting your money to work for you is the goal, not self denial at the coffee counter. They are both part of the equation, flip sides of the coin, since we all deal with finite time and money. Although they are related, I view the investment side of the coin as more important than the saving side. And knowing myself, giving up my daily coffee just isn’t in the cards.
I used my existing Vanguard account to create a recurring weekly investment for each day of the week. (Since you can’t create an automatic investment on a weekend day I doubled up on a couple of week days to have 7 total investments a week.) Here’s my current latte investing setup – there’s an additional 8th weekly transfer to a money market fund as an emergency savings additional goal.
I’ve blanked out the amounts above as I don’t think it’s relevant and will depend on each person. For you, the $5 a day may be a great start. Perhaps you earn a lot more money than I and $500 a day would be a better fit. The important bit is to start, and automate, your investing so that you remove the need for active attention and willpower to ensure it happens. This is likely already the case if you have a 401k or other employer investment plan – you set it up once and rarely think about it again. Adding an investment plan for yourself individually can be a great complement and remind you that your financial future is ultimately in your hands, and needs to be on your mind.
In addition to the power of compounding, I’ve enjoyed the psychological element of having a daily investment habit. When I’m winding down at the end of the day I can tally a small win, every day, that even if I did go out for coffee, or dinner, or booked an expensive trip I was also investing for the long-term. That little bit of positive reinforcement and encouragement has been meaningful to me. My wife and I both set up our own daily investments in this vein. It’d be a bit cleaner and simpler to just lump the investment dollars together and do it once a day instead of twice. However, just as you can’t have another person eat well for you, or do your daily exercise routine I find it important for us each to be invested in the process and have a daily win.
Our first year of latte investing went well, and with the calendar turning over we took a few minutes to discuss and update our daily investments. Things have been going pretty well, so we were able to increase our daily amounts a bit. Maybe in the future we’ll need to decrease the amounts. Either way, I plan on continuing this daily habit to have our small daily money wins and to remind ourselves that everyday we are going to be investors. Hopefully, as the years go by, the returns will grow and our balances will accumulate.
Bean counter by trade, bean lover by nature, bean stacker by choice
I hope sharing this daily habit is helpful to you, and if you have ideas to share about building wealth for the long-term I’d love to hear them. Cheers.
One of my favorite websites is the fantastic Mr. Money Moustache (MMM). This website and the book Early Retirement Extreme (ERE) by Jacob Lund Fisker caught my attention a few years ago and the concept of financial independence has been stuck in my head ever since. There are a number of great podcasts, books, and articles, on the topic and the “FIRE” movement (financial independence / early retirement) has grown into a semi-mainstream concept.
The biggest lesson I took from MMM and ERE is the impact that a person’s savings rate has on the ability to grow wealth. The flip side to the savings rate is the consumption rate – together they equal 100% of earnings. The money you earn is either spent and disbursed to another party via consumption – the pizza place, daycare, car payments, etc. – or it is kept and accrued in your accounts – savings, investment account, real estate, etc.
The impact of the consumption / savings rate is laid out most excellently in this post from MMM:
I decided to take a stab at making a simple calculation along the same lines – using a few basic inputs to see the time required to create a “Passive Income Symbiote”. The goal is to create a passive stream of income equivalent to gross earnings – to entirely replace wage earnings with passive income. If you can live on what you currently earn then it’s easy to imagine living on that same amount, but with all of your time free to use as desired. I chose the word symbiote with the idea that the goal is to have the Passive Income Symbiote be the “host” and the person becomes the “parasite”, living on the efforts of the host.
The basic elements for the calculation (spreadsheet attached, feel free to use and share if you like) are:
Income / earnings – how much you make
Consumption rate – how much of your earnings you spend
Return on investments – what you earn on your savings
Earnings increase – if you expect an annual raise, how much it is
Earnings increase spent – how much of any earnings increase you spend (also known as lifestyle inflation)
Many of these factors are hard to change or controlled by outside forces – bosses, annual evaluations, how the stock market performs – the spending / saving ratio is the factor easiest to quickly adjust. It’s also the factor that has the most impact on the time required to fully fund a PI Symbiote. I’ve included some suggested ranges for items like return on investments and annual earnings increase. There’s a relative limit on some items and I’ve tried to based the suggested ranges on my perception of those general limits. (You might get a 100% raise at your job but it’s more likely to be a moderate increase of 3-5%, for example.)
Good luck on your journey and creating your own pet Symbiote. Cheers!
Screenshot of sample Symbiote calculation
a journey of a thousand miles starts with a shaky bridge
I recently read Dream Hoarders – How the American Upper Middle Class Is Leaving Everyone Else In The Dust, Why That Is A Problem, And What To Do About It by Richard Reeves of the Brookings Institution. Despite having a very long and unwieldy title it was a very good read about the “Top 20%” in the United States. The book calls out unfair advantages that the upper class has carved out for itself and how these advantages have created “mobility stickiness” at the top – if you’re born in the top 20% you’re likely to remain there, more so than your chances of remaining in the bottom 20% if you are born there.
Reeves criticizes practices like legacy admissions at elite universities, college savings plans, nepotistic internship placing practices, the interplay of zoning and access to public goods like schools, and more. The book is a quick read and very informative.
Below is an example of the sort of information presented in the book. I really enjoyed the graphic presentation of data throughout, as well as the casual and plainspoken writing style. It makes the subject matter easier to grasp and relate to. I also enjoyed Reeves’ perspective as a non-native American – he was born in Britain and frequently refers to that land of dukes, dames, and queens and how his perception of America as a more meritocratic place has been challenged through his research on wealth and social mobility.
Illustrative example of graph from book
If you have a chance to pick up this book at your local library or purchase online I’d highly recommend it. It’s important for those of us in the Top 20% to recognize unfair practices and work to create a more fair playing field for our children and future generations.
I’m sending out these books as part of my “Sharebook” campaign – my personal project to send out books I’ve enjoyed and start a number of book chains to continue them being passed after I first ship them.
So many of us use computers today as our “workplace” and Mr. Scott mentioned that he created a page with a motivational message to be the default opening page for his browser. I love this idea and created a simple page (current version below, I plan to revise but wanted to set up something now to start from). The bolded item is based on Eat That Frog by Brian Tracy – a good motivational read about tackling the biggest, most important task of each day first thing.
first draft attempt at a motivational start page
I wanted to share my modest attempt at this “Start Page” idea as I think the idea is a really good one and thought you might enjoy as well. If you’d like to use my Start Page for yourself you can find it at:
