Group members: David Baldonado Christian Kouttjie Henry Phung Rafael Ruiz GROUP 6: LEAVING YOUR HEART IN CALIFORNIA… OR NOT?
Scenario Southern California vs. Tennessee Octavio and his dog, Rex, are saving up $200, 000 for a down payment on a house back home in California. Housing ~ 850 sq ft apartment that accepts dogs Where should he live?
Options Two job offers are available In Los Angeles, CA: $70, 000 /year salary, with a raise of 3% every 2 years In Knoxville, TN: $50, 000 /year salary, with a raise of 3% every year
Considerations Equivalent Distance Commuting Cost – LA: $2. 26/gal for 20 miles roundtrip TN: $1. 82/gal for 20 miles roundtrip Healthcare Costs– LA: $4, 156/year TN: $4, 274/year Dog Cost - $1, 525/year Rent -$1200 LA and $540 Knoxville State Income Tax – 9. 3% CA and 0% TN
Considerations Food and Entertainment: $3600 per year Car payment (lease): $300/mo 25 MPG Car insurance: LA: $842/yr TN: $659/yr
Decision Which location will let Octavio reach his savings goal the fastest? Without Sensitivity Analysis With Sensitivity Analysis
Without Sensitivity Analysis Tennessee is the obvious choice given the considerations Knoxville: Goal is reached in 9 years with $4700 leftover Los Angeles: Goal is reached in 12 years with $1500 leftover
With Sensitivity Analysis What does it take to make Los Angeles more financially desirable? Factors to consider Raises Savings APR Inflation Affordable Apartment in each city Affordable car in each city Starting Salary
Starting Income
Car Lease Payments BMW ///3 (M 3) BMW 328 i
Conclusions It depends… Personally, we would stay in L. A. Sacrifices can be made If you do not mind living in Knoxville, then you can either lease an M 3 or you can stay in a MUCH more luxurious apartment. Your choice!
Resources www. google. com http: //www. sniksnak. com/ac/costs. html - Dog Annual Cost http: //swz. salary. com/costoflivingwizard/layoutscripts/coll_res ult. asp? presentsalary=70000&presenthomemetrocode=98&p resentworkmetrocode=98&newhomemetrocode=84&newwor kmetrocode=84&x=56&y=6 – Cost of Living Estimates and Salary Comparison and State Income Tax Rent. com – Apartment Information Ncsl. org – Annual Health Care Cost Losangelesgasprices. com – Gas Prices…in Los Angeles, CA Knoxvillegasprices. com – Gas Prices…in Knoxville, TN Iii. org – Car Insurance
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