Paradise

  

I think everyone should find their own little piece of paradise in life. I may have found mine. I decided to move to Southwest Florida in mid-2009. Up until that point I had lived in the southeastern portion of Michigan for my entire life. I grew up in Detroit, and lived a great deal of my life about 40 minutes east of Lansing. I can appreciate certain aspects of the state, such as: season changes, white Christmases, cider mills and relatively cheap housing. The thing I most miss about living there is the fact that my family and friends still live there. If it wasn’t for that fact I don’t think I’d miss Michigan at all.

This blog focuses on living frugally and building a passive income stream. I believe that living in Florida helps me with these goals in many different ways that Michigan (or other northern states) simply can’t. First, Florida does not impose a state personal income tax. This, for me, is really all the reason I need. Michigan currently imposes a flat 4.35% state income tax. While I’m trying to get 4% yield out of my portfolio, Michigan is taking slightly more out of my income. Seems very counter-productive to me. The fact that Florida imposes no state income tax is really quite wonderful. I don’t make a lot of money, and 4.35% of my income isn’t a lot of dough…but it’s still over 4% of my income. And I like keeping it. While this is simply a comparison between two states, because I’m familiar with and have lived in both, you could really do this exercise with any state you choose. Ask yourself, how much of your income is being paid to the state? There are currently only 9 states that do not impose a personal income tax, so odds are good you live in one that does.

Another thing that I love about living in Florida is all the free activities you can partake in year-round. While many states offer free activities, whether it be fairs or concerts or anything else, Florida is one of the few states that you can enjoy these types of things year round. The beach is one activity that comes to mind pretty quickly. I can drive to Siesta Key and park for free. I can walk out to the beach and enjoy some of the best views the United States has to offer, then I can watch the sun set along the horizon. I can do all of this without spending 1 penny. That’s pretty attractive. Exercising outside is also free and easy year-round. In colder states, it’s pretty imperative that you have a gym membership if you want to get a good workout all year. Down here, I can work out just the same in January as I can in June. A lot of what I’m writing is based on my own experiences, and I don’t particularly enjoy being outside when it’s below freezing. That’s just my take on life and I usually prefer warm weather.

I’ve been kicking around the idea of living without a car. Being in Florida makes this a lot easier than many other areas of the U.S., in my opinion. Other than living in one of the few major cities with excellent public transportation such as Chicago, New York or Washington D.C., I would not care at all for biking/busing my way to work and personal obligations when it’s 20 degrees outside. This past winter it averaged right around 65 degrees during the day in my particular area. That is very comfortable for a nice bike ride. Walking, busing, bike riding and any other public transportation needs are a little more comfortable when you’re not fighting the elements. I really like the idea of not writing the monthly check to the insurance company, not filling up my car every 2-3 weeks and not depositing money into my bank’s account for the auto loan. My overall transportation costs average over $400 per month. I agree that living without a car is a little “extreme”, but I also think spending that much money to travel to and from work is a little “extreme”. Living in a very warm climate does allow a little flexibility in this area of life.

I’m really not trying to convince anyone to move to Florida. The less competition for housing and rent there is, the less my housing bill costs me! But seriously, this is just my take on a wonderful state. I really came down here for a new opportunity and simply because I really dislike cold weather. I didn’t like driving in snow, I didn’t like having the highest auto insurance rates in the states. I didn’t like scraping snow off my windshield, I didn’t like warming up my car for 20 minutes. I have gained not only new opportunities by moving to Florida, but I lessened my overall tax burden in the process. I saved myself over 4% of my income. I opened myself up to free activities, beautiful beaches, gorgeous weather year-round and the possibility of living without a car and saving the associated auto costs. I increased my ability to live frugally, and therefore invest more of my net income.

Seems like a great decision to me!

Thanks for reading.

Comments

  1. says

    Sounds like paradise for the most part. I’m in WI and we have income tax, but FL has operating costs like every other state (I spent a yr in FL), and goes about getting them covered in other ways (especially not that Mkt values in FL are rock bottom).. Like several other states that have no income tax, Florida makes up for it with generally higher property taxes, fuel taxes and sales taxes as well as various high motor vehicle fees…not to mention the dreaded tolls!! If you can forego owning a veh, I’d say the scale tips in your favor.
    check out this interactive map http://www.jsonline.com/news/wisconsin/89702927.html

  2. says

    Gabe,

    I agree on the operating costs. The thing that puts me in an advantageous position in regards to taxes is that I rent. The property taxes down here definitely make up for the lack of income taxes. That’s where the state coffers make up the revenue. Sales taxes are pretty comparable. MI has a sales tax rate of 6%, FL is 6% with variable county-added taxes. I pay 7% in my city. But this is generally negligible as I don’t buy much.

    Motor vehicle fees are pretty high, I will agree with that. I still own a car and therefore am still subject to those taxes. I hope to figure a way out of that by the end of the year.

    Very cool map. It actually shows the motor vehicle taxes are lower here than my home state. Property taxes also show lower here. I’m surprised about that! I think renting cheaply, buying little and not paying the state income tax is putting me in a great spot.

  3. says

    Excellent post.

    It reminded me of the great time my wife and I had when we visited Florida for our honeymoon.

    I come from the true north and I can tell you, I completely agree with you in that it’s nice to be able to enjoy warm weather virtually year round.

    Don’t get me wrong, I love snowmobiling and doing outdoor activities in the winter, but there’s something awesome about having warm weather.

    Being able to do various activities on a beach for many months is a dream for many people. I can understand why you call in Paradise.

    The 4% is significant, and in the long-run you will benefit from the difference in comparison to Michigan tremendously. Besides, you can always listen to Eminem in Florida :)

    I really admire how you’re able to save such a large percentage of your income earned.

    Cheers
    TWC

  4. says

    TWC,

    Thanks for stopping by. I do think there are certain intangibles to living in a warm climate…for instance it makes it “easier” to take public transportation year-round. I’m partial to heat and very sensitive to cold weather, so YMMV.

    4% savings on gross income is also wonderful. I think this is somewhat overlooked by some people. I try to think of every angle.

    If you’re ever in southwest Florida, let me know!

    Take care.

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