What's up you guys, it's graham here so, as some of you know, i recently bought a home in las vegas and i'm gon na be moving from california full-time by the end of the year. However, even though there have been a multitude of various reasons behind this move, let's focus for a moment on just the financial aspect of it, because i understand this is something that's been brought up a lot lately and i want to take some time to address it. But in order to do that, let me snap my fingers really quick and transport myself all the way to las vegas right after you smash the like button seriously. As soon as you hit the like button, i will appear in las vegas.

Just try it out. Try it as soon as you hit the like button, so i think it's no surprise that if there's one thing i'm known for it's, my persistent frugality since i was a kid. I've always had this weird fascination with saving money and, throughout my entire life, i've always found enjoyment in trying to stretch the value of the dollar as far as it will possibly go well, along that same line of thinking, i want to clear up some of the Confusion about this house that i just recently bought in las vegas, even though the purchase price of this home was one million four hundred and forty thousand dollars, and that's a lot of money out of pocket that, on the surface, seems completely unnecessary and out of character. At the end of the day, it's actually going to cost me zero dollars to move here.

In fact, by buying this house, it's actually going to save more money than i spend to the point that this home is going to make me substantially more than it costs and, if you're confused here's how this works for my situation now until this house is finished, I'll be living in los angeles, california, which is really important to mention, because california has the highest state income tax throughout the entire united states as high as 13.3 percent see. Here's how that works - and i just have to say the subject of taxes - is easily one of the most important topics to understand, and it's such a shame that schools never teach you about this, and most people will just figure it out eventually on their own, at Which point it's usually too late, so here is exactly how it works and exactly what you need to know here in the united states. You first have what's called your federal tax bracket, which is how much money you owe the irs, depending on how much money you make this one is the same throughout the entire united states, no matter where you live here. This one applies to you, except if you live in puerto rico, but that's the topic for another video anyway, in 2020, here's how this works, as you can see from the chart here, if you're single and you earn under 9 9875 dollars a year, you're not going To owe any federal taxes, then, after that you're going to owe 12 taxes on all income.

Above that and up to 40 125, then you're going to pay 22 federal tax on all income between that and eighty five thousand five hundred and twenty six dollars. And, of course, this just continues until you hit five hundred and eighteen thousand four hundred dollars in a single year, in which case all further income after that is taxed at a federal tax rate of thirty seven percent. Now, in addition to the federal tax rate, you also have a state income tax rate and here's how that works. Almost every state has an income tax that you owe them completely separate from the irs.

As you can see from the chart, some states have zero income tax like texas, nevada, tennessee, florida, washington and so on, and others range anywhere from a few percent, all the way up to 13.3 percent and guess which state i live in. That's right, california, the one with the 13.3 state income tax rate the highest in the entire us. Now, just like the federal income tax, there are tiers to what you would pay for. The state income tax in california, you're gon na pay one percent state income tax on all income up to eighty eight hundred and nine dollars, then you're gon na owe two percent up to twenty thousand eight hundred and thirty three and then, of course that continues all The way up to 13.3 for incomes of above 1 million a year and higher that means if i were to earn 3.2 million dollars net in 2020.

I would owe about 1 million and forty four thousand dollars towards federal income taxes and then another four hundred thousand dollars towards state income taxes in california, leaving me with slightly less than half left over after all, taxes are paid. Now, if we approach this from a purely tax standpoint, las vegas doesn't have any state income tax. That means on 3.2 million dollars worth of earnings. I would effectively get to keep an extra 400 000 a year by living here.

So, of course, that's where some of the math behind this comes in, i was able to get a fixed rate 2.875 30-year mortgage with 15 down on this purchase price of 1 million 440 000. That means the mortgage is going to be about 5078 a month, my property taxes are gon na, be about one thousand fifty dollars a month. The hoa is about three hundred dollars a month and the insurance on this is another two hundred dollars a month. That means my total to own.

This home is six thousand six hundred and twenty eight dollars per month. However, when you pay a mortgage like this, a portion of that payment goes towards home equity as you pay down the loan. So that means when you account for the two thousand one hundred and fifty dollars every single month that goes into home equity by paying down the loan. My actual out of pocket cost is reduced to more like four hundred 4 seventy eight dollars per month.

Not only that, but because i'm planning to use half the house exclusively for business and filming i'm able to write off half the entire cost. That brings my entire out-of-pocket cost to own this home after tax write-offs and eighty to 3582 a month. So that means, even though the purchase price of this house is one million four hundred and forty thousand dollars, and it's costing me out of pocket three thousand five hundred and eighty two dollars a month. Not only do i get an extra two thousand square feet to create filming locations from, but i'm also able to save 33 000 a month to move my business over here to las vegas.

So the way i see it, i'm happy to pay 3582 a month. If that allows me to save 33 000 a month in return, so that leaves me with 28 000 a month left over every single month to move here, not including all of the other benefits of getting to live in las vegas. That works out to be almost a 1 000 roi on my money every single month that i'm here not to mention. I also get to diversify my real estate outside of owning property, in los angeles, so yeah, even though this house might seem like initially a waste of money.

This is probably one of the best acquisitions i could have made now for anyone curious. Yes, i still will owe california income tax on any income generated from california. That means that i'm still going to owe california income tax on all of my rental properties, and any business in california is going to be carefully accounted for, but because nearly everything else that i do could be done completely remotely moving here just gives me significantly more Opportunity to continue growing and expanding and giving you even better content day after day. So that's how this house not only cost me zero dollars, but it's saving me significantly more money than what i spend by a magnitude of 10, meaning for every one dollar that i spend here.

I end up getting back 10 dollars in return now. This is certainly not to say that anyone can do this because there's a lot of factors to take into consideration, but for me this is how i broke down the math in terms of how it pertains to my own situation now keep in mind, taxes are not The only reason i'm leaving to las vegas, and even though this video is centered around the financial aspects of moving, there are many other factors that went into this decision that you can't really put a price tag on and for anyone who wants more information on this Check the video i posted about a week and a half ago going over why i'm leaving california, which more thoroughly discussed all of the non-financial aspects of the situation. This is a very well thought out. Decision carefully mapped out throughout the entire year and las vegas just makes sense for a multitude of reasons.

Not only do i have a lot of friends here, but these are friends i can collaborate with and start businesses with and continue to expand in a way. That's very difficult to do remotely i'm going to be teaming up with someone else there to start something new and i believe in person. Discussions provide so many other benefits that can't really be done over the phone or with zoom. In addition to that, i'm gon na have so much extra room for so many extra activities and there's no traffic and the opportunities there are a lot greater for me at this stage in my life, my girlfriend and i both work from home.

I barely leave the house and, besides working from my backyard, my priorities have just changed and listen. The reason behind sharing all of this is purely for the sake of being completely transparent and also bringing you throughout the journey of everything that i learn and experience along. The way i've documented my entire progress on youtube throughout the last four years through every obstacle, hurdle and purchase, and something as big as this deserves to be thoughtfully discussed, so that that way nothing is being left out and remember, i'm still going to be paying california Income tax on all income sourced from there or any business generated from california. So it's not like i'm going to pay.

No california state income tax anymore, but since the majority of what i do could be done from anywhere and i want to continue to grow and expand as much as i can. New opportunities just lie elsewhere and that's what i plan to follow anyway. In terms of coming back to my thoughts on taxes and building wealth, here's what i've learned! If you want to build long-term wealth, it really all begins with saving money. You got to save a significant portion of your income and invest it wisely if you're ever going to be financially independent, there's simply no other way around it and really at its core saving money is a lot like dieting.

It's not meant to be something you just do for a few weeks or for a month here and there and then never again. Creating a budget is something you're supposed to stick with for the rest of your life and even though it might seem like on the surface, i'm spending more money. Every single purchase is carefully planned around not losing value like the las vegas house, but once you get to the point where you can't possibly save any more money, that's the point where you begin focusing your time and efforts around making more money. Maybe you start a side hustle or you move careers or you enter into a different field.

This is really all about maximizing your value of time. Now, once this happens, it's really important that you keep your expenses at the exact same level, except now that you're making more money, you're able to save and invest the difference. And, lastly, once you've maximized the value of your time and you're saving as much money. As you can, then it's up to you to learn the tax code and strategically reinvest back into your business.

That way, you could continue growing and expanding. These are strategies to keep the money you make while simultaneously investing it back in yourself, because sometimes the money you keep could be greater than the money you earn now. I typically don't cover topics like this, because it's a pretty niche audience. This applies to and chances are if someone is making a ton of money, they've already been paying someone to set up their business for them, but for anyone curious at least this is something to be made aware of, and i hope this helps explain the math behind The purchase so with that said, you guys thank you so much for watching.

I really appreciate it as always make sure to destroy the like button. Subscribe button and notification bell also feel free to add me on instagram, i post it pretty much daily. So if you want to be a part of it, there feel free to add me there, as on the second channel, the graham stefan show i post there every single day - i'm not posting here. So if you want to see a brand new video for me every single day, make sure to add yourself to that as well as get your two free stocks down below in the description, that's right.

Weeble is gon na, be giving you two free stocks when you deposit a hundred dollars on the platform with one of those stocks potentially worth all the way up to one thousand six hundred dollars. So if you want those, two free stocks claim them down below. Let me know which two you get thank you so much for watching and until next time.