There a number of reasons why one would consider moving to a new state. Before moving, here are a few items to consider.
The Average Price of a Home:
You can use websites such as Zillow.com, Realtor.com, and Trulia.com (average price of a home interactive map) to see what kinds of homes are available. Consider how much you earn, relative to the average price of a home in the area. One way to know how much you can afford is to make an appointment with a mortgage lending officer (an MLO) to get pre-qualified for a loan. They will most likely ask you for your three most recent bank statement and pay stubs. A good rule of thumb, is that you can afford a mortgage payment that is roughly one third of the amount that you earn. Getting pre-qualified will allow you to get a realistic idea of how much you can afford, provide you with a house hunting budget, and will signal to Realtors that you are a serious home buyer.
Compare the Cost of Living:
The cost of living varies by location, and by using this cost of living calculator it will show you how far your salary will go in a specific region. Consider the amount you earn relative to the average cost of living. If you are moving because of a new job, make sure that any increase in the living cost (interactive map) is factored into your salary.
In many trendy states, where there is a net gain of individuals emigrating, it may be difficult to nail down a job due to an influx in the labor supply. It would be in your best interest to start the job search process prior to moving. Use websites like Monster.com, Indeed.com, and ziprecruiter.com to see which companies are hiring in your industry. If you decide to apply to a position, I would recommend using a local address (use a friend’s address who lives in the area that you plan on moving to) or leaving your address off of your resume. In your cover letter, explain that your are moving to that area and give a firm date.
The Daily Commute:
Some cities have great public transportation, but most will require that you own a car. You should research the cost difference of registering a car, and the average cost of gas (gasbuddy.com-interactive map) in the area. Another thing to consider, is the average cost of parking. In some areas, such as New York City, parking can add up and become a significant monthly expense. I grew up in Santa Monica (California), where many streets are restricted and allow permit parking only. Each house was allotted a certain number of parking permits, which you paid $35 per year with a maximum of 3 permits per household (at least that is what it was when I lived there, the number may have changed since then). Additionally, the city performs street cleaning every Tuesday and Thursday. If you accidentally forget to move your car, you will find a $65 ticket on your windshield. When I lived in LA, I received at least 4 tickets per year. I would also have to pay for metered and car lot parking. Even though parking tickets are not considered a standard cost to park your car, everyone I knew received at least 4 parking tickets per year, so I would argue that you should figure this fact into your car parking budget. When I moved to Las Vegas and then later the Reno/Tahoe area, I would find that almost all parking was completely free of charge! I would recommend visiting the city that you are interested in moving to and asking locals about what they think the pros and cons of the city are. Ask how long it takes to cross the entire city in normal traffic conditions versus during peak traffic hours. You can also use Google maps to see the red traffic areas at 5pm to get a sense of the flow of traffic.
Calculate State Taxes:
Taxes vary widely from state to state, and can have a significant impact on your paycheck. You should compare the different amounts each state charges in income taxes, property taxes, and sales tax. Taxes will greatly affect your net income, and it may surprise you which states are most tax friendly. I recommend creating a file where you can compile all of this information so that at the end of your research you can compare the net effect on your bottom line.
States with no State Income taxes:
- South Dakota
Create a Plan:
Make a list of all of the pros and cons of the place where you are currently living, and the place that you are considering moving to. Perform research on how much it will cost you to move, and create a budge. Obtain bids from at least three moving resource websites. There are a number of ways to phonically move your belongings and at various prices. I will list three methods in order of cheapest to most expensive.
1) You can rent a truck, pack it yourself, and drive. Example: U-Haul and Budget.
2) Have a company drop off a large moving container, you fill the container with the contents of your house, and then lock the container with your own lock (no one but you can open the container). Schedule the moving company to pick up the container and transports the container to your new home. Example: Pods
3) Have professional movers pack your belongings, drive to your new home, and move the boxes into their designated rooms. (check Google for local movers in your area)
The cheapest option is clearly going to be the option where you are going to have to perform the most work, and the more expensive option is going to require less work on your end. When you call to get a bid from the professional moving company, make sure to ask about whether they have insurance (should any of your belongings get damaged in the move). You should clearly label each box with its contents, and the room that it belongs to (kitchen, master bathroom, bedroom, etc.). This will help you greatly with the unpacking process.
Now that you have created a moving budget and a full analysis of where you live versus the place that you are considering moving to, take a moment to sit back and take it all in. In a prior blog, I talked about mental modeling. You should try to imagine what your life will be like in the new city. I am a big believer in using both your heart and brain when it comes to the decision making process. The budget and plan was the “logical” brain part of the decision making process. Now it is time to ask what your heart wants. Once you have let your heart weigh in on the situation, analyze all of the information together as a whole. The best way to make a decision is after you have gathered all of the pertinent information. Are you thinking about moving? If so, where to and why? Comment below.
Photo credit: state income taxes
Photo credit: property taxes by state
Photo credit: state sales taxes
Photo credit:Tax friendly states