Thinking of relocating to another state? My husband and I have lived all over the country in our 21 years together and we aren’t done yet.
Each move to a new state (we are on our fourth!) or city (six and counting!) has taught us something new about relocation and the things that we need to consider when undertaking future moves. We are hoping that our next move will be our final one but you never know and we get itchy feet really easy! 🙂
With all these different relocations under our belts we have found there are some major things we have learned to look for before deciding if a relocation will make sense for us financially.
Since all of our relocations thus far have been due to job opportunities, we carefully examined if what is being gained financially by the new job opportunity is going to be washed away by cost of living expenses. It is amazing how much some of life’s major expenses can vary from state to state and in some cases in different areas of the same state!
Here are the six budgetary items we always take into consideration before deciding if a relocation makes sense to us:
#1 - Grocery Costs
Grocery Costs – Some places in the country are just more expensive for groceries. This is unfortunately the way it is.
I have found though that over the last 20+ years I have been able to keep our grocery expenses pretty consistent even as we lived to four different states.
That’s because something was always cheaper where we lived. When we were in the Phoenix area, I always got great prices on produce year round because so much of it is grown right there in Arizona and California.
In Michigan, milk was really cheap as was certain produce like apples, corn, etc at certain times of the year.
I was thrown for a loop on our most recent move by something I have never had to consider before. In Missouri, we are being taxed on food purchases. We have never lived anywhere where groceries were taxed before so I’m having to account for this by tweaking our grocery budget.
It is adding almost 6% to our grocery budget every month. In Arizona, one of the counties we lived on the border of had a 2% tax on groceries so I made sure I always made grocery purchases in the county that didn’t have the tax. These are things you may want to research when choosing to relocate to a new area.
Paying this sales tax is adding about $7 to our grocery expenses every week. That adds up to over $350 a year which I will have to account for in our budget somewhere!
#2 - Car Insurance Rates
Car Insurance Rates – It’s pretty common knowledge that car insurance rates can vary greatly from state to state due to different laws, rules, and regulations. But we’ve also seen significant differences even moving from one location to another within the same metropolitan area.
When living in the Metro Detroit area we moved from a city that was more rural and on the outskirts of the area to a city that brought us into a more populated area which was also much closer to the city of Detroit. We were shocked when Progressive (our long time car insurance provider at the time) wanted to more than double our rates!
Luckily my husband was able to call around and find another provider that offered us close to what we had been paying if we bundled our home insurance with the policy.
My car insurance rates also went down by hundreds of dollars when at 21, I moved from the Metro Detroit area to Las Vegas. This was so shocking to me at the time because Las Vegas is a 24 hour drinking town but Michigan has laws in place such as No Fault and PIP that make it one of the most expensive state’s in the country to buy car insurance in.
So be sure to consider car insurance rates when moving to a new state.
It can vary by hundreds and sometimes thousands a year depending on your state and city. I recommend calling your provider and seeing if you can get a quote before you move to give you idea of what it will be should you move.
#3 - Income Taxes
Income Taxes – Besides paying state and federal income taxes, some counties and cities also like to take a cut of your paycheck too.
This one was a new one to us when we recently moved to the Kansas City area. We were surprised to find out when my husband got his first paycheck that the city had claimed what amounted to almost 1% of it for themselves.
Fortunately we are in a short term apartment lease while we look for a home. This did lead us to chose a home in a suburb which doesn’t have this tax. It will save us hundreds and hundreds of dollars a year.
Certain states don’t have state income taxes which is nice. We didn’t pay any when we lived in Nevada. As of the writing of this article, it looks like there are currently 9 states that don’t have state income tax. They are:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
#4 - Housing Costs
Cost of a home – The cost of a home can vary greatly from one area to another. It has also been a major deciding factor for us many times when we have chosen to relocate.
We left Las Vegas in 2005 right after housing prices went through the roof and it became almost impossible for us to afford a mortgage there. At the time, our oldest was 2 years old and I was looking to become a stay at home mom. There was no way that we were going to pull that off on one income at the time if we had to purchase a house for between $250,000 and $300,000.
So my husband sought out career opportunities in the Phoenix area which hadn’t yet experienced the same real estate boom. We were able to buy a starter home for $130,000 before the market went completely nuts there (for the first time…I see they are currently experiencing another real estate boom!).
In our most recent relocation, we knew that our mortgage was going to cost us more. We had bought our latest house in Michigan while the market was still low and the Kansas City area where my husband’s job was relocating us to is booming but we weighed our options and decided the increase in salary he was going to receive justified the $400 or so more a month we would have to pay for housing in our new location.
#5 - Property Taxes
Property Taxes – Some cities can have higher property taxes than others. Take this into consideration when considering whether your relocation makes sense for you financially.
In our most recent move, we found that property taxes in the city of Liberty where we ultimately ended up purchasing a home were $600 to $1000 cheaper a year than they were on a comparably priced and sized home in the city of Kansas City were we were renting an apartment. This lead us to focus our home search more heavily in Liberty.
We have had relocations we considered in the past that we ended up changing our minds about when we did some online house hunting and saw how expensive the property taxes were in that area.
For instance, years ago we considered leaving Phoenix and relocating to Austin, Texas but after some research into whether it was a plausible option for us we decided it wasn’t after discovering property taxes cost $5000 or more a year.
Since at the time we were paying just over $700 a year in property taxes on our home in the Phoenix area, that was complete sticker shock!
#6 - Home Owner's Insurance
Home Owner’s Insurance – This is another expense that can vary greatly based on your location. If you are moving to an area with a higher rate of tornadoes, hurricanes, or other natural disasters, you can expect to pay higher insurance rates.
This happened to us on our most recent move. Moving from Michigan to Kansas City, Missouri which is very close to tornado alley caused our home owner’s insurance to go up 33% on a very similar sized home.
This was even after my husband called several insurance providers and had them tweak the policy as much as possible to get us a rate we were comfortable with.
So be aware that this is yet another expense that could change by a great deal when you relocate to another state.
These are the major expenses you will want to consider when deciding to relocate to new state. Don’t forget to also consider moving expenses! Those can also add up quickly. We’ve always saved on this by doing it by ourselves.
Looking at all these factors can help you get a good idea of whether a relocation to a new state is going to be worth it or not for you financially!
