A Real-Life Example of How Moving Can Save You a Ton of Money

I've written before about how moving from a high cost-of-living city to a low cost-of-living city can save you a bundle of money. Despite the fact that many of my readers hate this advice, I think it's good, sound and something to be reasonably considered. That doesn't mean you have to do it, but it certainly is worth thinking about as the financial impact of living in one city versus another is huge.

Here's a case in point. This writer works at Kiplinger's and details how she and her husband moved cross country, leaving family behind (one of the key complaints people have about moving), to get ahead financially. She starts by stating the problem people face when living in expensive cities:

If you're struggling financially, your location may be the culprit. Start your independent life in such metropolitan hotspots as Boston, New York, San Francisco or Seattle and you could live like a pauper, struggling to find the money to pay down debt, begin investing, buy a home or start a family. The cost of living in San Francisco, for example, is 83% higher than the national average, according to Sperling's Best Places. New York is 65% above the average. In other words, the hype and romance surrounding these cities may not be worth the cost.

But it may be worth the cost. All I'm saying is that was all need to recognize that there is a much higher cost for living in certain cities than in others.

She goes on to note that you don't have to live in the middle of nowhere. In fact, she moved to Baltimore -- not exactly a wasteland -- and was still able to decrease her cost of living. Furthermore, she notes that you don't have to move away forever. How about just moving for 3-5 years, getting stabilized financially, then moving back if you want to? Doesn't sound like a bad idea to me.

Next, the writer tackles another one of the key objections to moving -- that people can earn more money in certain (usually more expensive) cities. Her thoughts on this:

Sure, with a higher cost of living comes a higher salary. But your extra pay may hardly keep pace with your expenses. For example, an entry-level accountant in San Francisco makes about $47,886 per year, according to the experts at Salary.com. In Austin, Texas, however, he'd make about $37,800 to start. That's 21% less than his West Coast counterpart. However, housing prices in Austin are about 79% lower than in San Fran, and the overall cost of living there is nearly half. So even on $10,000 less, his living costs are dramatically lower, enabling him to live much more comfortably.

Exactly. This is exactly the point I made in Move, Save Money, Become a Multiple Millionaire -- All in One Step. Yes, you may earn more in San Francisco, but the cost-of-living there eats up any extra salary you get and much, much more.

She ends with this:

It boils down to this: You can choose to scrape by in certain metropolitan areas, or you can build a financial foundation in an affordable starter city. If you can help it, don't let your address stand between you and your goals.

Just food for thought...

Comments

[Lynnae @ Being Frugal]

My husband and I have often thought about moving away from the expensive West Coast. Our parents are all broke and in poor health, though, so if we moved, I know we'd regret that our kids didn't have the opportunity to get to know their grandparents better.

I agree that moving to a less expensive place is an option worth considering. It's not the right one for us now, but perhaps in the future it will be something we consider again.

[Matt]

This is something I'm strongly considering.

My employer has two main locations, one outside of Washington, DC and the other outside of Boston. As a result, we end up working with a lot of our colleagues by phone, email, and videoconference even if we report to an office every day. So a lot of people end up becoming tele-workers, since it only makes a marginal difference in how people work together.

If I became a tele-worker, I could move to a much cheaper city (ideas include Columbus, OH and Pittsburgh, PA) and live like a king on my continuing DC salary.

[Lord]

The critical questions would have to be why you want to live there and where do you want to live. If it is for the money, it is probably a mistake. If it is because it is where you want to be and you are willing to put up with more, or less, as the case may be, then it is alright. You only live once.

[mysticaltyger]

This was a good article...The only thing I disagree with is the idea that you'll be able to pick up and move easily in 3 to 5 years. As time goes on, it get's harder to keep moving around.

That said, to consider relocating out of the trendier and more expensive places is definitely something to think about.

[Matt]

In a lot of places, it's possible to have the best of both worlds. I used to live in Chicago. Now I live just across the border in Indiana, in a $310,000 house that three miles away would cost almost a million dollars. My train ride into the city (for work and entertainment) takes a little longer and costs a little more, but EVERYTHING is cheaper in Indiana, especially the taxes. And since I'm only a few miles outside the city, I don't have to give up either the cultural resources or the good job market.