Author Topic: Savings needed to prompt moving?  (Read 718 times)

Displaced

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Savings needed to prompt moving?
« on: February 24, 2013, 10:37:18 pm »
I'm curious is there is an easy financial formula to decide on moving based on projected savings?  For example, costs of move recovered in ____ months, or monthly savings increase by ____ % just based on the move.  I know it's a tricky slope to use % sometimes as there's always room for improvement, but I'm wanting to see if there is a base formula.  Thanks.


ETA: after doing some research we would have about a $90-100,000 less expensive mortgage (330,000 value house now vs 200,000 value house), plus less taxes.  Salary would be potentially the same.  The move would potentially be to Florida with the bright futures scholarship (not a guarantee for college, of course, but potential for free tuition by children academically working hard).  It would be near my parents (kid's grandparents) so visiting them would be a really nice draw with many additional benefits (babysitting, kids growing up around them). 
Would a decrease in mortgage by this amount justify a big upheaval, minimal moving costs, PITA factor? 
Thanks for your financial insight!
« Last Edit: February 26, 2013, 09:11:39 am by Displaced »

marty998

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Re: Savings needed to prompt moving?
« Reply #1 on: February 24, 2013, 11:41:05 pm »
How many years do you base it on? What other costs/benefits do you add in....commute times, cost of living.

Does the new place need more maintenance...etc etc.

You can construct any formula you want to get any outcome you want.

Choosing where to live is one of the biggest decisions you will make. It should be based on qualitative factors, not just on costs. Without knowing what you want I can't really help much further.

Displaced

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Re: Savings needed to prompt moving?
« Reply #2 on: February 25, 2013, 03:56:39 am »
Good questions!  I am assuming a move with similar aspects of life we have currently but lower costs of living.  We would keep short commute, good schools, etc.  we would notice unless there is a significant increase in income or reduction in costs of living.  Any move we made would likely be semi long term (10+ years).  If we could downgrade costs by decreasing mortgage and taxes we may as well, but only if significant to justify expenses of moving.  I'm guessing there's probably no easy answer!

Displaced

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Re: Savings needed to prompt moving?
« Reply #3 on: February 26, 2013, 09:12:18 am »
ETA: after doing some research we would have about a $90-100,000 less expensive mortgage (330,000 value house now vs 200,000 value house), plus less taxes.  Salary would be potentially the same.  The move would potentially be to Florida with the bright futures scholarship (not a guarantee for college, of course, but potential for free tuition by children academically working hard).  It would be near my parents (kid's grandparents) so visiting them would be a really nice draw with many additional benefits (babysitting, kids growing up around them). 
Would a decrease in mortgage by this amount justify a big upheaval, minimal moving costs, PITA factor? 
Thanks for your financial insight!

mlipps

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Re: Savings needed to prompt moving?
« Reply #4 on: February 26, 2013, 09:33:22 am »
Bearing in mind here that I don't have kids, or own a home, my fiance and I recently made a move from DC to Chicago. On the financial side, what we did was make a two column table, with DC on one side and Chicago on the other. We created a line for every single item in the budget, and weighed out what the savings or increase would be and put the amount into the appropriate column (example, rent is $500 cheaper in Chi so we put $500 in the Chicago column, gas/electric we expected to go up about $25/month so we put $25 in the DC column). Then, we summed each column to see the true change we would have on a monthly basis. After that, we added up all the potential costs of moving (we were pretty close to accurate based on our final numbers). We calculated a break even point of 6 months, which for us was enough to push us to move.

Other things to consider: if you can get a job before moving, your move is tax deductible (without itemizing). If you itemize, you can also deduct the costs of travel for job searching. This can take a lot of the bite out of the costs. For us, the monthly savings was greater than what we calculated because by moving & freeing up so much cash, we were able to pay almost $1000 extra/month towards student loans.

Frankly, all other things being equal, if I could buy a house for $100k less and on top of that be closer to family, plus all the other benefits you mention, I would move in a heartbeat.

Displaced

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Re: Savings needed to prompt moving?
« Reply #5 on: February 26, 2013, 06:34:44 pm »
Thanks for the advice.  It is pretty helpful.  I've been doing more research on a move and I've found advertised jobs in our field for better pay than our current salaries!  I would not move without at least DH's main job established and we'd have to live with relatives for free while selling our current house.  At least we live in a stable house market not directly affected by many foreclosures, so a sale should be easy-ish.  And if we're buying from a high foreclosure market that should be even better.