15 Cities where you can get a well-paid finance job…and cheap housing

15 Cities where you can get a well-paid finance job…and cheap housing

Kelly Grant contacted me from CNBC explaining that she was doing an article on a new joint study by LinkedIn and Zillow.com. The study found that 15 cities are very attractive to those who work in the finance industry, whereby they can earn potentially the same amount of annual income but save quite a bit on housing costs.

Kelly asked me my thoughts on this study as a certified financial planner. She wanted to know if I have ever seen clients actually relocate to a different city purely because they could maintain their income level while lowering their housing costs. I told her “Yes”, but typically a relocation generally occurs when someone works for a larger company and is transferring to a new branch, or to start a new job.

In most cases, this is not a simple decision. It is a multi-dimensional decision whereby a transferee needs to consider more than just a singular issue such as saving on housing costs. One would also need to consider an array of additional financial issues, such as the impact on a transferee’s tax picture or healthcare, as well as non-financial issues. Those intangibles could include adjusting to a new culture or environment, new friends, schools for kids, getting comfortable with a new religious community, etc.

Possible Advantages to Relocation: There are many possible benefits that come with relocating to a less expensive housing community. Deciding what to do with the newly freed-up income is on top of any such list. There are many choices, from paying down the new mortgage, to putting children in private schools, saving those funds for future college costs, catching up on a previously underfunded responsibility, or simply increasing one’s savings toward a more secure retirement. One may even decide to treat oneself and go back to school to earn a new degree with added earning potential.

A different type of advantage is an opportunity to potentially reinvent oneself: to live in a new town, enjoy better weather, meet new people, experience a more robust social life, and try out many new activities and adventures by joining new clubs and organizations.

Possible Disadvantages to Relocation: As important as it is to evaluate the advantages, all transferees should consider the possible negatives of leaving a place that someone has called home for all or most of their life.

Many non-financial issues must be considered, such as losing lifelong relationships with those special people that mean the most to you; those with whom you grew up and shared so many life experiences, such as the birth of a child or the break-up of a marriage. These are the people with whom you are not afraid to show your vulnerability. They are the ones with whom you have cried, laughed, and debated various views on life’s most interesting topics. If your religious community has also been an important and integral part of your life, that too will be hard to leave behind, and possibly harder to re-create.

On the practical side, any savings benefit you were expecting with this move might be offset by the added expense of traveling to and from your former location to visit old friends, family, children, and grandchildren. These extra costs can add up very quickly.

Another significant disadvantage to consider is that the quality of healthcare and services in the new location may be inadequate for you. I have had clients disappointedly find that after moving they now need to either drive long distances for care, or simply do not have the same amount of healthcare options as in their previous location.

If the disadvantages and regrets finally outweigh the advantages, moving a second time in the new location, or returning back home will mean additional unplanned expense and stress.

Words of caution: In speaking to Kelli Grant, I told her that even if someone decided to relocate for the potential cost savings, my best advice is “always rent first!” This allows a new resident time to evaluate the new city, the various neighborhoods, traffic patterns and more.

Relocating is not as simple as determining where you will work and picking a nearby location to live. New transferees will need to evaluate where they will spend the balance of their non-working hours.

Where will you go to enjoy dinner, entertainment, and other cultural events? Where are the best schools for your children? Where will you most likely go for religious services? Delaying an initial home purchase allows the transferee to ultimately buy in the area that they will feel the most comfortable.

Renting also provides a safety net. It allows the transferee to try out a new area first without the obligation of having to buy a permanent residence. This leaves the door open to an easier second relocation if necessary.

Speaking as a Vermillion Certified Financial Planner®, when considering any relocation, take advantage of our expertise to help you analyze all the important financial aspects of your move.

We’ll look at your tax considerations. How will the new state or municipal income taxes differ from your current ones? Will the new state be taxing distributions from your IRAs? Are real estate and other taxes higher or lower than your original location?

What about the cost of registering a vehicle? Some states/cities charge thousands of dollars to register a new vehicle for the first time. What about insurance costs? Will your auto, homeowners, or healthcare coverage be more expensive? Will traffic patterns affect your auto insurance? Will hurricanes, earthquakes, and mud slides affect your homeowner coverage? Will the lack of doctors or hospitals effect the cost of your health insurance?

There are many other mini financial factors that a transferee often forgets to consider. For example, if you move out of state, what are the new estate planning laws? Will you need to update all your previous estate planning documents?

It is always recommended that you discuss your plans with your Vermillion Certified Financial Planner® before making such a major financial and life changing decision. This will help you avoid such regrets as “wishing you were initially better prepared”.

Consulting your Advisor will help you to make a better informed decision – fact based, free of emotion, and confident.

Wishing you financial prosperity,
Mark

 
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