Whether you?re beginning your post-graduation career, received a cross-country job offer you can?t refuse, or are longing for a change of scenery, moving is an exciting, stressful, and budget-straining time.
This is especially true if your new locale is considerably more expensive than your current one.
Here are five steps you must take to preserve your finances before packing up for an expensive city.
Pull your credit report.
Home inventory in popular markets comes at a premium and can take time (and in some cases, a realtor) to find.
Before you start home or apartment shopping, financial advisor Xavier Epps of XNE Financial Advising, LLC says you must know your credit score?even if you?ve saved more than enough funds to move.
If your credit score isn?t strong (700 or above is generally considered a healthy score), this could hinder your ability to meet a landlord?s credit requirements for new tenants.
If you?ve got collection activity on your credit report, Epps suggests trying to settle and close unresolved issues at least two months in advance of completing a landlord?s credit application or applying for a home loan.
?In doing so, your credit score will feel some relief and move upward slightly, putting you in a better position to find a place to live.?
Know before you negotiate.
The cost of living in your new city may be double that of your current home?but that doesn?t mean your salary will get the same boost.
Epps suggests researching median incomes for your industry in your city of choice to establish a benchmark for salary norms before you discuss the topic with a potential employer.
If you?re moving before you find a job, he says to save at least five to ten percent of that median income before you move.
Consider your priorities.
?Expensive? is a relative term based on your experience.
For example, if you?re moving from Manhattan to San Francisco you won?t feel the same financial impact as a person moving from Atlanta will.
In fact, despite the fact that San Francisco is ranked as the fourth most expensive city in the country according to an index published by the Council for Community and Economic Research (C2ER), Manhattan-ites may actually save money making this move.
The index indicates that Manhattan is the priciest city in the country. Research cost of living calculators at reputable sites (Bankrate.com has a good one)?but also consider what those costs are based on, and which of them you can control.
For example, though real estate in Manhattan is notoriously expensive, the C2ER index shows that transportation and health care actually costs more in San Francisco.
While you must be realistic about what you can afford for basic needs, cost alone shouldn?t deter you from pursuing the life you want?provided you?re willing to make some concessions to make your residential dreams a reality.
If owning a home is a ?must? for example, moving to a city where you?ll always be priced out of the market doesn?t make financial sense.
But, if your primary goal is simply to live near a beach, and you?re willing to live with a roommate, use public transportation, and cut back on unnecessary spending, the move may not be out of reach.
Weigh the value of alternatives.
Bryan Robertson, a real estate broker of Sereno Group Real Estate who works in Silicon Valley, advises considering neighboring areas that are close the prime area you?d like to live in, but may cost a bit less.
He also suggests veering away from living in top school markets, explaining that homes in such neighborhoods will always cost more than comparable ones in nice neighborhoods with less celebrated school systems.
Ultimately, sending your children to private school may actually cost less than the price differential.
He also suggests considering the cost of commute time, and fuel, before committing to one area.
You may get more house for your buck when you live further from a metropolitan area, for example, but if that means doubling your commute to work, it may not be worth the overall cost savings.
Most importantly, keep an open mind and be prepared to make some adjustments. ?Focus on what your budget will allow in a new location, versus comparing what you had in your less expensive town,? says Robertson.
Save your receipts.
Remember that moving expenses are tax deductible, if you meet Internal Revenue Service criteria.
If you are moving to a new city for a job and paying for it out of your own pocket, you can deduct ?reasonable moving expenses? (not meals) as an adjustment to your income when you file yearly taxes.
Keep in mind that you move at least 50 miles away from your old home and old job location, and work full-time for at least 39 weeks during the first 12 months immediately following the move to qualify for the deduction.
Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of?Wellness On Less, she also writes on small business, consumer interest, wellness, career and?personal finance topics.
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Source: http://www.mint.com/blog/housing/moving-up-5-ways-to-prepare-for-moving-to-an-expensive-city-092012/
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