Location, Location, Location

When you get a job offer (or when you decide to move to a city to find a job–which is pretty difficult), there are many things you want to think about:

Location.

Salary.

Benefits.

Now, location seems easy. Do I want to live in Chicago? YES. Done. I’m going.

But before you pack up, you need to think about some practical things in order to make moving to your dream city the awesome experience you imagine it will be.

Question: is it an expensive city?

Each place has its own “cost of living.” In some places, you can get a low cost of living with a high value. San Antonio, Texas is one of these places. You can get a huge house with a hot tub in the big backyard in a moderately nice neighborhood that has access and convenience to all the places you need to get or want to get, plus a great cultural life, for $400 a month in rent with other roommates. Then there’s New York, which has an extremely high cost of living (you can tell by how expensive stuff is in the grocery stores) but a relatively low value–tiny walk-up apartment with no washer/dryer hookups in a neighborhood you wouldn’t want to walk alone in at night for $600 a month with another roommate crammed in with you. But the culture and work is great!

Location will have a direct impact on your paycheck. Each state and city decides their state tax rate, in addition to the federal tax rate. Some states have a state income tax,a few don’t. One even has a tax credit (shout-out to Alaska! USA’s best kept secret). Look it up before you move. Some cities (the big, fancy ones that everyone seems to want to go to) have a higher city tax because it’s trying to support a big population–that means more schools, more public amenities, more roads needing work. And overcrowding–which also means housing shortage.

Let’s get real: your rent or mortgage should only be 25% of your annual income. If you’re getting paid $30,000, you really only have enough money to pay $7,500 a year in rent. Seems low, right? Well, $30,000 is low. In order for you to live comfortably and have money left to pay for stuff you need and want and put some away for the future, you should only be shelling out $625 a month in rent. Can’t find a decent place for that much on your own? Split rent with a roommate, significant other or your parents if you’re lucky. You really shouldn’t be paying more–you’ll only feel burdened in the long run.

In addition to housing, location will also have an effect on your transportation costs. Do you live in a neighborhood close to your work and all the things you need access to just by walking? Awesome. Do you live a little ways away? Well, that’s gas or bus or subway costs.  Do you live far away from family that you’ll be needing to visit for holidays or big events like weddings or funerals? Airfare isn’t cheap, last I heard. You have to plan for this in your budget.

You have to adjust your budget not only to what you need and want, but to what city you’ve chosen to house those needs and wants. It’s a plain fact– it costs more out of pocket to live in Chicago then it does to live in Minneapolis. Look it up–compare cities you’d consider living in.

Now, you may find yourself saying: there’s no way I can live in Dreamcity for under $900 a month and I don’t want a roommate. Plenty of people make it work. You’re exaggerating, Kaitlin (you dramatic floozy).

My response is: okay. You can do whatever you want. First, let me create a scenario for you:

Let’s pretend you moved to Austin. A great city for young adults–good culture, relatively cheap cost of living. If you’re spending $10,800 on rent alone and you’re only making $30,000 a year, that’s $19,200 you have left spend. Subtract taxes that are taken out before you even cash your check: $3500 (that’s lowballing and in Texas, where there’s no state income tax). So you have $7,300 in take home pay minus rent and taxes. Utilities? $2,000 maybe (lights, water, internet only). $5,300 left. Other bills (including student loan repayments, car payments, insurance payments)? $10,000. Oh, whoops. Not enough to pay for everything. Welllll, let’s just pretend you don’t have car payments or car insurance or student loans to pay for (hahaha).

So, we’ve got $5,300 left. Groceries?$2,400. $2,900 left of your annual income. That leaves $241 a month in discretionary income. Not bad, right? Well, don’t forget to pay your credit card bill: $100. And you haven’t even saved anything yet: 50! Plus, you want to have some fun sometimes, right:50? And buy new shoes when it gets cold:30. Have any pets? That’s easily an extra $25. But you’re out of money. Plus, I just assumed that you’d have health care through your parents or work, but if you don’t, that’s another $100 a month gone–but you’re out of money, so you can just go without, right? You’re young and healthy. Not to mention, this is only possible if you also don’t have a car or student loans.

A lot of us are familiar with this. It’s called, “living paycheck to paycheck.” And it’s okay, for now. But we want to move past that, because it’s a struggle that leaves you having to live without some pretty important things. You definitely don’t want to be 36 with one kid and another on the way and struggling to live paycheck to paycheck.

In the end, you have to decide what is best for you now and in the next five years. But hopefully you’ll do it wisely. Give yourself plenty of options. Do research. I know that moving to The Big City has been a dream of yours since you were 17, but did you know that Minneapolis had the second best arts funding per capita in the US in 2010? That it’s home to one of the best contemporary art galleries in the world? That a bigger number of recent graduates are moving here because it has a low cost of living but a high value? Who’s to say you can’t or shouldn’t go there just after graduating, getting some great experience and then moving up to The Big City after a year or two, when you can demand more pay and actually afford living out your dream?

It may seem unromantic to think this way. If you want to move to NYC and be a starving artist in of the greatest cities in the world–no one should stop you. Just plan out a budget for it so that the starving is figurative, not literal. Find out what your annual income is or will be, figure out what 25% of that is for your rent, deduct 10-15% of that for taxes (if you’re not making 60,000 a year), budget out your bare necessities. If you have enough for your fun stuff, if you’re also saving, and using credit wisely, and planning for retirement then you know you have a good budget. When you’ve got your budget figured out, then you know where you can move, because you’ll know what you can afford. You’ll be able to live in the most cost-effective neighborhood in a city you like and still be able to pay all your bills, feed yourself and your cats, and go out for a drink every now and then because you won’t be over-spending.

I hear Brooklyn is the new Manhattan, anyways.

 

 

PS- there won’t be a new post next Sunday, as I will be in Vancouver, BC, Canada, visiting my sweet boyfriend. Here’s a picture of it:

One of the most beautiful and most expensive cities in North America.