I live in the suburbs of Chicago, and recently, after 11 years in the same apartment building, my husband and I re-entered the renter’s market.
When we first began renting at our last apartment, the two bedroom apartment was a bit too big for us. Three kids later, we were bursting at the seams.
However, we were shocked to see that 3 bedroom apartments in our location rent for $1,300 to $1,800 a month. Houses can rent for as much as $2,500 to $2,800 a month.
Houses Are Often Out of Reach
Over the years, people have urged us to look into buying a house, but even in the current buyers’ market, homes average $300,000 in our area, and the property taxes typically run $12,000 to $15,000 a year. With those numbers, we still consider renting to be our best bet, especially since we don’t plan to stay in the area permanently.
We ended up renting a moderately priced 3 bedroom apartment for $1,400 a month.
It definitely wasn’t the nicest apartment on the market; we couldn’t afford those!
Out of curiosity I looked at the price of 3 bedroom apartments in my hometown, where we plan to move after my husband finishes his post-doc. My hometown is a mid-sized city about 2 to 3 hours away from two major metropolitan areas. I was shocked to see that 3 bedroom houses rented for $900 to $1,100 a month.
Salaries Do Not Always Compensate for the Cost of Living
When I first moved to the Chicago area immediately after graduate school, everyone told me that the cost of living was expensive, but salaries more than made up for it.
I have not found that to be true.
I began my first job here in 2000 at $31,500 a year. I had trouble affording even a reasonable one bedroom garden apartment for $650 a month. Now, my husband is beginning his post-doc at $35,600. I freelance and bring home about $1,500 a month. Between the two of us, we are able to make ends meet, but there is rarely any extra at the end of the month.
Moving Can Give You an Instant Raise
If you are struggling financially, it may be worthwhile to look at your location and the cost of living. Using a cost of living calculator, I see that in our case, if we move to my hometown, we will essentially get a 21% raise.
In other words, it costs 21% less to live there than our current location.
While we average about $55,000 a year in income, we would only need to make $42,943 to maintain the same standard of living. When my husband finishes his post-doc and we move, we will immediately get a raise. Best of all, my freelance job is portable. I can do the work where ever we move, and the pay will remain constant, so I will experience my own raise because the money will go further.
In today’s tough economic times, it may be worth considering moving out of your current town if it has a high cost of living and moving somewhere with a lower cost of living. You may experience a pay reduction, but often, even with a pay deduction, the new locale may be more affordable. When we visit my hometown, I notice differences not only in housing costs, property taxes and other big ticket items, but also in groceries and gas, which can add up over the course of a year.
However, make sure you are confident with the move. I have known of two people who moved to lower cost of living areas but then decided they would like to move back to their old, higher cost of living location. The trouble was that they were no longer able to afford to move back to the higher cost of living area and maintain the lifestyle they enjoyed in the lower cost of living area.
It is nice to be outside of a big city and benefit from all of the amenities a big city offers such as entertainment, education, and culture, but ask yourself if you are truly benefitting from these things. In our case, we have three children who are in bed at 7 p.m. A baby-sitter in this area runs $15 to $20 an hour, so we don’t take advantage of all of the big city offerings.
While it will be a mental adjustment moving back to a smaller area with a lower cost of living, over the long term, when we look at our lifelong financial outlook, it will be well worth it.