Are you trying to cut costs? Did you have a sudden drop in income? Are you a college student trying to avoid student loans?
One of the most common suggestions personal finance authors make is to move to a cheaper location to save costs, but does it really save that much? How long do you have to be in the new location to reap the rewards of moving?
My husband and I currently live in a spacious, 1,000 sq. foot, two bedroom apartment. We live in an urban area and find our $1,000 a month rent competitive with the area. We have not had a rent increase in two years, and most two bedroom apartments cost more than ours does. I will use our current situation as the example for the purpose of this exercise.
If we were willing to live in an area with a (much) higher crime rate, we could get a two bedroom, 800 sq. foot apartment for $769 a month, which would save us $231 a month in rent. Just like our current apartment, the cheaper apartment’s monthly rent includes heat.
If we could move all of our belongings ourselves and just rent a truck, it would cost $87.95 to rent the truck for the day. However, because we don’t have friends in the area who would be willing to help us move, we would need to hire movers to help us get all of our furniture out of our 2nd story apartment. Did I mention the staircase is a narrow, winding staircase? Movers for 3 hours are $222.50. Our total moving costs are $310.45.
At our current apartment, we paid a security deposit of $1,400. I am assuming that we will not get this back as we have been in this apartment for 7 years and have a two year old who furtively colors on walls when no one notices because she thinks the apartment is her canvas. Three kids in general are hard on an apartment.
The new apartment requires first and last months’ rent up front, which would equal $1538. True, we would get $769 of it back immediately for the first month’s rent, but we would be out the other $769 until the month we move out of the apartment. Therefore, these expenses are $1,400 forfeited security deposit from our old apartment and $769 in last month’s rent for the new apartment for a total of $2,169.
Installing cable and Internet at the new location will cost us $50.
The Final Calculations
All told, it will cost us $2529.45 to move. We would be saving $231 in rent. At that rate, it will take us 11 months to recoup our expenses from moving to start to see savings. However, because the area is much more crime ridden, we would be highly unlikely to move there. We would be more likely to move to a smaller apartment nearer to our current location that would run about $900 a month. If that were the case, it would take us over two years to recoup our expenses.
The calculations in this post are highly subjective as it applies to our current situation. I do agree that moving to a different area of the country with a much lower cost of living would perhaps yield a much quicker savings. However, if you are a college student or have a young family and are considering moving to save costs, make sure you calculate all of the costs involved before taking the arduous leap of moving to a cheaper apartment.