3 Reasons to Rethink That Big Move
You're looking for a change of scenery, and you want to move. Your search for a new city or state to call home might include assessing employment opportunities, area schools, and maybe even the quality of neighborhood restaurants.
However, don't forget to dig into the costs of living. Otherwise, you might overlook costs that will make your potential landing spot either cheaper or more expensive than where you are now. Let's explore some of them.
One would think your car might be the least of your factors in planning a move -- beyond making sure there's enough room in your vehicle to get you and your personal belongings there -- but it's more complicated than that.
Different ZIP codes result in different rates to protect your vehicle, and some states have far more stringent coverage requirements. CarInsurance.com, an independent quote-comparison website, recently introduced a pricing tool to compare rates. Even if I stay within Florida, my auto insurance rate would drop 31% if I move from Miami to Celebration, Fla. In a more extreme example, the average premium of $702 for a car in Bullhead City, Ariz., would skyrocket 555% in a move to Detroit with its $4,599 rate.
It's probably no surprise to see that providing coverage for your home varies from place to place. If you live on a coastal flood zone or happen to check into Tornado Alley it's easy to see why insurers would want you to pay more for the same coverage on your riskier homestead.
I mentioned Miami and Celebration earlier. I have places in both. I pay a lot more in Miami for less coverage. It's not a surprise. Hurricanes can do some nasty damage down here in south Florida, and pricing began to reflect that after the devastating Hurricane Andrew in 1992. It's a different story in central Florida where hurricanes are less likely and historically less severe.
Federal tax rates will be the same wherever you go, but other tax rates vary dramatically. Weigh state income taxes, state and local sales taxes, property taxes, and even state estate taxes that will fluctuate depending on where you land.
Most states charge an income tax. Seven states do not, but this doesn't mean that you should limit your moves to Florida, Texas, Washington, South Dakota, Wyoming, Nevada, or Alaska. Most states charge reasonable state sales taxes in the mid-single digits, but California is at the high end of the spectrum with a 13.3% top marginal rate.
State and local sales taxes are also a part of everyday purchases through most of the country. Just five states -- Alaska, Delaware, Montana, New Hampshire, and Oregon -- do not collect a state sales and use tax. Once again, California is at the high end. The local portion of the sales tax is lower, and that varies by jurisdiction. Keep that in mind if you're torn between two neighboring cities.
Property and estate taxes also vary widely by state. In other words, don't just compare the prices of houses if you're planning to buy. Even if you plan on renting it's something to keep in mind because landlords will naturally bake that into the lease rates.
Hopefully this doesn't dissuade you from moving altogether. Sometimes we don't have a choice as to where we move as work or family dictate the situation. Picking a new place to live is also largely an emotional decision, and high taxes or insurance rates might not deter your dream.
It goes without saying that there isn't a perfect place -- or else we would all be there. Some states that don't have one particular tax can hit you with something else. However, at the end of the day, it's important to weigh all of the related moving costs. Contracting the moving company could be the least of your worries.
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