7 Questions to Ask Before Moving Out of State
Moving to a new state for personal or professional reasons is always an exciting time. While you may be looking forward to living in a new city, a new job, or simply a new adventure, changing cities and states will have a major impact on your financial life. To ensure you are properly prepared financially for your move into a new state, there are seven money-related questions that you should ask before making the move.
Will My Taxes Change?
One of the biggest ways that moving to a new state can impact your finances is by changes in state and local taxes. State and local taxes can range anywhere from 0% in some states to well over 6% in other areas of the country. On top of the basic state tax, you will also need to factor in sales tax, property taxes, and ancillary tax expenses that can easily eat into your paycheck. It is important that you use paycheck estimator tools that can be found online for free to see how your net paycheck will compare when you switch to a new state in the country.
Is the City More Expensive?
Another major factor that can influence your finances when you move is the overall cost of living. Cost of living, especially when factoring in housing costs, varies considerably from one area of the country to the next. In general, moving to a city on the east or west coast will be far more expensive than living in a city in the Midwest. In fact, some cities have median home prices that are several multiples of the national average. While these cities can be very alluring to move to, it is important that you understand what type of housing you will be able to afford and to make sure it fits your lifestyle.
Do I Need a New Bank or Investment Advisor?
When you are moving into a new city you also need to consider your financial assistance. The average person takes a lot of financial assistance for granted. This can include having access to your bank or local investment advisor. While a lot of these services can be completed online, over the phone, or through email, it is still nice and convenient to have an actual office or branch to attend when you are in need of immediate help. If your bank or advisor does not have a local presence in your new state, you will want to make sure you find a new one locally before you move.
How Will This Impact My Commute and Auto Costs?
Another part of planning financially for your move to the new state will include factoring in your auto expenses. If you are used to having a very short commute, the low amount of mileage you put on your car and reduced gas expenses is something that can easily be taken for granted. It is important to carefully consider what your new commute time will be, what your gasoline and maintenance expenses will be, and if you will have higher insurance rates or parking expenses.
While Higher Education Costs Be More Significant?
While you may be out of school already and are working full time, it is also important to consider what higher education costs will be. Going to college is very expensive today and if you have children you will want to be able to help them as much as possible. One of the best ways to do this is to make sure you move to a state that has affordable in-state tuition and higher education options. If you are moving to a state that does not have as much to offer in terms of affordable higher education, you will need to make changes to your 529 college savings plans accordingly.
Will Capital Gains be Affected?
Another factor to consider when you are moving to a new state is whether it will have any impact on your capital gains taxes. Whenever you sell a stock or other asset you could be charged with capital gains. While this is a fixed expense at the federal income tax level, there are states that do provide tax benefits to those that have to pay capital gains. For example, South Carolina will allow you to deduct a portion of your capital gains tax and Nevada will not charge income tax on dividends.
What is the Cost of Moving?
Finally, you also need to consider the cost of simply moving from one home to the next. The actual cost of moving out and into a new home across the country is often very underestimated. If you are planning on moving a whole home’s worth of personal goods, it can easily cost more than $5,000. Fortunately, you can reduce these costs by getting rid of older personal items and furniture or you can get a title loan estimate to see the value of your car. The ultimate cost that you will be charged will be based on the weight of your items and the space they take up. This can allow you to make strategic decisions about what you will want to bring with you to your new home.