What if We Move to Another State?
We are Mark and Lisa Johnson, both in our mid-thirties, living in Austin, TX, with our two children, Emma (6) and Ellie (3). Mark works full-time, and Lisa has been at home with the kids for the last few years. Lately, we’ve been wondering if moving to another state might be the right move for us. We’re drawn to the idea of more affordable living, better schools, or perhaps even being closer to family. But we also know that moving is a big financial decision, and we need to understand what it might mean for our future.
We have family on the East Coast and Mark has an opportunity to take a job in California, so we would like to model both scenarios, the cheaper and the more expensive cost of living. Here are the basics of our financial life, followed by a graph showing our Net Income and Expense Breakdown.
Current Financial Picture and Goals
Our financial situation is stable, but like any family, we need to think carefully before making a big move. Here’s where we are right now:
-Mortgage: $2,100 a month on a $330,000 home
-Daycare and After-school Care: $1,200 a month for both Emma and Ellie
-Car Payments: $600 a month for both cars
-Living Expenses: $2,500 a month, including groceries, utilities, insurance, and miscellaneous costs
-Savings: $30,000 in an emergency fund, covering roughly three months of living expenses
Our financial goals include:
-Building a college fund for Emma and Ellie, contributing $200 a month
-Saving for retirement by contributing 10% of Mark's salary to his 401(k)
-Taking one family vacation each year, costing around $4,000
-Potentially moving to another state for a better lifestyle or new opportunities
Baseline: Our Current Situation with Cashflow Breakdown Graph
What we saw:
Our baseline shows that while we are financially stable, any big changes—like moving—would need careful planning. The costs associated with relocating, including selling our current home, buying a new one, and potential changes in income, all play a significant role in whether this move would be a good idea for our family.
Scenario 1: Moving to a Lower Cost-of-Living State
We used StartingOutPlan to model what would happen if we moved to a state with a lower cost of living. We chose North Carolina, where housing costs are significantly lower, and Lisa's sister lives there with her family. We could be closer to family and and we could buy a similar home for around $250,000. We also looked at the job market and estimated Mark could find a comparable job with a similar salary.
What we saw:
The scenario showed that by moving to a lower-cost state, we could reduce our monthly mortgage to around $1,500, which would free up $600 per month for other expenses or savings. This would allow us to increase our contributions to Emma and Ellie’s college fund or boost our retirement savings. However, we also saw that the cost of moving—including realtor fees, moving expenses, and other one-time costs—would require us to dip into our emergency fund, leaving us with less of a cushion for unexpected events.
Scenario 2: Moving to a Higher Cost-of-Living State with Better Job Opportunities
Next, we modeled a move to a higher cost-of-living state, like California, where Mark could potentially earn a higher salary. In this scenario, we estimated that Mark’s salary could increase by 20%, but housing costs would also rise significantly, with a comparable home costing around $500,000. We also considered the cost of living increases in areas like daycare, utilities, and taxes.
What we saw:
While the higher salary would help cover some of the increased costs, our monthly expenses would still rise. The mortgage payment would increase to around $3,500 per month, and daycare costs would also be higher. Overall, we would have less discretionary income each month, and our ability to save for future goals would be impacted. We also recognized that the stress of higher expenses could make us more vulnerable if anything unexpected happened, like a job loss or medical emergency.
Making the Decision
Moving is a big decision, and it’s not just about the numbers. It’s about quality of life, opportunities for our kids, and what we want for our future. Using StartingOutPlan has given us a clearer picture of what a move might look like—both the benefits and the risks. For now, we’re leaning toward staying put and focusing on building up our emergency fund and saving more for the future. But we’re also excited to know that if the right opportunity comes along, we have the tools to model different scenarios and make an informed decision.
The Importance of Comprehensive Planning
This case study presents a simplified financial scenario. In a more detailed personal financial scenario, we would incorporate specific expenses, financial goals, and the details of all debts and assets to ensure a more precise and tailored financial plan.
The Role of Professional Advice
While we’re confident in the numbers we’ve run, we recognize the importance of consulting with a financial advisor. StartingOutPlan has given us a solid understanding of our financial situation, but having a professional advisor validate our plan will give us peace of mind and ensure we haven’t overlooked any critical details.
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