Researchers have found that moving is one of the top five life stressors along with the death of a loved one, divorce, major illness, and job loss. Putting yourself in a better financial position before making a major move can help reduce your stress—to some degree. Here are seven money moves you may want to consider before making a physical move to a new city.
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Save as much as possible
There are plenty of unexpected costs that can sneak up on you when planning a move. Experts recommend having an emergency fund of three-to-six months’ worth of living expenses, but obviously more is better.
Get a sense of the cost of living
Figuring out how much you’ll need to have saved will depend on the cost of living in your new city. Is it more or less expensive than your current hometown? Consider potential differences in income, state, local, and even sales tax.
For example, states like Florida and Washington have no income tax. If you’re moving from Miami or Seattle to New York, that high income tax could throw you for a loop if you’re not prepared. Sure, your pre-tax salary may be higher, but with the income tax blow and higher cost of living, it may end up being a wash.
Pay down debt
Paying down your debt is an important move to make at any point in your financial journey, but prioritizing repaying debt before making a move can help you breathe a little easier when you arrive at your new destination.
If you’re struggling to pay down debt, see if a debt consolidation loan is right for you. Debt consolidation loan rates tend to be lower than high-interest debt like credit cards and medical bills, which can help you save money in the long run.
Create a separate “moving” budget
You may already have an everyday budget, and that will likely change based on your new cost of living. But when you’re moving, it’s key to separate those costs from other spending.
Moving expenses can range from lower-end supplies like boxes to your eventual monthly rent or mortgage payment. Make sure you factor everything in, including things like a security deposit or closing fees.
Your moving budget will be drastically different if you’re making a relatively short move or long-distance move. You’ll spend quite a bit more if you hire professional movers compared with a DIY move. The national average cost to hire movers is just over $1,300. But even a DIY move can cost you well over $1,000 if you’re moving across the country.
Boost your credit score
When applying for a mortgage or renting an apartment, your credit score will come into play. The higher your score is, the better off you’ll be.
To improve your credit scores, make on-time payments, keep your credit utilization ratio as low as possible (ideally less than 30%), and avoid applying for new credit until you need to apply for a mortgage, if applicable.
Sell off items you don’t need
Not only will this help you add to your savings, but also the more you get rid of, the less you actually have to move. Moving companies typically quote you based on how much stuff you’re transporting, in addition to distance and other factors. And if it’s a DIY move, you may be able to downgrade truck sizes or go from a truck to a cargo van.
In the digital age, there are lots of ways to sell home items, like Facebook Marketplace, AptDeco, Craigslist, and eBay.
If you’re not concerned about making money but just want to get rid of things, you can donate to The Salvation Army or Habitat for Humanity ReStore, or use tools like Freecycle.