Unless we have a major job change, there are several times in our lives where we ask ourselves if it is time to move from our current home. Change isn't easy. Moving can be even harder. New friends, new traffic pattern to work, and time to learn a new landscape. However, moving may be a defensive or offensive play in your family finances depending on your overall situation and the national marketplace for real estate. Here are four smart money moves scenarios that may give you some insight if it is the right time for your family to move.
- The Cost Of Private School Is Killing You- Let's look straight up at the math on this. If you pay for private elementary, middle, and high school in any major city, let's assume the cost is $25,000 per year. If you are in a neighborhood where the public schools won't suffice, you may be forced to send you children to private school not by your own design. If you have two kids in school, this could be $50,000 a year of your NET income. That might represent $80,000 a year of gross income. If schooling is soaking up 20% or more of your gross income, it may be a definite warning sign to move to an area where you are satisfied with the public schools. Public school will be a part of your overall real estate tax cost. Depending on your county and city taxes, you can easily determine which areas would give you a better bang for your buck.
- The Cost Of Mortgage And Upkeep has now crossed 30% of your income- I have been a big believer for many years that you should keep your overall mortgage payment to about 25% of your net income. Often, families forget the cost of maintenance, upkeep, and improvements with the cost of owning a home. Owning a home isn't like owning a car. If the cost of your home plus ongoing upkeep starts to exceed 30% of your income, it may be time to consider moving to an area that is more affordable or a home in your area that costs less. Put your ego aside and make a quality decision that will improve your bottom line. One misstep with your job or a gap in income could devastate your family finances.
- Income and Cash Flow Meets Opportunity- It doesn't matter what area you live in throughout the United States, there are always neighborhoods that are "in transition". If you have a sharp eye, you can keep your spidey senses up on what areas of the city or suburbs will become powerhouses over the next five to ten years. If you are willing to sacrifice through the transition within those areas, you could move to a location that will lead to a lot of profit on what you buy with your money.
- Taxes- There are all kinds of taxes, but two that I am referring to with this smart money move are state income taxes and real estate/city taxes. There are a good handful of states that have no state income tax including Florida, Tennessee, and Texas in the southeast United States. If your current state tax is 6%, for example, and you make $250,000 a year this could represent a $15,000 tax save. In addition, if you live within a city or county that slaps on additional taxes, you could move to a new location that would lessen your real estate tax or city tax to increase your bottom line.
Whenever you decide to make the move, just be certain you consider the cost of making the move. This includes the seller's costs to unload your current home, moving costs, and the out of pocket expenses as you get settled in your new home. Consider these four smart money moves opportunities, and you might just find yourself in the right situation to move sometime soon.
Written by: Ted Jenkin
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