You Haven’t Truly Budgeted Until You’ve Looked at This

by Will Lipovsky · 8 comments

living space
Nearly all of us have some sort of budget. We budget for groceries, rent, car payments, fuel, even toiletries. We may think we’ve thought of every expense but have we really? Probably not.

What this post will do is uncover the one area of our budget we can easily overlook. And it is perhaps the biggest expense we have. It’s easy to miss the forest for the trees.

So what is this mystery expense?

It’s cost of living. Are you living in the optimal location for your financial situation?

It’s About Challenging Everything

Why do you live where you live? Is it where you grew up? Do you enjoy its climate? Are the schools good? Really think about why you live there. And then think about moving. Do it.

I’m saying this because the typical American lives 18 miles from mom. Even when their hometowns are becoming derelict, people are still reluctant to move. But why am I challenging this point? Why not just let people stay where they feel comfortable?

Moving away from home may be at an all time low but that probably isn’t a good thing. Rather, America was born on immigrants and pioneers who were willing to take risks and move where opportunity awaits. To live without risk is to live without reward.

Why Cost of Living Matters

Did you know that seven states have a 0% income tax? The states include Washington, Nevada, Alaska, Texas, Wyoming, North Dakota and Florida. Several other states have income taxes only on certain categories like dividend and interest income.

Let’s say you currently live in the state of California. Let’s assume you earn $75,000 – because you read MoneyNing.com and you know how to make money. Without entering in the specifics, the state income tax would come to about $6,000 (mileage may vary). Whereas, you could move to a no income tax state and pay $0 in state income tax. Total savings: 6,000 smackers. That’s enough to fully fund your Roth IRA each year and blow the rest! If you did that for 40 years and earned an annual ROI of 8%, that’s $1,537,676.59. That’s right! You will have an increased net worth of over 1.5 million dollars just for moving across the border to Nevada. Plus, if you did better with your money and earned 10%, then not having to pay state income tax would save you $2,675,737.36.

Yes, there are other tax considerations to consider – ie: moving to a state with no income tax may mean paying a higher sales tax. Or perhaps property tax is higher. I simply used state income tax to make a point. When comparing cost of living expenses, it’s important to consider all state and local taxes plus other living expenses that rise and fall from state to state and city to city. Still, moving to a state with no income tax is a huge advantage.

What About Family?

The best reason to stay put is because of family. Some of us can live anywhere but our family are only in one place. This is a valid reason to stay – regardless of money. Think long and hard though if you’re simply using your family as a crutch – the reason your financial situation cannot be improved. Don’t let this be the case. If they truly love you, they will want what’s best for you. And, as I mentioned earlier, your family probably moved a lot in the past. You would just be next. Future generations will thank you.

I’m Serious About Challenging Everything

How would you like to, at 70 years old, realize that you could have saved millions by simply moving to a different area of this beautiful country called America? Not good, so consider moving now.

Next time you revisit your budget, see how much you could save by moving. Furthermore, see how much more you could earn by moving to a new place. While the internet may have leveled the playing field some, certain locations are still better for making money.

Have you challenged everything?

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{ read the comments below or add one }

  • Nancy Ranft says:

    I live in Las Vegas, NV. (no state tax) but the cost of everything is ridiculously high…even the “buffets” are out of reach unless you’re on vacation and plan on spending $$$ !! Crime, also, is skyrocketing, although “they” don’t like the tourists to know this and people still keep moving here, resulting in a massive homeless population that is an embarrassment to the city and a decided threat to those all-powerful tourist dollars. They (the dollars) are soooo much more important than ANYTHING else, up to and including those homeless! Don’t get me wrong…I love Nevada. It’s beauty is undeniable. Unfortunately, it’s politics is corrupt and self-serving! The pay scale is weak compared to Any town, USA. Average loaf of bread is $2.18 or more, $3.50 or more for a gallon of milk. This author is very correct when he states to do your homework! Just because there’s no state tax doesn’t necessarily mean you’re going to save money. Many things have to come together exactly right in THIS city for you to make it here. Also, just one tiny word of caution for those with knowledge: If you’ve got a record…STAY AWAY…this state makes it’s money on convict slave labor (mandatory probation/parole, too) and it’s a revolving door. Once “they” have you, it’s in their best interest to keep you! In closing, I’ll reiterate. Check ALL sources available to find out everything that may be important in YOUR life. Different social media can be very helpful in getting actual on-site information.

    • David @ MoneyNing.com says:

      Yikes. Thanks for the heads up. I’ve toyed with the idea of moving to Nevada off and on to save on state taxes but I will think twice now!

  • Laurie says:

    I currently don’t live anywhere near my family, though I wish I did – not only to be near them, but the cost of living there is actually less. There are no state taxes where I live, however I live in a city where everyone keeps moving in flocks – the of living is astronomical – even though we live as far on the outskirts as possible. As much as I love where we live – I wish we could move someday somewhere different to cut down on costs.

    • David @ MoneyNing.com says:

      Keep dreaming and make plans to make it happen. The goal may seem far away now but keep chipping away at it and you’ll be moving to your dream location sooner than you think!

  • Elle @ New Graduate Finance says:

    Feeling pretty bad about living in California! Kidding.

    I agree. I think it is so easy to get caught up in the little details that sometimes we forget the big things, like significant state taxes.

    • David @ MoneyNing.com says:

      I hear you. CA is definitely a nice place to live in but cost of living can be quite expensive!

  • A. Woodrow says:

    People today live near where they have jobs! What’s the point of earning $75,000 in CA, if you move to FL with no income tax, the odds of getting a job that pays $75,000 drops to like 15%.

    • David @ MoneyNing.com says:

      You are absolutely right, but don’t be so quick to dismiss low cost of living areas because those states also have plenty of high paying jobs. CA does have a huge share of high salaried positions, but it’s also a state with a huge population. And plus, plenty of people are able to find side gigs that are location independent, like the author and myself. We could easily move anywhere and still make the same amount of money.

      Be creative and you can reap the rewards.

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