Learn Me: Higher Cost of Living

I've been offered a position in Flagstaff, AZ that would be a $15,000 raise over my current position, plus a sign on bonus, an extra 9 days of vacation plus 12 holidays, and yearly bonuses.

My wife works long hours, salaried, and is pretty fed up with her position. She's ready to move on, but not necessary ready to leave her field. Flagstaff offers no comparable jobs to what she does now.

Our current income in Lancaster, PA put us solidly middle class. We're able to spend freely, save effectively, pay down debt, and we could easily afford a home on our current income.

My income alone in Flagstaff would be 78% of what we're making now. The wife could get a part-time job and we'd make the same.

The downside? Flagstaff's cost of living is higher than living in Amish Country, surrounded by Mennonites, our families, farmers fields and friends. From what I can tell, Lancaster is 2.8% below the national average cost of living, and Flagstaff sits at the average (0%). Home prices, however, are 17% increase. Median rent looks about a 25% increase. My wife will likely have a hard time finding employment that pays comparable to what she does not, then again, she works for peanuts so maybe not.

The position and opportunity are all-around better, and we're young, without kids, want to be outdoors, want to explore the Desert Southwest, so it makes every bit of sense to do this now, but I've always lived someplace where the cost of living was relatively low. Just comparing the price of a house with a garage in Lancaster versus Flagstaff; for example, shows me only a few acceptable homes under $200,000 will get me a garage in Flagstaff, while I've got nearly a hundred options in the same price bracket of Lancaster.

What is life like living in an area with a higher cost of living? What impact can we expect on our finances long term?

Sounds like a good opportunity. No move will check off all desirable boxes for both of you. Since you are young and do not have a house to sell, it would be a neat thing to do. You can always pack up and move somewhere else down the road. Go for the experience!

Don't know what kind of work your wife does, but there are always transferable skills. She will find something.

I'd go. The income/outgo thing seems to balance out place to place. I'd imagine your heating bill will be lower in Flagstaff. if nothing else.

Edit; Plus, just think of the savings from not having to change your clocks spring and fall!

In addition to looking at home prices, also look at real estate taxes if you're loooking to buy. I don't know what they are in AZ, but I'd imagine they're pretty low in Amish country.

Taxes are one of the main reasons I stay in PA and deal with 2.5 hrs of commuting every day. While I could afford to buy a house closer to work in NJ, the taxes would kill me. A minimum 2x the roughly $300/mo I'm paying now.

You should also consider the costs of running AC.

Water too! There are water issues. It's a high plains desert.

Gore has a place in Flagstaff. Not the wacky carbon tax guy, but the company that makes Goretex. Always sounds like an interesting place to work. With the elevation of flagstaff the weather seems good unlike phoenix or tucson. It is a place I've never been but would like to experience.

The main cost of living difference will be housing and taxes. If you can deal with those, then give it a go. I've been there briefly and really liked it. High desert is very cool.

I moved to a place that has a higher cost of living on purpose about a year and a half ago. It is the place we want to stay, so we came. I pay more in property tax, sewer bills, flood insurance, etc. but it's worth it to us. Just a matter of budgeting and deciding what your priorities are.

One thing to bear in mind for the cost of housing- you are talking averages.

So relative to your current housing situation, you will probably get less, but still be paying the same amount. Well, possibly, not probably. Flagstaff is a college town, so there should be some more basic home choices available, at least.

But that's what the higher cost of living means- you are going to have to make choices of what part of your lifestyle you are willing to cut back on.

Maybe look for more of a fixer-upper that you can work on. Or something really small from the late 40's could work for just two.

The wife's job is a tough one- I forgot that Flagstaff is far away from the state cetner, where most of AZ lives. It's also so high that the A/C bills are not as bad as most may think- I would bet that the heating bills may be more surprising.

Over the long term, theoretically, your job should make up for it, as the salary should compensate for the higher cost of living. Especially if your wife can find a good career job there.

Doesn't AZ not have income tax or something?

I've heard Flagstaff property taxes aren't that bad.

From Kiplinger:

TAX-FRIENDLY

One of Kiplinger's top ten most tax-friendly states for retirees, the Grand Canyon State is a major retirement destination, with plenty of sunshine and a low personal income tax rate that tops out at 4.54%. Social Security benefits are exempt, as is up to $2,500 of some retirement income. Although Arizona's statewide sales tax is 5.6%, when combined with local rates it can top 12%. There is no inheritance tax or estate tax.

State Sales Tax

Arizona's state sales tax is 5.6%. Counties and cities can add to that, with the highest combined levy an additional 7.125%. Arizona does not tax food for home consumption or drugs prescribed by a licensed physician or dentist. However, most cities in Arizona levy a tax on food for home consumption.

Income Tax Range

Low: 2.59% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for all others)

High: 4.54% (on more than $300,000 of taxable income for married joint filers and more than $150,000 for all others)

Social Security

Benefits are not taxed.

Property Taxes

There is no state property tax. Tax jurisdictions set tax rates, which vary considerably from one area to another.

Median property tax on the state's median home value of $187,700 is $1,356, according to the Tax Foundation.

Tax breaks for seniors: Single homeowners and renters 65 and older who earn $3,750 or less and married couples who earn $5,500 or less are eligible for a property tax credit.

Homeowners who are at least 70 years old, have either resided in their primary residence for at least six years or have lived in the state for at least ten years, and do not receive more than $10,000 of taxable income per year can defer their property taxes

Inheritance and Estate Taxes

There is no inheritance tax or estate tax.

Read more at http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php#DQlbmV0jzq3dbWmQ.99

I would suggest the two of you quickly take a plane trip out there to experience Arizona. It's a vastly different environment from Lancaster, PA.

To a Lancaster resident, it will have no trees, no grass, no creeks. The wind will blow endlessly, as will the dust. It will appear as dry and barren as the moon, and just as rocky.

Some love it for those very reasons, others do not. Go visit and get an idea of what the two of you think of it. Especially to live in it.

Then, have a discussion about the other things.

We were out there for 10 days last year and fell in love. We love the variable climate.

Remember, Flagstaff is the highest elevation in Arizona, so it's climate is more akin to someplace like Tahoe or Salt Lake City. It's got "green".

I think it would be a perfect mix for us. My wife hates cold, but the fact we could escape harsh winters temps by going to Phoenix or Las Vegas for the weekend is inviting. I hate humidity, and Flagstaff has always got a nice breeze. We both hate clouds, and Flag has got 300 days of clear skies every year.

We were originally thinking of moving to SC/GA/FL, but I knew the culture and topography down there would be difficult for me. I need mountains and valleys and canyons and waterfalls. The rolling hills of the southern Appalachia would satisfy me, but the humidity during summer would be a challenge. Not to mention the job opportunities are pretty poor unless your in the Atlanta suburbs.

Her parents are still thinking of buying a place in Florida and Pittsburgh, so we'll have both options to come back to if we decide we miss the east coast. She's also got lots of family in California which we'll now be able to visit in a long weekend or short flight.

In reply to foxtrapper:

yea, Flagstaff is very much not Phoenix- which is what most picture for Arizona.

They get snow, too.

I think I'll need to roll through there and other areas whenever I can take a long vacation.

PHeller wrote: We were out there for 10 days last year and fell in love.

Then there you go!

It's been a long time since I've been out there.

It really is beautiful, but I think sometimes vacationers miss Flagstaff on their way to Grand Canyon or other scenic areas in the region.

We love the fact that it will give the opportunity to visit a lot of places, and spend more time in places we've already been.

For example, we'd love to hike more in the Grand Canyon, but doing so without proper prepartion is a recipe for disaster. People have died that way. If we live out there, we can work our way up to it.

It's this thinking for like-minded people that is the reason Flagstaff is as popular and expensive as what it is.

I'm on the opposite end of the spectrum, I could move almost anywhere else (except CA) and have a lower cost of living. I desperately want to move south and could easily take a 50% pay cut and live better than I do in NJ.

The differences you are describing are not so terribly different as to be a deal breaker if you love the area (and I don't blame you, I'd be aiming west instead of south if I could get the wife to move that far)

It sounds like you've been very adept at managing your finances well up to this point so I think you have the necessary tools to make it work.

Life is short, if you have the opportunity to spend it some place you love do it :)

I'd say go. Cost of living increases are worth it if you want to live there compared to where you are. Housing costs are obviously a big variable, but you can probably find something acceptable with some searching. Rent first, then buy once you know the area better. A 2.8% change in cost of living is pretty negligible imo...

I moved from Baltimore (high) to Fairbanks (higher). According to CNN's calculator... http://money.cnn.com/calculator/pf/cost-of-living/

Comparable salary in Fairbanks, AK (assuming I made $50k in Baltimore, which I didn't): $61,996

Price difference in Fairbanks, AK Groceries 14% more Housing 10% less Utilities 158% more Transportation 12% more Health Care 68% more

And yet, I was able to make a significantly higher salary in Fairbanks due to the opportunities here so I don't notice the differences all that much. I also built an affordable house with great efficiency to minimize the utility costs, so there are things you can do to help yourself.

Honestly anything under 10% is negligible. You will find small things will be different like gas and groceries.

Here is the other thing, If you buy you hedge a lot of the cost of living too. I mean Austin's cost of living has sky rocketed over the last 10 years that I've been here but I'm paying less a month in expenses than when I moved here because I've got house that was cheap when I moved here. Now you have to pay at least double the cost per sq ft that I paid so new people moving in have a much larger tax and house payment.

Just stop worrying and do it. I moved from a very inexpensive place to a very expensive one. After a while you just get used to it. Housing is the only thing that is really a night/day difference. But even that doesn't seem so bad after a while. A woman I work with just bought a pretty ordinary suburban home for $650k, meh, that's just the going rate.

Oh, and I neglected to mention, Flagstaff is up there with Durango and Bend as one of those places where I think you are pretty lucky if you get to live & work. My line of work pretty much means I will have to live in a major urban center until I can retire.

In reply to PHeller:

I'd look towards the northeast for "touristy things"

Does anybody believe these cost of living calculators? I just don’t see how they are accurate at all. First of all 2.8% sounds to be completely within the realms statistical error, also they seem to have far far too small a geographical resolution. For instance every one I’ve looked at, you start by selecting your state, in my case Michigan, the choices in SE Michigan are either Ann Arbor, or Detroit. Well I’m closest to Detroit, but that’s meaningless. The Detroit Metro area contains 5 million people with such massive diversity of socio economic groups that any kind of broad brush comparison is meaningless. Let’s forget Detroit itself. If you put a compass on a map and draw a 2 mile radius around my house you can go from solid middle class areas with $150K houses to the wealthiest community in the state with multi multi million dollar homes full of CEO types. How does any calculator begin to take account of this?

International ones are far far worse, most trick you into believing that you could afford to live in Europe and show stats like food and clothes costing 10-20% more. My experience is more like those things cost 50% more and housing more than doubles.

Back to the OP, it sounds like you like the area. 2.8% is nothing, especially with the pay rise. While your wife can’t get a comparable job, it sounds like she’s not well paid now, so she could find something else, and even if it’s less than she’s on now as a couple you could still come out ahead. Have you looked at moving costs to trek across country though?

In reply to Adrian_Thompson:

Yes, I started a similar conversation: Relocating: Rent or Buy Cargo Van? Rent Space in Trailer? Sell everything?

Currently I'm estimating somewhere between $2000-$3000, no matter which route we take (rent/buy/pod/ship), unless we were to sell everything and not take more than what could fit in the Fit, which we don't really want to do.

Luckily the employer will give me $5,000 sign-on bonus after taxes (so close to $5800 before taxes).

I can also write-off some of those expenses on our taxes next year.