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Top 10 Mistakes

Moving is difficult enough when things go smoothly. Moving can be a nightmare when things go wrong. Fortunately, you have the opportunity to learn from others' mistakes, and avoid repeating them. Here are a few tips to make your moving experience a little easier.

  1. Canceling your existing lease too soon.
    In a perfect world, all real estate transactions close on time. In the world we live in, transactions are often delayed a week or more. Suppose you asked your landlord to terminate your lease the day your purchase transaction was scheduled to close. A day or two before your scheduled closing date, you discover your transaction is delayed a week. In a perfect world, no one is inconvenienced and your landlord is willing to work with you. More likely, however, your landlord is inconvenienced and angry. Will you be thrown out? Will you have to find interim housing for a week or more? The eviction process takes a little time, so the Sheriff won't immediately remove you, but more importantly, this type of stress-producing episode can be avoided. How? Terminate your lease one week after your real estate transaction is scheduled to close. That way, if there is a delay in closing your transaction, you have some leeway. This approach might cost a little more, then again, it might not.

  2. Not researching what money can buy in your new city.
    Don't assume to know anything about factors such as salary, cost of living, taxes, rents or home values at a potential, new location. Be sure to read
    Relocation Planning: Avoiding Unnecessary Stress.

  3. Not researching the demographics, neighborhoods and schools.
    Before you buy, spend some time online and offline researching demographics, neighborhoods and schools. Also, contact the local chamber of commerce and your Realtor for more information.

  4. Not setting up cost effective interim housing between destinations.
    When you first move to your new city, you may need to set up temporary housing arrangements until you can close and move into a new home. This may take from a few days to a few months. If you need interim housing for a few days, perhaps staying in a hotel the simplest solution. However, if you need housing for more than a month, you may want to consider corporate housing or an apartment with a short-term lease.

  5. Not getting your loan pre-approved before you move.
    Once you start the moving process, it may be difficult to locate documents that are required by your lender/broker--bank statements, pay stubs, etc. Also, if you are pre-approved you will have more negotiating power when you make an offer to buy a home.

  6. Not having options if you cannot sell your home.
    You need to be prepared in the event you can't sell your existing home before you buy your new home. In this event, you might consider getting a bridge loan on your existing home, or using a home equity loan on your home to pull cash out. Check with your loan officer to discuss a backup loan program in the event your home doesn't sell. Also, consider renting your home if you can't sell it.

  7. Not using local, licensed professionals.
    Every area is different. In some areas you have to be concerned about earthquakes, other areas about floods, and yet other areas about termites. It is very important to get good local appraisers, Realtors® and inspectors to advise you about things to watch out for. Before you buy a home, have it inspected thoroughly by a professional inspector, who is a member of the ASHI (American Society of Home Inspectors). Make sure that your inspector is bonded, licensed and insured.

  8. Not using the right moving company.
    Moving companies have a wide variety of costs and service levels. Some companies give you a fixed bid, while others leave the final costs open-ended. Make sure that your moving company can guarantee pickup and delivery dates. Also, make sure that the moving company has insurance to cover broken or damaged items.

  9. Not understanding your childrens' concerns.
    Many children are very reluctant to move. They may be concerned about making new friends and losing current friends. Spend some time acquainting your children with the new neighborhood. If possible, have them meet their new teachers and other children in their new school even before they move. Finally, try not to move in the middle of a school year.

  10. Not reading your employer's relocation policies.
    Employers have different policies for reimbursing employees' relocation expenses. Read your employer's relocation policies carefully. If you are not clear about which expenses are reimbursed, check with the human resource department of your new employer. Also, take time to understand the IRS policies for expense reimbursement. Money that your employer pays towards your relocation expenses may be taxable. The IRS allows you to deduct certain expenses. Finally, keep good records and copies of all your receipts associated with your move.

Relocation can be stressful

You may be considering relocating to a new residence. Moving can be stressful and has been recognized as one of life's major stressors (Holmes & Rahe, 1967). Additional stressors often accompany a move, such as marriage, divorce or retirement. A side-effect of high stress levels can be a temporary deterioration of objectivity or sound judgment. When considering relocating, careful planning and research are essential to maintaining restoring one's ability to make informed decisions.  This article suggests economic questions which should be answered prior to move.

Financial Analysis

Benefits of a Financial Analysis:
This article emphasizes the importance of obtaining an individualized, accurate, after-tax (federal, state, local and Social Security taxes) financial analysis of the changes in your living situation resulting from a job-related move. The analysis should consider all family members--including children. Will your spouse need to find a job? Will your children require additional school- or activity-related expenditures? Only by obtaining an accurate analysis can you make the decision which is best for you. The analysis can also be a valuable tool when negotiating with your new employer. It can help the employer better understand what they're offering you.

Don't settle for superficial, before-tax financial analysis. Such an analysis will inaccurately represent your new situation, perhaps leaving you with an unacceptable living standard. Don't accept the argument, "Others in this area in this job earn this much. . ." If your new employer could find someone in the area, they wouldn't be offering you the job! If you settle for a cursory analysis and end up with less than what you're accustomed to, you could be unhappy, less productive, back in the job market, or relocating again. The following pointers help underscore these important concepts.

Cost of living and salary considerations:
A lower salary may be a blessing in disguise. If you're moving to an area with a lower cost-of-living, you may be able to increase your disposable income, providing more money for essentials and investments. If you're moving to a higher cost of living area, you'll want to be equitably paid, or at least have the potential to soon offset the increased cost of living. Your analysis should include changes in:

Recurring income and expenses:
  • Income from all sources: salary, wages or business income.
  • Automobile and transportation expenses: personal and commuting distances, insurance premiums, maintenance, employer reimbursements, depreciation, etc.
  • Benefits: medical, dental and life insurance, retirement, day care.
  • Housing:
    • Compare your current home with a similar one in a similar neighborhood.
    • Be aware of increased rent, mortgage payments, property taxes, insurance premiums, upkeep and maintenance, etc.


Non-recurring (one-time-only) income and expenses:
  • Capital gain and capital gain tax upon the sale of your current home if you purchase a lower-priced home.
  • Capital gains and capital gains taxes upon the sale of other assets. For example, you sell a rental home because you can't manage it from your new location.
  • Moving expenses: movers, hotels or temporary living quarters, travel expenses, telephone activation, etc.
  • Non-recurring fees associated with purchasing or leasing a new home.
  • Non-recurring fees associated with selling your current home.


Ideally, you'll be reimbursed for non-recurring expenses, and your new salary will provide you with at least a familiar standard of living

Conclusion

The importance of obtaining an individualized, accurate, after-tax analysis of the changes in your living situation can't be over-emphasized. The money invested in such an analysis will pay you dividends for years to come. By now you may be thinking that a financial analysis is a good idea. Where do you go to get one? The professional you chose is ultimately up to you. Before making your choice, you may want to visit these web sites for ideas. These web sites are included here for informational purposes only. The author does not recommend or endorse them.

Certified Financial Planner (CFP) Board of Standards home page. This is a resource for information about CFP licensees and the financial planning profession.

National Association of State Boards of Accountancy home page. NASBA serves as a forum for the nation's state boards of accountancy which administer the Uniform CPA Examination, license certified public accountants, and regulate the practice of public accountancy in the United States. This site includes information about CPAs in your area.

References

Homles, T.H. and Rahe, R.H. 1967. "The Social Readjustment Rating Scale"
     The Journal of Psychosomatic Research, Vol. 11, Pergamon Press, Ltd.

Before you relocate

Most people don't move often enough to become well practiced at it. That's why this "To Do"-list is so important. Follow it and accomplish most of what you need to in preparing for your move.

Ninety days prior to moving
Preparing for your move this far in advance may seem unnecessary, but some things should be done as soon as possible. Here are a few:
  • If commercial transportation (plane, rental car, bus), hotel or temporary living quarters figure into your moving plans, make the reservations as soon as possible. Have you ever tried to make a plane reservation to a popular destination during peak season? Don't risk this happening to you and your family unless you want the experience of flying "stand-by." OK, if you're moving to Anchorage in February, you might not have to worry--but don't take the chance. Make important reservations early.

  • Will the family pooch sit on your lap during your move, or will you have to arrange transportation for him or her?

  • If you're going to use a commercial moving company, find one now and get a written estimate. You won't be pressed for time and you'll make your best deal.

  • Create a budget for the next three months and include the cost of moving.

  • If your just moving across town, or only need short-term rental of a truck, dolly, storage unit, etc., try to secure them now, or determine the earliest date you can reserve them. Note that date in your daybook.
Thirty days prior to moving
  • Remember those reservations you made sixty days ago? Confirm them.

  • Go to the post office and grab as many "Address Change Notification" cards as you think you'll need--then grab a few more. (Your taxes helped pay for them and you'll probably need extras.) Send one to everyone you know or with whom you do business. Here's a short list of possible recipients:
    • Financial institutions: banks, brokerage companies, companies managing your retirement accounts created with previous employers, etc.
    • Credit card companies
    • Doctors, dentists, attorneys, insurance providers
    • State and Federal agencies from which you receive income
    • Internal Revenue Service (IRS)
    • Companies you might pay annually, such as you Internet service provider (ISP), pager, etc.
    • If you use a software program to compute your income taxes, it will contain the required, "Change of Address" form, so don't bother calling the IRS for one. If you pay a tax preparer, they'll have the form.


  • Go to your local "U-Drive" and purchase boxes, tape, marking pens, box-cutters, bubble-wrap, styrofoam peanuts, rope, etc. Ask U-Drive if you can return any unopened or unused materials--if you can, get more than you think you'll need. Keep your receipt and take good care of the supplies until you use them.

  • If you're driving, plan your driving route.

  • Purchase or have handy a briefcase or satchel to exclusively contain your moving-related paperwork. Items to keep in it include:
    • All receipts associated with your move. Many expenses may be tax-deductible.
    • Itinerary
    • Travel route
    • Maps of your new neighborhood
    • Transportation tickets
    • Hotel information and reservation confirmation numbers.
    • Any documents you think you'll want handy.
    • This list!
Two weeks prior to moving
  • Remember those reservations you made seventy-five days ago and confirmed two weeks ago? Confirm them again.

  • You may be using professional movers who will help pack your household items. Whatever the case, there are some things you'll want to pack yourself. Items to consider include:
    • Irreplaceable items such as, jewelry, coin collection, heirlooms, high school yearbook, favorite coffee mug, etc.
    • Computer
    • Legal, medical, insurance, financial documents, etc.

  • Start packing all those boxes you have. Keep related items together and clearly mark the contents of all boxes. Identify boxes containing fragile items. Pack heavy items in small boxes; lighter items in larger boxes. Keep all boxes easily accessible. Don't tape them shut yet.

  • Contact utility, local and long-distance telephone, cable TV and trash companies and inform them of your move. Contact these types of companies at your new location and let them know when to activate them at your new address.

  • Recruit additional moving-day help if necessary.

  • Arrange to close or transfer your bank accounts if necessary.

One week prior to moving

  • Empty your safety deposit box.

  • You've been packing boxes for a week. Some boxes you go back to for things you need, some you haven't looked into since you packed them a week ago. Tape shut the boxes you haven't looked into since you packed them.


One day prior to moving
  • Go to the bank and get cash.

  • Today is the day to finish packing. Seal all boxes. Return to U-Drive all the unused packing materials and boxes.

  • Have a day-bag containing your toiletries, medications, first-aid kit, change of clothes, etc. This may be a good place to keep your purse or wallet, itinerary, travel tickets, extra glasses, book, etc. This will double as your carry-on bag if you're flying.

  • Conduct a maintenance inspection of your car. Check tire pressure, battery, radiator, oil and other fluids, fill the gas tank.

  • Pick up the rental truck.

  • Confirm casual help, movers, etc. you'll be using on moving day.

  • If you have children, pack a bag of games and extra batteries for their electronic games.

  • Congratulate yourself on a difficult job well done!

After you relocate

Within the first 3 days:

Get phone books and maps of the region. Consider purchasing a Thomas Guide (Thomas Brothers Maps®) for each car. A Thomas Guide is a map which lists names, addresses, phone numbers and locations of public transportation, public works, airports and airlines, major commercial and public buildings, Chamber of Commerce, colleges and universities, golf courses, hospitals, hotels and motels, libraries, post offices, private and public schools, shopping centers, U.S. government offices, points of interest, parks, Zip Code areas and more. Large grocery or stationery stores usually carry Thomas Guides.

Clear the kitchen table, spread your street map and identify locations of services such as these nearest you:

  • Police and fire stations
  • Hospitals and medical clinics
  • Gas stations
  • Grocery, pharmacy, hardware and department stores
  • Bank, dry cleaners, veterinarian



Within the first 10 days:

  • Call the garbage company or Department of Sanitation. Find out when the garbage and recyclable material is picked up. Are special containers required for recycling plastic, paper, oil, etc?
  • Contact the Chamber of Commerce. They can provide a wealth of information about your community. Your local chamber may have informational packets designed especially for newcomers.
  • Call City Hall and find out where to register to vote.
  • Contact the Department of Motor Vehicles to change the address on your driver's license.
  • Identify and contact your new doctor and dentist. Contact your previous care providers and request your records be sent to them.
  • Contact your new insurance agent. He or she can help you transfer your existing insurance policies.
  • Realize that moving is one of the most stressful activities one can experience. Make extra efforts to be patient and tolerant during this difficult time.

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