Reflections on Moving to a New Home
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My family recently moved to a new home, which brings many opportunities for financial mishaps! Here are a few tips for staying on top of your finances during a home move.
Moving: the good, the bad, the confusing!
My family and I recently moved into a new home. It's still in Chicago, less than 3 miles north of where I used to live. We are happy to have more space for friends and family visitors, a backyard area with an outdoor fireplace and space for my container garden, and walking distance to a neighborhood with lots of amenities like great schools, good food, and a huge park.
Moving homes is considered to be among the most stressful personal life changes, along with changing a job, having a new child, and changing relationship status. I'm experiencing lots of changes myself: learning where the nearest grocery store is; new commute times and traffic patterns (no joke here in Chicago where we have two seasons: snow and construction!); and treasure hunting where my husband put the stand mixer and cookie baking supplies when he unpacked the kitchen. I'm a creature of habit, so these adjustments have not been easy.
But, putting on my "financial advisor" hat, I thought I could offer up a few tips for minimizing new home purchase stress from a financial point of view.
Are you considering a move? Read on for some pitfalls to avoid and other personal financial tips.
Affording a new home. First on the list is affording a new home. Read my earlier posts here and here about how much home you can afford, and how to decide if buying a home is right for you. This is the single biggest challenge I see new homeowners facing - they are house rich, cash poor. Too much of their monthly expenses is going towards maintaining the home, and not enough is available for other parts of their life like paying down other debt, education funding for the kids, retirement funding, or vacations/having fun/living life. Talk to your financial advisor if you're thinking about a home purchase, and remember that you may qualify for way more mortgage than you can reasonably afford.
Use trustworthy home purchase professionals. We were fortunate to have a great real estate agent who was very familiar with our target neighborhood. I trusted her to tell us the honest truth and not push us into a decision we weren't comfortable with. There were several steps in the purchasing process that were confusing and overwhelming. It was good to know she was looking out for us in each situation, and several times she gave us perspective from her years of experience that helped us persevere. A good real estate agent can also provide referrals to other professionals like a home inspector or mortgage broker. Your real estate attorney is another important professional to have on your side; find someone who is an excellent communicator because they will handle the legal aspect of the transaction. Find a team of professionals whom you trust and can communicate with; and if it's not working out, move on and find someone else!
Day of the move. We moved on a Friday, which was ideal because we had the whole weekend to get organized. We had no internet that first weekend, so it was a good thing I didn't expect to have a Zoom meeting the first few days. Take special care of the most critical items you don't want to misplace - your computer, jewelry, toiletries, a change of clothes, medicines. Keep these in the trunk of your car until the movers are gone, or move them yourself and store them in a safe place at your new home.
Moving costs. Forbes says the average cost to move a 3 bedroom home locally is $2,200. That's about right from my experience, but this will vary widely by location. This time around, we hired movers who were fantastic. Our moving company had an online tool to request an estimate with an inventory of the items to be moved. Even requesting an estimate helped us - we had accumulated a lot of stuff over the years in our old home, some of which we no longer wanted. Time is money in this area - we spent one weekend packing, organizing, and getting rid of stuff, which was worth it because we were prepared for moving day. I spent about $300 on packing supplies and lots of time on packing, organizing, and dropping off donations. The move itself took less time that we anticipated so that saved us some money in the hourly rate. We ordered pizza for the movers before they unloaded the truck in our new home and at the end of the day we gave each of the movers a cash tip in addition to the hourly rate, because they did such a good job. Have cash on hand for this type of expense on the day of the move. Check cash tip rates in your area or ask the moving company for recommendations - like any service, it’s based on quality of service but can be 20%.
Townhome/condo to a single family home. Our family moved from a townhome with a homeowners association, to a single family home. I was used to emailing the HOA when we had an issue, and the HOA would send out a service provider to do the job, in exchange for the HOA assessment we paid monthly. With a single family home, instead, we are responsible for sourcing and paying the service provider. For example, fixing broken siding on the garage, power washing the front steps and back patio, sealing the counter, checking the fireplace. When you first move in, there will be a variety of repairs you need to make, so plan for this financially and from a time perspective. Ask friends and look at online reviews for service provider referrals - having the right provider can make all the difference. Annually, expect to spend about 3% of your home's purchase price in home repairs/maintenance if you're in a single family home; 1% for those in condos or townhomes. Factor this expense into your annual budget and set aside regular savings to prepare for this.
Change of address. Lastly, don't forget to set up your change of address with the US Postal Service. In addition to mail forwarding, change your address at the source for all your financial matters (credit card, bank, investment accounts, employer benefits, health insurance) and anything else that is regularly mailed/shipped to you (Amazon, Hello Fresh/meal kits, Chewy). This can be time consuming, but while you're logged in to each account, sign up for e-statements to minimize paperwork and lessen the opportunity for identity theft through stolen mail. If it works for you, sign up for automatic payment processing so you never miss a payment. This is a chance to simplify your life and these little changes can make a difference in handling the "administrative" aspects of adulting.