Finding Your Best Place
If you are considering moving to another town or state but wonder what that will mean in terms of your finances - check out this handy tool on Sperling's Best Places.
In three simple steps they provide a cost of living comparison. In the top menu, choose the 'Compare Cost of Living' link. Then list your current city and where you'd like to move. They show your two cities side-by-side in all the categories you need, such as taxes, housing, food, and other costs.
In addition, you can enter your salary and the built-in salary calculator will determine how much more (or less) you need to maintain your same standard of living.
Being a Your Money or Your Life follower and a believer in money = life energy, I would add one more calculation to this site. I would calculate the TIME you need to work in order to pay for your lifestyle choice. For instance, moving from Petaluma, CA to San Francisco would be an increase of 36% in housing costs as housing is the biggest factor in the cost of living difference. And if I would have to earn $45,000 extra to move to San Francisco - what would that mean in terms of extra hours I'd have to work?
If you have read the book Your Money or Your Life, a New York Times bestseller that I contributed to in 2009, you will be familiar with the concept of your “real hourly rate.”
Calculating Your Real Hourly Rate
Maybe you’ve never considered that it costs you money to go to a job, but once you know how much it does cost, you can then calculate your 'real hourly rate'. It's a little bit of work, but I think you'll find it of interest: first compile a list of work related expenses such as clothes for your job, gift pools, lunches eaten out, gas or commuting fees, including insurance, registration, repairs and maintenance, etc. It is easier to obtain this figure on a weekly or monthly basis, as it is too difficult to measure hourly. Then, once you have your number, break it down to an hourly rate.
As an example, if you were to do your calculation weekly, and you spend $30 in gas, $125 for car payment/gas/insurance, $55 for lunch and coffee, and $80 on clothes, then you are spending $290 per week to work at your job.
Now divide the $290 by how many hours a week you work, say 40 hours, which is $7.25 per hour. That figure is what it costs you per hour to go to your job. Next, figure out what your salary is when broken down to an hourly rate. Say you earn $25 per hour. Now subtract the $7.25 figure that it costs you to go to your job - you may be surprised to discover that your new and real hourly rate is $17.75.
Now imagine that money equals life energy, and since you now know your real hourly rate – in terms of what you are paid at your job in exchange for your time - consider that every item you buy is not costing you money, but life energy. So if you want a new i-Phone that costs $300 and your real hourly rate is $17.75, then you need to be willing to trade almost 17 hours of your life energy to own that i-Phone. If you want a new pair of jeans that cost $40, then you will have to trade 2¼ hours of your life energy for that purchase.
And you may reconsider that move to San Francisco.
Photo credit http://www.flickr.com/photos/thebusybrain/