We never manage to move cheaply. We’re on our seventh home in 11 years and currently looking for our eighth, so you would think we would be experts by now. But relocation is an expensive business – the packing, shipping, storage, tax filing, document preparation and transportation are just the tip of the iceberg.
We get wooed by the mouthwatering figures presented in the relocation package, and at that point, grown adults start confusing their employer with Santa Claus. They’re not – those figures have been created by a calculator loving accountant somewhere, and have not been put together with the sole purpose of making you happy. Quite the opposite, in fact – they reflect the minimum sum that the company feels is appropriate to get you established wherever it is you are going. And by established, they are not referring to the new Laura Ashley room set that you have been drooling over.
So, after reviewing three years of detailed accounts from the Defining Moves household, here are our top ‘hidden’ costs of relocation, and what you can do to reduce them.
Paying off past credit.
It’s money that you have already spent, but it’s still a cost to consider as part of your relocation package, because I’m pretty sure that if you read the small print, you will discover that credit companies take a dim view of you leaving the country.. When you took out that kitchen / bathroom / Laura Ashley credit agreement, the three years interest free credit seemed like a good idea. Now you are stuck with a hefty bill and maple cabinetry 3000 miles away..
What you can do. If you are even thinking of relocating, don’t take out loans without having the money to pay them off immediately. Your loan contract will almost certainly include a residence clause, you will need money to relocate to your own new home, and if you are planning on renting out your house, you are going to need an emergency fund if your home is empty, damaged by tenants or requires emergency repairs.
If you think you need to spend money on your home before selling or renting it, consult a property professional before you actually get out your wallet, and consider carefully the return on any financial investment.
Interim cost of living.
Most assignments allow for 4-6 weeks of interim living allowances, but it’s easy to go over budget once you are there. Typically, you are spending time looking for more permanent accommodation, finding your way around and getting established and you don’t have the time, the facilities and the storage space to cook for yourself. Your entertainment tends to be outside the home (i.e. cinemas, restaurants, shopping malls) and costly, and you are potentially paying for storage of your household possessions.
What you can do. Try and find interim accommodation with a kitchen and enough food storage to avoid daily trips to the grocery stores. Consider taking packed meals with you on days out (yes, I know I sound like my mother, but has anyone else ever noticed that when hunger strikes, the nearest cheap and healthy eatery is 25 miles away / back at the previous freeway exit?). If you are going to be eating out for at least one meal, make it lunch – typically you pay between 25 – 35% less for a similar meal at lunchtime, and portions are often smaller. Your wallet and your waistline will thank you.
Find your local library and parks, so when you are desperate to escape the confines of the generic wall color and furniture, you don’t need to pay for it. Consider joining a class, club or volunteer group so that you are meeting people – anything that gets you out without a price tag attached.
The Cost of No Credit.
You would think that in the world of the internet, email and instant access, business and financial services would be able to establish your creditworthiness over a wider geographical range. But no, while hackers in China can access your accounts and make merry with your credit cards, the financial establishment can only judge you on your local credit history. Which, bearing in mind you have just walked off the plane, is precisely zero.
This has a huge impact on your local expenditure. In the short term, you will be putting down hefty deposits for everything from cell phones to utility services, will struggle to get any sort of credit card, and will be paying international fees for any transactions using your home country bank account or credit card.
In the longer term, any loans that you try to take out will be at a higher interest rate, and will usually require a large deposit to qualify.
What you can do. Many banks now offer global accounts, so if you are going to be paid in your home country currency, consider applying – especially if you will be transferring money regularly. If not, there are many reputable online Foreign Exchange providers who offer far better rates and easy to use systems. Test them out with small amounts first so that if something goes wrong, you haven’t lost an entire month’s salary.
If you are planning on using your existing account for international transfers, negotiate rates and ask about rate thresholds – often there are better rates for larger amounts.
Anyone who has relocated before will tell you that for the first 3-6 months, their living expenses skyrocket. Setting up a home is expensive – which is why we have bridal showers, baby showers and wedding gift registries for newly weds. If you are lucky, you have the slightly less exciting interim allowance, which covers the basic cost of reestablishing residence, but doesn’t allow for the cost of making it into a home. It also does’t allow for the considerable time pressure, which is why when we move we tend to head for the nearest department store and get furnishings that ‘will do for now’, with the intention of replacing them later. Not only do we end up paying full price, we end up paying out twice.
What you can do. Research home stores before you go, and if you can see that items are expensive or difficult to find, consider adding them to your household goods shipment. Avoid shipping things that require specialized parts / care / refills unless you have regular visitors from home who are willing to act as couriers. Find out where locals buy home furnishings and when the sales are on. Consider outlet malls, consignment stores and borrowing items for the short term. Look on local noticeboards for “Moving Sales”.
When you live somewhere, you develop a store / cost hierarchy, which assigns quality and cost to items sold in a store. If we want something cheap that may not last, we head to Walmart. If we are willing to pay more for something more permanent, it might be Pottery Barn, Marks & Spencer’s or a local department store. If alcohol is involved, we may find ourselves in Restoration Hardware.. Whatever your home location, you have preferred stores that carry the brands and products you want at a price that you are willing to pay, and you can set your budget accordingly. When you move, all this goes out of the window and you find yourself spending a fortune in fuel driving around trying to locate bed linen, laundry detergent and a pair of pink tights for the school play – all of which you end up paying full price for, because you have yet to discover where the deals are.
Not only do you not know where to buy things, you don’t know what to buy. You would think a move between countries speaking the same language would make this easier, but the marketing departments have ruined it by changing the names on even the most familiar products. For the first year in the US, every contact I had with a British expat included discussion about laundry detergent, and the choice thereof.
The same applies to foods, clothing, furnishings, electronic appliances and even services – you don’t know where to go and what an acceptable price range is, and you end up paying for brand names that you know – the ones, inevitably are more highly priced. You buy a car from a large dealership rather than from a small used car lot, you get it serviced there because you don’t know any reliable local mechanics. You buy your furnishings at full price because you didn’t know about half price Wednesdays, and you have no idea what you should be paying for bread.. So you waste money on a higher quality than you might need, and you waste foods
What you can do. Ask for recommendations, samples and referrals. When you meet people with children of similar ages, ask about anything relocated to children. Receptionists everywhere from schools to doctors offices are a mine of useful information, and once you have found one good provider, ask them for the names and numbers of their favorites. If you have managed to find yourself a mentor, download our mentor checklist and ask them for their help. I am notorious for stopping people in stores and asking them everything form where they get their hair done, to how they get their child’s karate kit to stay so white. Most people are delighted with the compliment, and are very happy to share the information.
Check out the manufacturers. The names and packaging are all designed to appeal to a local audience, but many big manufacturers have a global presence. To help you narrow your choices, start with products by the same company and work from there.
If you have a realtor, consider asking them for a list of their preferred providers – they will not only have a list of reliable and reasonable tradespeople, but if they are involved in staging homes for sale, will also know where to buy attractive, inexpensive home furnishings (they will also now the more expensive places too!), and can give you an overview of the different price ranges of the various stores and businesses in the local area.
If there is one thing I have learned over the past 11 years, it’s that it is impossible to predict your true costs up front – but they will happen, no matter how frugal you are. Our solution is to start a moving fund before we go, keep a close eye on our spending and to travel as lightly as possible. Now it’s your turn – what are yours?