Paying for relocation

ANDY BOWEN

Moving is one of the most stressful life events you can endure — especially if you aren’t confident you can afford it. Whether you’re moving for a new job or personal reasons, there are a variety of factors that affect the cost and timeline of your move.

As a result of tax reform, Americans can no longer deduct moving expenses. So depending on how much help you get from your family, friends, or your new employer, the entire cost of the move might rest on your shoulder. Thankfully, there are a few quick, effective options to help ease the financial burden of embarking on a new adventure.

The repeal of the moving expense deduction

Under the previous law, taxpayers were allowed to deduct some of the costs of moving their goods and effects, plus certain travel expenses. But as of 2018, exclusion for qualified moving expense reimbursements and deductions are both suspended until 2025. The one exception is members of the military on active duty who move due to a military order.

Note: If you moved during 2017, you will still be able to deduct expenses on your 2017 tax return.

How to pay for your relocation

Personal loans

It’s ideal to pay for your move upfront, but that’s not always possible. If you need to finance some or all of your move, personal loans are one of the best options to consider. Personal loans are either secured or unsecured loans that are paid off in equal installments (what’s known as installment debt), usually over two- to five-year terms. The monthly payments include both principal and interest.

The main benefit for using a personal loan for your move is the interest rate. Borrowers with excellent credit can score rates around 10%. Those with good credit fall in the 13% – 15% range. With a credit card, good credit could get you a rate around the lower 20s. Over the lifetime of a loan, just a few points can make a big difference in the amount of interest you’ll pay.

Personal loans can be obtained from banks, credit unions, and online lenders. The application process is usually easiest with online lenders, but overall they’re much quicker than other loans. Sometimes the approval process might just take a few days.

What about credit cards?

A credit card (sometimes multiple cards) might seem like good way to pay for your move quickly. You might even be thinking about the potential to earn rewards in the process. But it’s not always the best idea.

Credit cards offer revolving debt, which means that, unlike personal loans, you don’t have to re-apply for credit when you need more money. The downside to that, however, is a higher interest rate. A good credit score will get you a credit card with an APR around 18% to 20%, while a personal loan can be closer to 10%.

Let’s say you’ve crunched the numbers, and you expect your total expense to be $3,000. (That’s pretty conservative, even for an intrastate move.) And the largest monthly payment you can afford is around $100. A personal loan with an 11% APR and 3-year term will get you a monthly payment of $98.22. Over the life of the loan, you’ll pay around $536 in interest.

Most 0% introductory credit card offers run from 12 to 18 months. So if you could afford to pay around $300 toward your balance every month, you could benefit from a credit card because you wouldn’t incur any interest. If not, a personal loan offers a lower payment and saves more than $400 over the life of your loan. Plus, you can’t be tempted to swipe a personal loan at the department store and add to your debt.

Here’s the bottom line: You should only use a credit card with a 0% introductory interest rate offer for larger expenses, like relocation, when you can afford to pay several hundred dollars on your balance every month. (Ideally, you should pay it off completely before the 0% intro period ends.)

Don’t forget to ask about relocation assistance

If you’re relocating for work, don’t forget to ask about relocation assistance. It can be difficult to ask for help for fear of sounding demanding or greedy, but remember, the worst your employer can say is no.

The cost of moving

Consider this: The American Moving and Storage Association says that average cost of an interstate household move costs about $4,300. That’s no small expense. Even moving within the state costs an average of $2,300.

Every move is unique, but here are six common expenses to help estimate what your move might cost:

• Movers. Hiring movers is one of the most important expenses you’ll make — you get what you pay for. Home Advisor found that the average move costs around $800, but that can vary widely based on the location, travel, and amount of goods and personal effects you need to transport.
• Travel. Gas, lodging, and food can add up quickly. And if you’re flying, it’s easy for a small family to rack up over $1,000 for a one-way domestic flight. Travel to your new home the potential to be the biggest expense of all.
• Boxes. Boxes can generally be obtained for free from grocery or department stores. If you need containers for transporting fragile items, remember that durable plastic tubs can cost more than $20 each depending on the size.
• Storage. If your move takes longer than expected because a house closing is delayed, for example, you might have to put some of your belongings in storage. The cost of a self-storage unit varies widely and depends on the location. CostHelper.com says a self-storage unit that’s 10 feet by 20 feet typically ranges from $95 to $155 a month, and $170 to $180 if the unit is climate-controlled.
• Replacements. Odds are, at least a few things will be broken during your move. Remember to set aside some money to cover replacements.
• Deposits and fees. It’s possible that you may have to pay early termination fees for services like cable or utilities. You might even have to put down a deposit for services at your new place prior to your move-in date.

The average cost of paying for movers by state

Use the following tables to help estimate how much you may have to pay your movers. HomeAdvisor used both intrastate and out-of-state moves were used to calculate these averages, but they will provide a baseline of what to expect.