Don’t Move Somewhere Just Because It’s Cheap

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It’s cheap, but I’m not sure I’d want to live there.

“When I was a kid my parents moved a lot, but I always found them.”
–Rodney Dangerfield

We were getting tired of where we lived. It felt small. It wasn’t located near family. We liked our friends there, but they kept moving away. After a year or so of grousing that things didn’t seem quite right with where we were living, we decided that we were going to actually do something about it and move somewhere else.

After some back and forth discussions about what we were looking for in a place to live, we decided that we wanted to move to Fort Worth, Texas. We knew how much we were willing to pay for a house and started looking at listings.

Nothing in Fort Worth was in our range. So, we expanded the range out a little, and started finding some incredibly inexpensive, relatively new homes just a few miles, as the crow flies, from Fort Worth. Compared to Charlottesville, where we’d been living, these houses right outside of Fort Worth seemed cheap, cheap, cheap!

We booked a flight, called up a Realtor, and spent a weekend looking at the houses on our list. The ones that stayed on the list were reasonably nice and in seemingly good neighborhoods.

And they were cheap!

Did I mention cheap!

Yes, it appears that Fort Worth is the home of cheap houses (so to speak).

However, none of them were really close to anything. They were all in nice neighborhoods which were connected to highways that were connected to interstates that took you wherever you wanted to go.

In the back of my mind, I started to replay a scenario that we’d experienced previously. When we bought our first house, it was a builder bankruptcy special, in a really nice neighborhood in a very small town about 30 minutes outside of Charlottesville. We picked it because I had a job at Capital One in Richmond, so it was a reasonable division of the commutes to work for me and my wife.

However, once I left Capital One and started my own company, we found ourselves increasingly dissatisfied. We lived in a good neighborhood a long way away from anything that we wanted to do. Every weekend, we’d make the 30 minute drive into town, and sometimes we’d do it two or three times.

We eventually decided to move closer to the city, even though the condo we bought was half the size of our house and about 25% more expensive.

We were happier.

Yet, here we were, touring around the suburbs of Fort Worth telling ourselves that a 30 minute drive to get to the places we really wanted to go wasn’t going to be so bad, because it was interstate driving.

Sure, interstate driving beats windy country roads, but, no matter how you slice it, 30 minutes in a car to get to the place you want to be is still 30 minutes.

But, geez, the cost of living was cheap!

When I was a twentysomething saddled with the burden of my financial stupidity, cheap was my siren song. However, even after reaching financial independence, I never quite got over the frugal tipping point. This was a case in point.

I was letting a potentially cheap cost of living override what I knew was important in our lives.

We stuck it out for about a year before we decided that we really didn’t like where we were living. Actually, it only took us a month before we realized that we didn’t like where we were living, but we figured that we would stick it out for two years so that we could get the capital gains tax exclusion on the sale of our house. At the one year mark, we compromised and put our house on the market. We rented an apartment in downtown Fort Worth (I describe the financial decision in detail in my guest post on Control Your Cash). We used it as a pied-à-terre for a few weeks until our house went under contract, and then we moved. As I write this (mind you, I write these articles well in advance of publication), we’ve been here full-time for a week, and I’m thrilled that we made the decision to move. It turns out that we were spending a lot of extra money and time to travel to downtown Fort Worth, so while the decision to move wasn’t purely, or even mostly economical, it wasn’t as expensive as I thought it would be.

I tell my tale because I’m very interested in expat living. I recently listened to a podcast with one of my favorite writers, Pauline Paquin, who is an expert in financially independent expat living.

One of her areas of specialization is cheap expat living. She lives in Guatemala on 50 acres, raises chickens, pigs, and all other assortment of farm animals, and uses a machete on a regular basis. She has to haggle with the town mayor for zoning for the land that she wants to develop, and she’s a 15 minute motor scooter ride away from nearly anything.

She’s in heaven.

I’d be miserable.

I lurk on the expat forums quite a bit because I’m always interested in finding out about places that I haven’t yet visited. The common theme that runs through these forums is “where can I find a cheap place to live?”

As Pauline said in the podcast interview, if you want a cheap place to live, you can also move to the Midwest. I can personally vouch that Fort Worth, Texas is cheap (and if you need a financial planner in Fort Worth, I can recommend a great one!).

But, what’s the point of moving somewhere cheap, no matter where it is in the world, if you’re just going to be unhappy? Sure, your dollar will go farther, but will that matter if you spend your days in misery?

Yes, there are many places in the world where your dollar will take you much farther. If you’re a salt-of-the-earth person and you enjoy working with your hands and living off of the land, then the ultra-cheap places on the planet will be your edition of paradise. Look at Pauline. This is a woman who took a motorcycle around Morocco for a couple of months and hacks away sawgrass with a machete. She’s a machine and she’s very down-to-earth. She’s loving her life.

But she also knows what she wants and what she likes. She loves the simple life. Therefore, a place with a low cost of living aligns with her personal values and aspirations. She also reached financial independence at age 29 because her expenses and tastes are simple.

Not everyone is cut from that cloth.

I’m all for looking for places that offer geographic arbitrage, where you can enjoy the same standard of living for a lower cost (see this article on Go Curry Cracker for an excellent example of what $1,000 per month in accommodation expenses gets you in San Miguel de Allende, Mexico). Or, alternatively, spend the same amount of money and have a higher standard of living.

However, just to go somewhere because it’s cheap introduces you to a new risk: the risk that you’ll be miserable with your new lifestyle.

Remember, we experience hedonic adaptation quite quickly. We get used to our lifestyles. When we have to cut back on our lifestyles, we’re not happy. If we trade what’s truly important to use for another way of life just because that way of life is cheap, we’re not going to enjoy our lives.

While expenses are important, they’re just one part of the equation in deciding where you want to live or where you want to retire:

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  • How close is it to the things we want to do? If you still have to travel to get where you will want to spend most of your time, you’ll get tired of the commute. If you’re a long way away from the things you want to do, you’ll rarely go, and you’ll rarely do them. That’s happened to us before. It’s not fun.
  • How well can I integrate into the community? This applies in many ways. If you don’t have things in common with your neighbors, you won’t make strong friendships with them. If everyone else pursues different activities, you’ll have a tough time meeting people. If they all speak Spanish and you only speak English, you’ll be isolated by choice.
  • What conveniences are available and how much do I value them? If you’re used to a more luxurious lifestyle, with gadgets, electronics, and hired help, then will you be able to access those same luxuries where you move? If you’re moving within the U.S., then this might not be as much of an issue, but if you plan on being an expat, this can be a problem. I had a friend who lived in a luxurious, palatial house in Gaborone, Botswana, but she also had to pay an arm and a leg for satellite Internet that was carried by passenger pigeons.
  • Are there things I take for granted where I live that I won’t be able to where I move to? The biggest example of this is healthcare. Pretty much anywhere you are in the continental U.S., you have reasonable access to skilled healthcare. In developing countries, particularly if you live in a rural area, this may not be the case. You may be healthy now, but you could be only a motorcycle accident away from not being healthy. Not that such a low-probability event should cause you to change your lifestyle, but you should also be aware that even relatively simple procedures that can be done quickly and easily in the U.S. may take time and effort in a developing country, or even in rural areas in the U.S.
  • How important is it to be close to relatives? Unless you grew up in a cheap area, moved away, and are considering moving back to your original home, you’re going to be moving away from relatives. This isn’t the big deal that it was before the advent of Skype, Facetime, and Google Hangouts, but you also need to answer the question of whether or not you want to be a long bus ride to the airport and 3 subsequent connections away from family if you ever get “the call” to come home.

If you’re caught in the horns of a dilemma trying to decide on retiring and moving to a place that has a low cost of living that will require a reduction in your standard of living or working a few more years to earn and save enough to maintain your existing standard of living, think long and hard about what’s important to you and what sort of lifestyle you truly enjoy. While it’s not impossible to go back to work once you’ve retired, it will be difficult. Not only will you have a gap in your employment history, you’ll have lost the routine and habit of going to work every weekday. For most people, it’s difficult to extricate themselves from retirement once they’ve made that decision.

If you’re looking to move to a cheaper place to live so that you can save more money, it’s commendable, but, again, you need to answer how sustainable the lifestyle is. I knew several people who took on temporary contract jobs in Bosnia, Afghanistan, and Iraq for a year because they made a LOT of money during the contract. For them, the year of sacrifice was worth it because there was an end in sight. When you move someplace cheap and potentially remote for the same reason, there is more finality to the decision. There is no feeling of “in one year, I’ll go back to civilization.”

For some people, there is an allure in living in cheaper, more distant places with fewer amenities. We did not fall into that category. We let the price tag of the cost of living draw us into a decision we had a hunch we’d regret, and that hunch turned out to be right. Don’t let the price tags attached with places cause you to overlook lifestyle changes that you might not want to make; otherwise, you’ll wind up moving twice in a short period of time.

Remote and cheap or more expensive with amenities? Which would you choose? Let’s talk about it in the comments below!

About Jason Hull, CFP®

Jason Hull, CFP®, is the Chief Technology officer of myFinancialAnswers, an online comprehensive financial planning service.