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:

  • 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!

This article appeared in the Control Your Cash Carnival of Wealth. Click. Learn. Laugh a little. Come back!

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About Jason Hull

Jason Hull is a Fort Worth financial advisor. Before becoming a Fort Worth financial planner, Jason co-founded, built, and sold a software development company. He is a CFP candidate, has a MBA from the University of Virginia, and a BS from the United States Military Academy at West Point. He is the owner of Fort Worth financial advisor Hull Financial Planning.

Comments

  1. Do you think our adaptation works in reverse, too? That is, after the period of adjustment, might I be as happy in suburban Ft. Worth as I would be anywhere else?

    Does everything inevitably just feel “normal” after a time?

    • Some aspects have hedonic adaptation in reverse. People, for example, overestimate how much misery they’ll experience when they come down with a chronic disease, because they adapt. That doesn’t mean that they don’t feel bad, but, rather, that they adapt to it over time. The same holds with the example we’re talking about. There’s a difference between adapting to your situation and enjoying your situation. We adapted to our situation when we moved to a place that wasn’t for us, but we never enjoyed it. On the flip side, now that we’re in downtown Fort Worth, we’re enjoying it immensely.

  2. For the record, we do have internet, a fridge, and even AC!

    I compared the costs of retiring abroad vs in the US
    http://reachfinancialindependence.com/early-retirement-abroad/
    and for me it is worth it if you can live better on the same amount or less. Staff come to mind, having a $300 a month full time nurse so you can stay at home instead of in a retirement home, you can generally afford bigger and better living quarters too, if you compare apples to apples. Guatemala City has multi million homes and its best condos can compare with properties in mid to large US cities.

    I generally suggest you list down your priorities and compare the costs based on that.
    We pay premium to fly out of Guatemala (safe a few Spirit flight to Miami), but the bigger house, staff and low cost living makes up for it over the next 10 months.
    If you want to see your family every 3 months, it is better to relocate within the US.
    Same if you want to live like a pauper abroad, the flights back home will cost you more and there is no point living on rice and beans and not enjoying your new home country. People on early retirement forums call me crazy for living on so much money in Guatemala, when it can be done for $250. But that wouldn’t be living that would be surviving, which is not a life goal of mine… thanks for the spotlight!

    • Hey, Pauline! Thanks for hopping on here to share insights! That’s an excellent article you referred to, and I’d read and reread it several times. I hadn’t even thought of full-time in-house nursing help; most people would prefer to stay at home and receive care when they are older than go to a nursing home or to the hospital. I wonder if the people who harass you for not living on $300 a month are truly enjoying their lives, or if they’re just beating their chests about their cheap cost of living to make themselves feel better about the tight box that they’ve contained themselves in.

  3. This reminds me of my brother thinking of buying a place about 60mins by driving, or 90mins by public transport, from his work. The main reason was that the house is cheaper in that neck of the wood, and that the land will appreciate “over time” (I live in Vancouver, the most over-rated city, and most over-valued RE in the world.) When I heard of his plan, I asked if he’s willing to spend 2-3 hrs a day, in traffic, for the next 25-30 years. That stopped him from considering such a plan. Now he’s thinking of renting a place closer to work in the upcoming years.

    • People forget to include the value of their time when making these decisions. They look at place A for $X but 60 minutes away from anything or place B for $Y (some amount greater than $X) 10 minutes away from things, and they mistakenly just compare $X and $Y, because we don’t value time as much as we value money.

  4. Hi Jason

    Nice post, you share a great thought process for thinking about where to live. When we were living in the US, we chose our home location based on quality of life, which meant we could walk everywhere. It just so happens that when you walk everywhere you also spend very little
    http://www.gocurrycracker.com/home-sweet-home/
    We think it is the best of both worlds

    Now that we are living the permatravel lifestyle, we still stay in the same place for extended periods. We are able to live a very affluent lifestyle for not very much money. The link you shared to our current rental home is one example.

    We do share all of our costs for our travels if anybody is interested in comparing their current lifestyle to ours. We spend more than Pauline but we spend less than many in the US. Here is a summary of about 6 months in Mexico: http://www.gocurrycracker.com/how-much-does-it-cost-to-travel-in-mexico/

    Thanks Jason, great article

    Jeremy

  5. Pauline is right about the Midwest. Not only that, but unemployment is low and pay is great when compared with cost of living. I live in Des Moines, which has it all except top-level pro teams and warm weather in the winter. It’s probably one of the best-kept secrets in the nation.

    http://www.usnews.com/news/articles/2011/06/01/10-cities-with-the-highest-and-lowest-real-incomes

    • Hi Marshall–

      Thanks for commenting! Your experience in Des Moines is similar to what I see in Fort Worth. Thanks to technology, it’s also possible to live in one of these places and work for an employer/client who lives in a higher cost of living location. It’s possible, though, to take cheap to an illogical extreme, which is what we originally did when we moved to Texas.