Personal Finance
The Essential Guide to Saving Money When You Move
Are you thinking about moving because of a new job or just need a change in scenery? Depending on where you live, relocation could save a bundle in the long run. Unfortunately there are also plenty of tasks as well as upfront expenses required in order to make a move happen.
With that in mind, we will be looking at the tasks involved along with their related expenses and offer tips on how to save money each step of the way. We’ll even dive into the tax deductions that may be available to you, as well as different options for covering the costs associated with a big move.
Planning Your Move
It seems that no one really likes moving. Perhaps that’s because it requires you to pack up your life only to unpack it all again, but it might also be because of how much money it can cost. While in-town moves can be accomplished with a couple of friends and the promise of pizza, moving to a new state requires a great deal of planning and can cost a pretty penny. Let’s take a look at what you should expect.
Downsizing
Before you start packing there’s one other task you need to complete: downsizing. Chances are there’s a good amount of stuff in your possession that’s not worth taking with you. Instead, go through all of your items and decide what to keep, what to throw away, and what to sell. You might also consider donating items, which could even earn you a tax write off if your donations are of value.
By getting rid of your junk before you move you’ll not only save space (which in turn saves you money) but you’ll also be able to live a less cluttered life in your new home. Doesn’t that sound wonderful?
Tip: A good rule of thumb for deciding whether to part with an item is thinking of the last time you used it. While there are some exceptions, if you haven’t used something in more than a year, you probably don’t need it.
Obtaining boxes
Another way that planning ahead can pay off is when it comes to boxes. First you should never underestimate how many you may need for a move or how what can seem like a small expense can add up if your paying for your materials. That’s why it pays to hold onto any sturdy shipping or appliance boxes you might obtain leading up to your move.
You might also be able to get your hands on free boxes through work. For example how many cases of copy paper does your office go through and what becomes of those boxes? Perhaps if your job doesn’t have a lot of spare boxes maybe a friend’s does. If all else fails, consider asking your local supermarket or other retailers if they have any boxes to spare. Obviously you should always ask permission before taking anything but chances are they’ll be willing to help.
Tip: Having a variety of box sizes can come in handy. For example having a huge box filled with books is just an injury waiting to happen. Medium-sized boxes can be used to break up heavy loads while small ones can help separate out tinier items that may get lost otherwise.
Packing Tips
When it comes to packing, every inch of space counts. In fact, while you’ll likely want to try to maintain some organization by dividing your stuff up by room, you will want to utilize any extra space by adding miscellaneous items to fill out a box. Also be mindful of how you’re placing the items in the boxes and don’t be afraid to repack one if you spot some space-saving opportunities.
One way to conserve space is, if you have dressers or other pieces of furniture with removable drawers, don’t forget to use these to your advantage. While you want to move these large furniture pieces with the drawers removed, you can pack clothes or other small items in the drawers separately and then place them back once the furniture is in the truck.
Some other ideas include placing trash bags over a section of your clothes on hangars (poking the hangars through the closed part of the bag and tying it off at the bottom) so that they stay clean, compact and organized without taking up box space. As for the kitchen, you could consider packing spices and other non-perishables inside of your pots or other kitchen items such as rice cookers. The real key here is creativity so find something that works best for you and go with it!
Of course keeping your items protected is also important. However you may be able to avoid purchasing expensive bubble wrap or packing peanuts by instead utilizing old towels, clothing, sheets, or other soft objects you can wrap more fragile items in. Newspaper will also come in handy for this task as will any tissue paper you may have lying around.
Tip: For more clever and creative packing/moving tips, Listotic has 33 ideas you might want to consider.
Set Packing Goals and Sticking to a Checklist
Waiting until just before moving day to pack is a big mistake for many reasons. In addition to the stress it causes, last minute packing often leads to a lack of organization, mismanaged space, and even damaged or misplaced items. Worse yet you may even discover you’ve run out of boxes or space just as the truck arrives.
Understandably there are a few items that you won’t be able to pack until the last minute as they are required on a daily basis. However most other things will be able to go into boxes right away. That’s why taking the time to set out a packing goal schedule is a great idea.
In addition to setting goals and deadlines for your packing, you’ll also want to consider a checklist that will help you accomplish other necessary moving tasks such as changing your address with the post office, getting your utilities switched off, etc.
To help you out we’ve created just such moving checklist that you can download here. Under each section is blank space reserved for you to enter any additional items you’ll be able to pack. Hopefully using this checklist and planning ahead will not only save you money but, more importantly, reduce a lot of stress.
Tip: When setting your account termination dates, be realistic about how much time you’ll have on moving day. While it would probably be nice to have WiFi until the moment you pull out of the driveway, worrying about returning modems or other items is the last thing you want to be doing at crunch time. On that note, you should also be realistic about what items you’ll need in the week leading up to your move and so you don’t leave too much for yourself on the big day.
Moving Expenses
Typically the largest expense you’ll endure when moving a significant distance is paying for movers or if you’re are going the DIY route renting a truck plus additional fees for gas and insurance. The longer the move, the more money it will cost you. Let’s take a look at your options along with their pros and cons.
Full-service movers
Some people swear by hiring full services movers and would never imagine using anything else. The benefits here are that you don’t have to worry about loading, driving, or putting gas in the moving truck. Of course the downside is that you will pay a premium for this service and even more if you also want them to help you pack your stuff.
There are also different kinds of moving services. If you are looking to save a little money but still don’t want to do it all yourself, you should consider companies that aggregate multiple people’s possessions in one big truck.
The way it works is the moving company will store your stuff while they wait for other customers to sign up that are moving to a close location. Once they have enough customers to fill a delivery they pack everything into a large van or semi and deliver to multiple customers instead of offering individual door to door service. While this is typically cheaper, be advised that it could also mean you’ll be without your possessions for a while, depending on the logistics of the move. Also keep in mind you’ll need to be able to accommodate an 18-foot truck at your new home as they unpack your belongings before heading to their next stop.
Tip: When looking at different movers it’s probably worth visiting Yelp and looking up reviews from past customers. Keep in mind that, just like with most reviews, people can exaggerate or even make things up but there may be a good deal of truth to be found that may make you think twice about who you hire.
Do-it-yourself — renting a moving truck
If you’re really looking to save money and don’t mind doing the heavy lifting (literally) there are also many do-it-yourself options. The trick with renting and driving your own moving truck is to find the right vehicle. Moving trucks come in many sizes and, while the larger trucks cost more money and use more gas, going too small and not being able to fit all of your belongings can also be a costly mistake.
When determining what size truck to get you’ll want to take inventory of your possessions and measure any large furniture pieces. Other options to look at include attaching a trailer for additional space or getting a hitch in order to tow your car. If you’re still not sure what size to get you may want to head to your local truck rental location and see them for yourself. While you’re there, if you’ve never driven a box truck before, you may want to ask if they’ll let you take a quick test drive to make sure you’ll be comfortable on the road.
Tip: Often times it’s worth hiring a professional to at least help you pack the truck. Not only will this help you save time and energy but will also ensure that you’re packing the truck efficiently and maximizing your space. U-Haul has a site that can help you find individuals and companies that will work hourly rates to help you pack your truck regardless of whether it’s a U-Haul truck or not.
Comparing Prices and Getting Quotes
Before hiring movers, renting a truck, or making other plans you’ll first want to get multiple quotes. In order to do this you will first need to take a complete and fairly detailed inventory of your belongings including the dimensions of your furniture and approximately how many boxes you’ll have. Moving companies might also need to know other information, such as how many rooms are in your house, if you have stairs, and whether there’s convenient parking at your location.
As you might expect prices can vary greatly depending on the company but using a moving calculator should at least give you a ballpark figure of how much your move will cost depending on which option you choose. Note that there also many other calculators you might find online but most will forward your information onto companies who will then contact you with quotes. This can actually be helpful in some cases but of course you’ll also want to make your own list of companies to contact and obtain quotes from on your own.
Tip: Don’t forget to take careful notes and ask questions about what each moving service’s quote includes. In some cases they may be giving you a base quote separately from other fees (such as an extra charge for stairs) instead of a grand total. Additionally some quotes may include tax while others do not — this can make a huge difference when you’re comparing your options and their prices.
Cleaning services
If you’re renting and would like your security deposit back, chances are you will need to do some deep cleaning before moving out. While there’s a lot you might be able to do yourself such as vacuuming, dusting, scrubbing, and mopping, it can be difficult to prioritize cleaning when you’re scrambling to pack.
Although it could cost some extra money, it may be worth it to hire a cleaning service to clean your home after you’ve packed everything up. This will help save you stress and the crew will likely do a better job than you would do anyway. In fact if you are renting it might be the difference between getting a full deposit back or nothing at all. Just remember: no one wants to move into a dirty home whether they are renting or buying so pay it forward.
Tip: If you live in an apartment complex you may want to ask the management if they have any recommendations for cleaning companies in the area. In some cases they may have an arrangement with certain services that could net you a discount.
Deposits
In addition to deposits you might have to pay to hold an apartment, keep in mind that you will likely also need to put down deposits for various utilities and services. This could include water, gas, electricity, cable, Internet service, etc. and, depending on where you live, these could be five different accounts requiring five different deposits. Be sure to look into what accounts you will need to start before you move so you’re not lacking any essentials as you’re trying to get settled.
Tip: Be on the lookout for ways to waive deposits. Some services won’t require a deposit if you sign up to have your bill paid automatically each month.
Insurance
Have you ever pulled into a McDonald’s in the middle of nowhere with all of your possession sitting in the truck and wonder what would have if someone just drove off with it? Sadly that sort of thing does occasionally happen. In cases like these having insurance can really come in handy.
Some movers will include insurance as part of their service quote while others will make it an additional option. As for rental trucks, many will offer both additional coverage for the vehicle itself as well as another policy that includes the items you have stored in it. Your homeowners or renters insurance policy may already cover your items even though they’re in moving limbo so be sure to consult your policy or ask an agent to be sure.
Tip: If you are driving your own moving truck you may also want to invest in a strong, thick lock to keep your cargo secured just in case.
Tax deductions
There are plenty of financial benefits to moving including the potential for a lower cost of living, the promise of a new job opportunity, and much more. Incidentally there could also be some tax benefits available to you assuming that you’re moving for the purposes of starting a new job (or finding one soon after you get to your new location). Let’s take a look at how you can qualify for these deductions and what kind of expenses you can write-off:
Meeting the requirement
There are three “tests” you must pass in order to be able to deduct relocation expenses on your taxes.
1) First you must show that your move was related to work. This is accomplished by showing that you started your new position reasonably soon after moving.
2) Next you will need to pass the “50-mile test.” If you’re moving across the country, this will be easy to pass, although the rule itself can be confusing. A common misconception is that the 50-mile test means your new home must be at least 50 miles away from your old job. In actuality it means your new job needs to be at least 50 miles farther away from your former residence than your old job. Put into simpler terms, if your old job was 20 miles from your home, your new job needs to be at least 70 miles away from your old home.
3) Finally you must work full time for at least 39 weeks out of the 12 months following your move to once again show that your move was work-related.
If you pass these three tests you are able to deduct some moving expenses on your tax return.
Tip: Even if you don’t have a new job lined up in your town just yet be sure to note your mileage and expenses anyway. That way if you do get a full-time job after your move you won’t miss out on these benefits.
Mileage
If you’re driving to your new home you’ll want to be sure to track your mileage along the way. Why? Depending on how far your move is you could end up with a hefty chunk of change to deduct on your taxes. For 2018 you can write-off 18 cents for every mile you drive for moving purposes. That might not sound like much but it can certainly add up.
Tip: There are a few different ways you can track your mileage but the simplest is to reset your trip odometer. Alternatively there are many apps including Mile IQ that will actually track your miles using the GPS on your phone.
Other expenses
While there are a number of things you can’t write-off (loss of security deposit, fees for breaking your lease, or vehicle registration fees), there are plenty of things that you can. For example any expense you incur for packing or shipping your possessions is eligible for deduction. Additionally, while you can’t write of meals while on the road, you can deduct lodging.
Tip: The moral of the story is keep all of the receipts for expenses you think could be deductible and speak to a tax professional when you’re ready to file. You may be pleasantly surprised at the tax savings you have in store.
Covering the costs
So you’ve calculated all of your costs for moving and are planning to keep your receipts for tax time, but how are you going to pay for all of these expenses? One of the most frustrating things about moving is that you have to pay out deposits for your new home or apartment before getting your old ones back. Furthermore, while the tax deductions are great, they won’t help you until the following year. If you need some extra money to help make your move happen, here are two options to consider.
Credit cards
Perhaps the easiest solution is to put your moving expenses on a credit card. In fact this is probably a default for many Americans. However the first thing you should be aware of is that, for some deposits such as utilities or rent, you may not be able to use a credit card.
Additionally you’ll want to pay close attention to your credit card’s spending limit and interest rate. First, maxing out or getting close to maxing out your card can hurt your credit rating. This could cause you to have to pay higher deposits and may limit your ability to get a loan or a new credit card in the future. As for interest rates, credit cards can get very expensive very quickly so you won’t want to leave a large balance on your card for very long.
Tip: If you have good credit keep an eye out for balance transfer offers on your existing cards or consider applying for a new card with a 0% interest introductory rate. If you run up a balance on a card that has a high rate, transfer a portion or all of it depending on your limits to the 0% card. You will be charged a transfer fee up to 5% of the total transfer so remember to read the fine print on each offer.
Remember though you should always try to stay below 50% usage of your credit limit on each card, as that is a major factor in your FICO score calculation. Also those low-interest offers are for a limited time so make plans to pay off the card before that offer expires or you may end paying a bundle in interest rate charges on top of the initial transfer fees.
Personal loans
One alternative to using a credit card to cover your expenses is to obtain a personal loan. Today there are many outlets for getting a personal loan, including online lenders that will allow you to borrow a lump sum of money, which is then paid back in monthly installments. Plus, depending on your credit, you may be able to secure a loan with a lower interest rate than your credit card carries.
What’s great about personal loans is that the money you borrow goes into your regular bank account, making it easy to pay your deposits. Additionally you can borrow more than you need to cover moving costs as a way to help you out while you get settled in your new place. If you do end up with more money than you need you can always pay it right back as well.
Tip: You will want to choose a loan that does not charge any prepayment penalties. That way, when you do get your security deposit check or tax refund, you’ll be able to apply it your balance and pay off your loan sooner, which will save you money on interest fees.
Whether you’ve been offered a job that will require you to relocate, are dreaming of a lower cost of living, or even want to hit it big in New York or Los Angeles, there’s a lot to consider when planning a move. If you do it right you can minimize your upfront moving expenses.
Even when you do minimize your moving costs through creative packing methods, the numerous expenses and deposits can still add up. Tax deductions can help relieve some of the pain the following year. In the meantime options such as low-interest credit cards or personal loans can to help you cover the costs. So, if relocating seems right for you, get packing!
