Ask Jesse: What should we consider when moving from irregular income to regular income?

I have been a stay-at-home mom since the beginning of 2011, but before then I worked hourly and my schedule constantly changed. My husband own his own small seasonal business, is in the ministry (he receives a housing allowance), and has worked any job that has come up for the past two years (always temporary, part-time, changing schedules).

He now has a job offer in another state that is a full-time position with a set salary and benefits. This would be the first time ever in our marriage of four years that we’ve had a full-time job like this. We are very excited, but we are quite nervous as to how to figure out what our budget changes might be.

What are some things that we should consider when looking at the job offer? Also, any tips on what to do when considering a change from one state to another and how to figure out the cost differences between states? – a reader

Making a move for a career change is a momentous event, even if you are not moving out of state. We have moved a number of times and have always had an irregular income, so proper budgeting is always key to making the transition a success.

First, I would make sure that you and your husband are where you are supposed to be, that you are on the same page, and that you both have complete peace about making the jump. These are the most important considerations to make and you can easily be overcome by the enticement of the regular paycheck. If you make this move prematurely, without family harmony, or for the wrong motives, that regular check will probably not go as far as the old irregular income–or at least there will probably be conflict and frustration attached with it.

Second, if you pass the first test, determine the lowest amount you could live on, add some wiggle room, and then create a budget based on that amount (provided it is still less than your set income). If you’ve never budgeted before, you’ll want to give yourself some breathing room as a cushion while you get settled into the new area and become more accustomed to budgeting.

After you get somewhat acclimated (usually somewhere around three to six months), reevaluate your budget and your financial priorities to see what areas need to be tweaked. Remember, a budget is a living document. It should be changed as your needs and priorities change.

Do keep in mind that just because you don’t use all of the money you budgeted in a category doesn’t necessarily mean you need to lower that category. I’d wait for at least six months to a year before deciding to significantly cut a budget category because many categories will fluctuate throughout the year. For instance, if we have money leftover in our utilities budget (a category that tends to fluctuate quite a bit based on the time of year), we always keep that budget “bucket” balance accumulating to make up the difference on months when our utility bills are higher.

Another thing you should consider in analyzing this job opportunity are tax law changes. I once worked in a city other than where we lived that imposed a municipal income tax. We had to make sure we included that in savings just in case the employer withholding was insufficient to cover it.

Finally, the last consideration would be housing. I know that there are a lot of people adamant that you need to buy buy buy, especially in this economy. But, if you are moving to another area, my recommendation would be to rent, especially in this economy, and definitely if you are moving to another state.

Before buying a home, not only do you want to make sure you have a good down payment saved up and know that you’ll be living in an area for longer than a year or two, but it’s also helpful to have a better feel for the areas of town you’d want to live. You’d much rather rent for six month or a year and scout out your home and location options, than to just run ahead and buy something when you’re really unfamiliar with the area.

For those of you who have made a similar jump, I would love to see your other recommendations and considerations in the comments.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.


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Comments

  1. Heather says

    Find out about sales tax where you will move? Is food taxed? In some states it is rather high, and you will want to work it into your budget.

    Perhaps look for coupon blogs in that state and read up a little. You can get a sense of what prices are like there. Of course, if you know someone already in that state, he or she will be a valuable resource.

    Five months after I moved to MD back in the 90s, I went to get new vehicle tags, and was shocked to discover that I had to pay 5% of the value of the car to bring it into the state! Ended up being $500, which was a big ouch on a teacher’s budget. Apparently, it would have been less if I had gone in as soon as I moved there.

    • Lana says

      I agree with the food tax point. Here in SC we have no food tax but our son and his family live in Alabama and they pay 8 or 10% on food and everything else. (Exact number escapes me right now.) It is shocking when I go shopping there and my total bumps up from the high sales taxes.

      • Adriana says

        Going along with the check the couponing blogs, I’d check blogs for neighboring cities. Perhaps you end up in a city with only a few stores and no good deals. However, maybe there’s an Aldi an hour ago where you can go once a month or every two months to a huge stock up.

        If you live close to a border, I’d check on prices in the next state. I live in NM and we pay ~7.5% tax on all non-food items. I’m really close to Texas though, and they charge tax after coupons. So, if I go to Walgreens and buy $100 worth of merchandise pre-coupon and it comes out to ten dollars after coupons, I’d have to pay ~$7.50 in taxes in NM. In TX, I’d pay $0.80. It adds up fast. (It doesn’t warrant a drive out there

        • Adriana says

          Oops, submitted that too soon!

          I meant to say that not every deal warrants a drive out of town, but I have family out there, so I always make sure to plan my deals around trips to family (if there’s time, of course! Family comes first).

    • Kristine says

      I agree. Sales tax on food makes a big difference in a budget. We moved four years ago from a state that didn’t have tax on food to one that does. Our sales tax here is over 9%, too. I still hate the fact that sales tax adds so much to my grocery receipts.

  2. Jennifer H says

    I agree with you on renting. It is only after you have been in an area for a while that you can see which parts of towns are a good value, and which areas you would really not want to live in.

    • Rachael says

      We just moved to a new city, and are renting. Our children are not in school yet, so we wanted some time to check out the schools before settling on a neighborhood.

  3. Meagan says

    Check out how much your automobile insurance will be. See how much it will costs for tags and titles for your vehicles. When we moved out of state, the decrease in the cost of automobile insurance was offset by higher costs for car tags.
    What will it cost for healthcare, including insurance premiums, co-pays, and deductibles? Are there in-network doctors in the area? Does your family have special healthcare issues to take into considerations (like if you need a cardiologist nearby). We moved to a very small area with little healthcare options. That greatly affected which health insurance plan we chose thru my husband’s employer.

  4. Lana says

    We moved from Florida to SC 18 years ago. We did not take into account the fact that a pay increase my husband received bumped us into another federal tax bracket and it was a significant difference in with-holding. Also SC has a state income tax and Florida does not. Those 2 differences made more of a dent in my husband’s paycheck than we expected.

    We also pay property tax on our vehicles in SC and we really took a hit when we put tags on our cars because we had to pay those taxes first.

  5. Courtney says

    My husband and I just moved across the country, from California to North Carolina, and let me just say that I WISH I had all of your advice back in July, before the move. We definitely made quite a few financial mistakes, and are struggling now because of them.

    However, I finally started a serious budget, clipping coupons, and saving every penny, literally, in our change jar! Better late than never, right?

    I really enjoyed this post and would love to hear more. Thank you.

  6. Anne says

    Find out how often he is paid and when. My husband once worked a job where he was paid once a month. It made budgeting a little more of a challenge. He has had other jobs where it was every other week. Then other jobs that was the 1st and 15th of the month.

  7. Paula says

    The Chamber of Commerce in the location you will be moving to can provide information on the cost of living. Also, consider property taxes and income taxes, besides sales taxes. Some states have no income taxes, but high property taxes (like Texas), while other states have both.

  8. Laura says

    When we moved to another state for a job, we registered our cars right away. This wasn’t a problem the first year because we had budgeted for moving expenses, but thereafter it was a pain because we had to pay tabs for both cars at the same time. It would be helpful to know the local laws & when penalties kick in so you can stagger the months in which you register your vehicles. Hopefully you can avoid heavy-expense months like December and having to pay both fees at the same time.

    • Emily says

      You also need to know the law of the state when registering your vehicles. In IL you have 30 days to register after you move.

  9. Eleanor says

    You need to compare costs of several things between your current location and the new one. Cost of food, gas, utilities, insurance (health, car, property). What will the taxes be like? How much can you expect to pay in rent vs a mortgage. We moved last year to Texas and it’s actually cheaper for us to buy than rent. Finding out when you get paid is important. We didn’t realize until it happened that my husband’s church pays 4 times/month. Boy was that first 5th Sunday a shock! Now I clearly mark 5 Sunday months. Don’t just set a budget based on where you live now.

  10. Dee2 says

    When my husband got transferred from Pittsburgh to Connecticut, 19 years ago, the cost of everything was sticker shock. Everything cost more, down to renting a movie. We paid all the same taxes, plus personal property tax on our cars. Add the cost of several trips back to visit grandparents every year (500 miles each way), and it became next to impossible to save money. I worked part time until our kids went to school, then started full time. We saved 90% of my salary to make up for lost time.

    I was also suggest you consider the cost of the actual move (truck, boxes, gasoline, etc) and how much it will cost to set up in a new city. Will you need to pay security deposit, first and last month’s rent up front? (I agree with Jesse to rent.) How much will it cost to turn on utilities? Some electric companies want a deposit and run a credit check. Is your lease up on your present place if you rent, or will you have to pay out your lease to move? If you own, can you rent your house or do you have to sell? Don’t forget to budget the realtor’s commission for selling your house (5 – 6%).

    The best thing we did when we moved states was live in a town with beaches! It also made for a 10 minute commute for my husband. Since we knew every school vacation would mean a trip west to visit grandparents, we thought we could spend our “home” time at the beach. The kids loved it. So did I. And we didn’t spend money on “vacations.”

    We also chose a neighborhood with lots of kids the same ages as our kids. The other moms and I created a day-care co-op when our kids were in pre-school and half-day kindergarten. We each took a turn taking care of all 4 kids one morning a week, fed them lunch and put them on the bus. We could each work a few more hours, had free day-care and our kids adored each other.

    Good luck! And Jesse’s first point is critical… only go if you KNOW you are supposed to.

  11. Jackie says

    Our family moved last week to a new city for my husband’s job. He too, is in the ministry, and is self-supported. We’re in the process of getting our budgeting figured out but I completely agree with Jesse’s first point. We don’t make a lot of money now (I’m a stay at home mom now, when before I brought home 2/3 of our income.) All of the changes are hard and there are so many stressors that would feel overwhelming if we were not 100% confident that we were brought here for His purpose.

    And don’t be afraid to rent for a while! We own a home in our old town that we couldn’t sell and had to find renters. We’re renting now in the new place and people always ask us if we’ll buy and think we’re a little crazy when we tell them we’re happy to rent for now.

  12. Amy Reynolds says

    He is totally right about renting. We move from Louisiana to Texas in 2007, and because the move happened quickly, we ended up renting for a year. It was a huge blessing!! We were able to get to know the area well and decided exactly where we wanted to live. We were also able to adjust to our new income and cost of living so we knew exactly what we could afford. We rented cheap. To be honest, it was a crummy house in a not-so-pretty part of town, but it allowed to save a lot fast, and we just knew it was only for a year. It was one of the wisest decisions we’ve ever made.

  13. says

    When we moved and bought a house in PA, we were shocked to find out we had to pay a real estate transfer tax equal to one percent of the purchase price of the home!

  14. Karen says

    We have moved from MS to NC to LA back to NC in the past 10 years. All of the above advice is great. One thing that has bitten us is the housing. When we moved to NC the first time, we set ourselves up with an apartment complex online. It looked nice and the staff was nice on the phone. It was in a smaller town outside Charlotte and that is what we wanted. When we arrived at the apartment, the apartment was not ready and we quickly realized that it was not enough in the small town. We were homeless for a couple of days until we found another apartment, which ended up being $100 more per month. When we moved to LA, we looked online and in newspapers for rentals to approximate what rent would be. It wasn’t until we actually went out and looked at the properties that we realized, to live in something comparable to NC, our rent would be $1500 a month! Talk about sticker shock. This was due to the area being the new “it” place after Katrina hit. After being there awhile, we learned we were in the most expensive parish in the state. Of course, these choices were made with schools and neighborhoods in mind. When we moved back to NC, we signed up for a lease/purchse deal, which was cheaper than our LA rent. But after 6 months, I could not find a job and the rent was too high. We ended up moving again to another town in NC for cheaper rent. My advice: if possible, go physically look at the area you are moving to twice. Ask the people your husband will be working with where they live and what it is like there. I know with kids, schools are the foremost thought when moving. Try to only sign a lease for 6 months. You can always sign another lease later on. By then, life has calmed down and you know where you are financially and physically. Check the following: car insurance rates, homeowners insurance rates, tags, personal property taxes, state sales tax, income tax, utility deposits and grocery prices. The first time we moved to NC and went to the grocery store, milk was $5 a gallon. Even with my husband’s raise of $7500 a year, the grocery prices made the raise disappear. Even though with each move we have made more money, cost of living and cost of moving ended up making the large raise not seem so large. Money can be a motivator for moving, but don’t let it be your top priority.

  15. Carol says

    I was offered a position in Southern Indiana about 10 years ago. I was glad that I had the prudance to explore all areas of the cost of living. I was a single mom and my daughter was still home then. I needed a 2 bedroom apartment. Prior to accepting the position I checked rental rates on apartments in the area. Finding that they cost approximately an additional 1/3 as much as where I was the salary they were offering was not enough to cover living expenses. I contacted the prospective employer to negotiate salary and they would not budge. Even though it had an excellent benefit package I had to decline the position. It required that I work days and evenings on different days and no set schedule, so there was no option of getting additional work. You might want to explore rental rates by doing an apartment search online to get an idea ahead of time. If it is a larger metropolitan area it may vary quite a lot depending on neighborhoods, but you don’t want to be in an area that is unsafe either.

  16. Michelle says

    Don’t forget that for the first month you can end up doubling up on bills because final bills from your old residence will be coming to your new address while you might already be getting bills for your new services. It is good to make a list of all your current services that you pay and consider if you will be swaping new for old or if you will be able to drop some or need to add some. For instance if you have a well where you live but move to a place with city water that will be a new bill or vice versa. There are several cost of living calculators that you can use on-line. You enter your old state and new state and it calculates an estimate of percent of increase or decrease in the cost of living. Try several to see if you get consistent answers because it is just an estimate. Also, if the company is offering money toward moving expences that can be taxable. We had one move and the amount sounded like plenty but a huge amount got withheld for taxes.

  17. says

    My family and I moved to a suburb of Minneapolis a little over a year ago. It was a tremendous change from living in northern Indiana my entire life. When my husband got a wonderful job opportunity in Minneapolis, we really did not have to consider for too long if it was the right move to make because he had been looking for this type of position for 3 years.

    We had a 3 year old daughter and 10 month old son at the time of our move. Now we have a 4 month old son too :) One of the first things we did was to look up all of the areas that were close to my husband’s work, that were family friendly and safe. We were fortunate that most of the suburbs are extremely safe here.

    I would also recommend that you rent. We have been renting for over a year and I do not think we will ever buy a house here, because the houses are just too expensive. We eventually plan to move back to Indiana where things are much cheaper than here. Even when you are looking for a place to rent, it is good to remember to be careful how much you are willing to spend on rent. I know that we were so excited to move here, that we were looking for places that were way out of our price range.

    I would also recomment that you rent from a rental management company, especially since you ar enot familiar with the area. They will be able to sent out people right away if anything goes wrong with your house and they will help you get set up with other things you may need too.

    If possible, you should check what the food prices are because you may have to increase your grocery budget like we did.

  18. Stephanie says

    In the years we have been married, I was the one who had irregular income the most, while my husband was the one who had the regular income we could depend on. At that point we were working on becoming debt free. All of my income went towards that goal, whenever it came in. Being as we couldn’t really depend on my income, we had budgeted everything off of what my husband made. When we both had steady employement, the same concepts applied. It just happened to be that I knew ahead of time exactly what would be coming in and when. It made it easier to plan and save. We didn’t change any of our spending habits. It turned out that we could actually live off my income (which was half of my husbands at that time) if needed. That was a nice realization. We kept our living at that level, even though I was bringing in more money.

    One difference I see in regular vs. irregular income is that you will now not have the highs of money coming in, but you will also not have the lows. It is still good to plan ahead and save for what you can when you can (extra money in the bank never hurts), but you may have the freedom to try new things.

    Not really knowing how you do your budget now, I am hesitant to suggest any changes. If you are comfortable with how you do things, you might keep doing what you have been. I think it would be harder to go from regular to irregular, rather than the direction you are going. Use the same concepts you have been using. You may see that some things don’t work, but my guess more will work than you think.

  19. says

    My husband and I and our two kids just moved from MD to CA this week. I would consider a number of things. How much will the move cost you? (U-Haul, Gas, Hotels, Food, New Driver’s Licenses/Registration) What costs will be eliminated? Can you afford to buy a house? We are renting a three bedroom for less than we pay for the mortgage on the two bedroom we still own in Maryland. What areas in town are good for your family? Who will help you move? Where will you stay if your house isn’t ready? Who will help you move in when you arrive? Anyhow, I’m hoping to write some blog posts about it soon once the dust settles! Let me know if you have any more questions. :)

  20. Sarah says

    The advice about renting for a year before buying a home in a new city is great advice, and advice that my father-in-law really could have used 6 years ago. He moved from Arizona to Northern Virginia, and ended up buying a house that didn’t look that far from work, but in Washington DC traffic it ended up being an insane commute (especially since there’s a steep learning curve to find the limited alternate routes in the area). Then within a year of moving there my mother-in-law got really sick and couldn’t make it up the stairs anymore. If he’d had longer to look for a house, he may have been able to find a house with the kitchen and bathrooms on the ground floor. But the house he’d bought had the basement and garage on the ground floor, with all the living space upstairs, so they had to build a bathroom in the basement and my mother-in-law spent years not being able to cook for herself since she wasn’t strong enough to climb the stairs. Most of their living space was unused, they were upside down on the house (since they happened to move at the height of the market in a MUCH higher cost of living area), and she was alone in the basement a lot waiting until her husband made that long stressful commute and cook her dinner upstairs. Their whole lives would have been different if they’d rented first and got to know the area before buying their next house.

  21. tara says

    I would say plan on about $4000-$5000 for moving cost especially if moving out of state. We just moved from NC to VA about 6 weeks ago and that is about what it cost us and we did not use full service movers.
    We did use uhauls movers service which worked really well for us. For around $120-$160 depending on the area you can get a mover company to come to your house for 2 hours and do a variety of things. We had them load our uhaul in NC and then had another crew meet us in VA and unload our uhaul there. It worked great.

  22. Kristine says

    My husband was a pastor for 10 years, but he resigned a few years ago due to some theological disagreements with our denomination’s doctrines. So we moved to another state and lived with my in-laws for four months (which I wouldn’t recommend to anyone, no matter how well you get along normally) until my hubby found a new job. Fortunately, that was before the economy got really bad, and he found a job fairly quickly, but he had to start over in an entry-level position, and we were (and still are) making much less income than previously. I’m a stay-at-home mom of three kids.

    We rented a huge four-bedroom, three-bathroom parsonage where we lived before, so we’ve never owned a home, and rent is more expensive where we live now. We currently rent a three-bedroom townhome with 875 square feet for the five of us, and it’s been a hard adjustment for me getting used to the smaller living space, but it’s all we can afford right now. On the bright side, it’s close to my husband’s job, and the schools here are very good. The good things about renting are that we don’t have to pay for household maintenance, we don’t have to do yard work, and water and garbage services are included in the cost of rent. We’ve rented here for four years now and will probably not be in a financial position to buy a house anytime soon, but I’m okay with that now, and my hubby really has no desire ever to buy a house.

    In our situation, we had to move because it was a matter of integrity for my husband either to stay in a position in which he was expected to teach doctrines with which he could no longer agree or to resign and move despite the financial and other hardships. We both agreed that we had to do what we believed God was leading us to do, and we’ve been blessed in many ways even in the midst of the difficulties.

  23. Jen says

    My family of four moved from rural PA to Northern Virginia 2.5 years ago. Cost of living is doubled in our new area. We decided to rent for a year and it was a great decision. 2.5 years later, we are still renting, and are able to save a considerable amount for a down payment when the time to buy is perfect for us. Renting has given us considerable flexibility in our budget. We don’t feel pressured to buy a home until it is right for us. We are able to find the best location and home for our family, without the pressure of having to sell a home too.