UO Magazine > Hidden Relocation Expenses

Hidden Relocation Expenses

By Sally Herigstad Unique Opportunities, Sep/Oct 2007

“You get used to your surroundings, but 1,200 miles away it’s a new deal,” he says. “We were really shocked when we started looking at houses here.” In fact, after selling their house in Denver, they couldn’t buy something comparable in Seattle. And it was almost impossible to find a house with a basement—a given in Denver. “Here, $250,000 doesn’t buy anything. That was a big eye-opener.”

Moving to a new opportunity is exciting. Before you accept a distant offer, however, it’s better to know what you’re getting into. The move itself can cost more than you expect. Even if the new practice or hospital is picking up moving expenses, there are house-hunting trips, furniture storage, moving the family pets, and sometimes maintaining two households temporarily. It all adds up, and it’s worth considering trying to negotiate some of it into the moving expenses as part of your contract before signing.

Then there are the expenses of setting up housekeeping: There’s new furniture (somehow


	Plan Ahead – Don’t let these expenses catch you off guard a Moving company or truck rental a House-hunting and buying trips (possibly several) a Cost of maintaining two houses temporarily a Cost to move pets a Cost to move boats, campers, or trailers (not always taken by the moving company) a Vehicle expenses for trip a Hotels, food en route and until the kitchen is functioning a Interruptions in salary—yours and/or your spouse’s a Cost-of-living changes a Utility deposits a New furniture a Costs of upgrading or adapting new home a Membership dues a Licensing fees a Insurance changes a Income tax, sales tax a Change in business expenses

the old furniture is never quite right), restocking the pantry, putting down utility deposits, and maybe joining the local gym. It’s not always possible to get refunds for memberships and club dues at the old place, either.

Some additional expenses show up after you move. Dr. Cheryl Tan-Jacobson and her husband, Brad, had a new home built in Black Diamond, Washington, approximately 45 miles southeast of Seattle. Everything went pretty much to plan as the house was being built. “The biggest surprise,” says Tan-Jacobson, “was how much landscaping costs. You think the house is built and that’s it, but we hadn’t thought much about the fact that it didn’t come with a stitch of landscaping. That cost us.” The American Society of Landscape Architects recommends planning to spend 5 percent to 10 percent of the cost of your home on landscaping.

Cost-of-living adjustments

After the family settles in, the budget is likely to need adjusting. For example, people who move south from a snowy state may be surprised at how much sunbelt dwellers spend just to stay cool, keep the bugs at bay, and maintain year-round landscaping. People who move north may quickly discover why locals forgo the snow shovel and invest in a gasoline-powered snow blower that costs slightly less than a small car. And the first winter heating bill can be a shock. Plus there is the cost of warm clothing, coats, snow boots, and snowsuits for the kids.

You can plan ahead by comparing cost-of-living rates on line at the Sperling’s Best Places Web site (www.bestplaces.net/col/). Don’t be surprised if the statistics don’t tell the whole story, however. Even little things add up. For example, in Denver, according to Brotton, when you order trash service, it doesn’t matter how much you set out. “Here, [in Seattle] they ask you how much trash service you want—one or two barrels. Out there, we had a state income tax. Here, we get taxed on everything, even the second garbage can.” Brotton also notes that a [man’s] haircut in Denver is $9; in Seattle it’s at least $12.

Spending expectations vary in different places, too. Fred Dalgleish, a gynecologist, discovered when he moved from Maine that doctors in south Florida are “held on a pedestal.” He says, “The expectation is there that you project a successful image. Every other doctor who parks in the lot drives a pretty nice car. I drive a 1997 paid-for Saturn.”

Business expenses

Fred Dalgleish and his wife, Ann, have moved numerous times for opportunities in medicine and public health education. He has sometimes been shocked by the cost of malpractice insurance. He says insurance costs, which can vary dramatically by region, can be almost impossible to research ahead of time. “Nobody wants to give you a quote until you have an address and land in town,” he says. “You get a letter in the mail: ‘Your premium will be...’ and that’s it.”

Once you settle into a practice, the business expenses can make more of a dent in your income than you expected. According to Dalgleish, doctors are often invited to join a practice and offered a good salary to lure them there. Then, “You come to a group practice, and one year later they say ‘We think you’re doing so well that we’re going to take you off your salary.’“ From that point on, you are on the “eat what you kill” rule. “You get the income you bring in, minus expenses. To get a really, really good nurse, you pay their health insurance and a Christmas bonus. The group decides how much to charge you for office rent, which will be subtracted from your income. The difference is your paycheck. If the difference between income and expense is enough, you get a bonus. They can adjust the price on the rent, and you may never get that promised bonus. You have some expenses decided for you (the scary part) or you have expenses you do control (equally scary). You have to pay for your nurse, and you may have to buy equipment. If you want a new piece of equipment, you have to buy it yourself or have it applied against your income.” Dalgleish recommends, “You’d better get your equipment in the first year during the honeymoon period.”

According to Tan-Jacobson, in most cases, going off salary on production is a good thing. She says physicians usually stay on salary longer than one year; in any case, you should agree on the period of time before you move. “Some people can choose to stay on salary, but for most people, going on production is more desirable. Unless you build your practice slowly, it is to your advantage to be paid on production.” Also, once you buy into a partner-ship, you have a say in what the rules are.

Weighing the costs vs. benefits

The good news is that sometimes higher costs in one budget category are offset by savings in another. Despite the higher cost of living in Washington, Corcoran and Brotton at least save money on transportation; Corcoran lives five miles from her practice. They also spend less on heating bills, and they found a house in their price range by purchasing a 1982 home that needed updating. It even has the basement they wanted, and Brotton is remodeling the house room by room.

Sometimes, additional expenses or perhaps a higher cost of living are a small price to pay for professional satisfaction and opportunity. When he lived in Maine, Dalgleish found that he couldn’t make enough to pay the bills as a gynecologist if he didn’t deliver babies. Even though the cost of housing in Ft. Lauderdale is high, he and his wife have no regrets about moving. Dalgleish now works at the Holy Cross Medical Group in Ft. Lauderdale, Florida. He says, “It’s the best of both worlds. No babies, straight salary, no [personal involvement in] insurance companies or malpractice insurance. I sleep through the night, and I get a paycheck every two weeks.” Holy Cross is a prestigious group and the largest in town, and Dalgleish was thrilled to be chosen from 30 applicants. “It was very worth the move.”

Whether it’s little things like discovering that you have to pay extra for the second garbage can, or bigger things like having to pay dearly for qualified nursing help, it seems moving always costs more than predicted. The new opportunity, however, can be well worth it. The important thing is to know as much as possible about what you’re getting into so you can make the best decisions for you and your family. <

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Sally Herigstad, CPA, is the author of Help! I Can’t Pay My Bills (St. Martin’s Griffin, 2006)