Monday, March 20, 2017

Move: To Madison, Wisconsin (17 Days Before Arrival)

Abstract: I start a new job on April 10, in Wisconsin. Whenever you relocate to a different place, cost-of-living is an important issue. Madison and Houston are comparable to each other, in that regard. Cost-of-living websites give contradicting information. Nuance is required to understand why a given website says that a certain town costs more or less to live in than the other. To buy or to rent is considered. Madison seems a better place to buy than rent, especially if you plan to live there longer than a year. Due to the short time scale, I will use AirBNB for short-term housing needs until a longer-term solution is found.

The long version: Sometimes, you have to move. Especially, if an aerospace company makes an offer that you shouldn’t refuse. I start on April 10. Having done the research on moving, certain things are clearer than others.

For example, the cost of living. I’ve not yet reached a point in my life where I’m willing to move to a town, then look for work. In the case of Madison, I am following the job offer. During salary negotiations, it’s important to know what kind of quality of life a given salary would allow in the new town. Well, I know what I make in Houston, and would prefer my quality of life to be similar, if not better in Madison.

So, is Madison more expensive than Houston?

According to and, Madison costs 7 to 15%, respectively, more than Houston. According to, Madison costs 8% less. The average among the three is 4.7% more expensive than Houston.

BestPlaces attributes most of the higher cost of living in Madison to an increase healthcare costs. Healthcare is more expensive in Madison, according to them. Fortunately, I’m in good health for now, and not paying for healthcare with the same kind of frequency as a mortgage. BestPlaces says that housing is less expensive in Madison than Houston.

Bankrate begs to differ. Average or median (not sure which) homes prices are much more expensive in Madison ($362,264.33) than Houston ($263,601.33). Rent prices, however, are slightly lower in Madison ($957 vs $998).

Numbeo goes further, showing that rent prices in Madison are 12% lower than in Houston.

I suspect that the cost of living in Madison is more like Houston’s than not. No dramatic increases as found in San Francisco or New York City.

To continue with the nerdiness, the next question is: buy or rent? This get really heavy into the math. Thank goodness that there are online calculators that will help you figure out how expensive of a house you can afford. The process that I used is as follows:

1) Gather or have available your gross salary offer and cost of benefits (health insurance, etc).

2) Use a paycheck calculator to determine your take-home pay. Whichever calculator you use should let you choose the State for Withholding, the pay-frequency, whether health insurance is taken out of your gross income (before taxes), and so on.

3) With the hopefully realistic estimate, find a mortgage calculator that includes taxes, property taxes, PMI, etc. Play with the numbers, until you find a house price that you can afford.

In terms of how much money one should devote to housing, Bankrate says that lenders suggest no more than 28% of your income before taxes. While property taxes and interest are tax deductible, they are only deductible if you itemize. Sufficiently low taxes and interest may not be worth itemizing. Personally, I maintain that until one can pay a mortgage with pretax income on a monthly basis, one should stick with post-tax income in these analyses. The income that actually pays the mortgage.

4) With the house price, go to a real estate website, and have at it. If and when you find something attractive, note its price, number of bedrooms, square footage, age of building, and anything else you find important.

Now, it gets really nerdy.

5) Go to the New York Times Rent vs Buy calculator. Enter in all the relevant information, guessing or Googling for information as you need or want. The calculator will tell you in no uncertain terms that if you can find a similar place (number of bedrooms, square footage, age of building, etc) at the indicated monthly rent, then you’re better off renting.

6) Go back to the real estate website, and look for rentals in that price range.

In my situation, it became clear that if one is sticking around in Madison for at least two years, then one is typically better off buying. If you plan on living in Madison for only just a year, then renting might make sense. But, squinting at the details, it’s not clear one way or the other (for 2017).

Until I talk with a real estate agent and a loan officer, the really fine, local, specific details won’t be known. In the meantime, I will be staying at an AirBNB. Much cheaper, and more interesting than hotels.

The summary: With the job start date known, find out all the numerical information that you can about your expected take-home income, cost of living, and housing options. Use online calculators to determine your financial boundaries. When it becomes clear that you need to speak with local people (real estate agent, loan officer, etc), wrap up your research with information that you find particularly important (maximum cost of house, maximum monthly rent, minimum amount of bedrooms, etc). The clearer you are with your requirements and limits upfront with the real estate agent, the faster the overall process can be otherwise.

At this very moment, I’m prioritizing making sure that I have a place to stay for at least the next month. I temporarily leave my house in Houston on April 5, and arrive in Madison by April 7. Housing should be ensured for at least the April 7 through 18 time period. Thank goodness for AirBNB.

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