Unexpected moving costs
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If you're planning to relocate to a new place, whether within your state or across the country, you have a lot to consider. What should you take with you? What should you leave behind? Should you buy or rent in the new location? What are the school districts like? How much will it cost to move your stuff, and can you write off this move on your taxes?
That's just the tip of the iceberg. If you think moving costs are limited to just paying moving professionals to pack and transport your belongings, think again. Moving oftentimes comes with surprise costs. Here are some of the unexpected expenses that come with moving and a few tips for sidestepping them.
Auto insurance costs
Your auto insurance profile may change because of your new location. "When you move from a more rural market, less population, to a highly densely populated urban environment, you can see swings (in your car insurance rates) probably anywhere from 15% to 50%," says Dan Young, senior vice president of insurance relations for Carstar, a network of 400 body repair shops located in the U.S. and Canada. The exact amount depends on the area's accident rate and the customer's driving and claims history.
If moving out of state, you may have to buy more insurance coverage, too. Each state has its own minimum liability requirements and some require drivers to purchase personal injury protection and uninsured motorist coverage.
Also, if you're moving from an area where incomes are modest to a place where they're higher, you may need more coverage, Young adds. "In rural Iowa, you may not run into Lamborghinis or a vast amount of Mercedes Benzes," he says, "but you move to New York City and you're out driving around, you'd better be fully covered."
When planning a move, Young advises consumers to ask their insurance company about rate changes and whether they need to purchase more coverage.
Along with higher car insurance costs may come increased parking fees, says Bryan Pritchard, owner of Tricap Preferred, a luxury apartment locator service in Chicago.
"Parking is typically not included in rent," he says, adding that a primo parking space can easily tack on an extra $200 to $300 to your monthly rent in a big city.
The best way to avoid extra parking fees along with increased car insurance and servicing costs is to ditch your vehicle entirely, says Pritchard. While public transportation may suffice in larger cities, those living in areas without bus or subway access may be able to use car sharing and car pool services instead of having their own ride. If getting rid of your car isn't a viable option, make sure you're aware of what it costs to park in or near your building and workplace.
Health insurance hikes
Like car insurance, health insurance can change when you switch homes, especially if you're moving out of state.
"Not every health insurance company is licensed in all 50 states," says John Egan, managing editor of InsuranceQuotes.com, a Bankrate site. Even if it is, your insurance provider can change the plan you're on, the health care network you have access to and the rate you're charged. Egan adds that health insurance mandates vary among states, too. "There may be some types of (medical) procedures, for instance, that are covered in one state and that are not mandated to be covered in another state," he says.
Unless you're getting health insurance from an employer or spouse's employer, switching insurance companies as a result of a move will likely mean undergoing medical underwriting, Egan says, which could result in a substantial change in premium or a flat-out rejection if you have certain pre-existing conditions.
The only way to fight escalating health care costs is by careful comparison-shopping. An independent broker may also be able to help compare policies apples to apples.
Higher interest charges
Paying off debts with local stores is a good idea. Closing out those credit lines may not be. According to FICO, the company that created the FICO credit-scoring model, 30% of your credit score is based on the amount you owe in relation to how much credit you have available.
While paying off debt can improve your credit score, closing out an account and reducing the amount of available credit can hurt your score, says Gail Cunningham, vice president of membership and public relations for the National Foundation for Credit Counseling, a consumer advocacy group based in Washington, D.C. For families who plan to take out a loan or mortgage after moving, a credit score ding can result in thousands of dollars in extra interest over the life of the loan.
"If you're on the cusp, if you're trying to build your credit, maybe you're moving to that new town and you haven't bought your house yet ... then you need to leave those accounts open," Cunningham says.
Some moving costs can be easily overlooked. If you've paid for a membership at a gym, pool, country club, day care facility, after-school enrichment program or community association, ducking out ahead of schedule could cost you. Ted Stimpson, president and CEO of MyMove.com, a consumer information site about relocating, says that consumers oftentimes lose money by assuming that they can't get out of an annual or monthly contract.
"If moving is a qualifying event for allowing you to get out of your contract, they're going to want to see proof that you are moving," he says. "They're going to want to see some sort of documentation (such as the purchase and sale agreement) on the new home or that contract with the moving company that's proving you're actually moving."
Stimpson adds that managers may not know if consumers can break a contract without paying a hefty fee. Before taking "no" for an answer, review the terms and conditions of your membership to see if there's a loophole for members who move.
Missed security deposits
Along with forgetting about annual memberships, renters frequently forget to reclaim their security deposits. Depending on your state, landlords are legally required to return your security deposit anywhere from 14 to 60 days after you move out; however, tenants generally must provide a forwarding address in writing or a direct deposit account where funds can be placed.
According to Tenants Union, a nonprofit equal housing advocacy group based in Seattle, landlords may not subtract money from the security deposit for normal wear and tear done to the apartment, but they may subtract nonrefundable fees such as cleaning or pet fees if the fees were outlined in the rental agreement prior to move-in.
Should the landlord not return your security deposit in a timely manner or send a letter explaining why he is keeping all or part of it, tenants may seek legal assistance through an attorney or housing advocacy group.
Cancel your local memberships before you move, but leave your bank account open for now, Cunningham says. Even if you're moving to a location that your old bank doesn't service, leaving your account open after the move can prevent forgotten bills from incurring overdraft fees.
"Give yourself three months to let all of those cycle through," she says. "Don't put yourself at risk of incurring a nonsufficient funds (charge) by having closed that account." These fees can add a lot to your moving costs.
Once you know that all of the bills linked to that account have been paid and closed, remember to shut down that old bank account, too. Many institutions charge monthly fees on accounts with small balances.
The price you pay for basics such as gas, water and electricity can go up during a move even if you decrease your own use, says Pritchard.
Utility bills are not based on usage, he says. "It is based on a methodology that allocates a certain percentage to your apartment, and that is typically done based on unit size," he says. "If you have a two-bedroom, you're going to get charged more than a one-bedroom ... no matter if you sit in the dark all day or your house is lit up like a Christmas tree all day."
While apartment and condo tenants typically can't convince the building to reallocate utility bills based on usage, says Pritchard, they can be aware of how utilities are divided up, ask about average utility costs per month and choose to live in other places if they feel that the costs are too high. Such moving costs can be prevented with a little bit of planning.
Mail mix-ups are common when changing abodes. So are the financial ramifications of not getting mail on time. Consumers who don't get their bills may be hit with late fees on multiple bills, likely resulting in a ding to their credit score.
Even if mail forwarding is already in place, Cunningham says those planning to move should switch as many bills as they can to online bill-pay until they're sure there's no problem receiving mail at the new place.
"Simply because they've moved and they forgot about a bill or the bill didn't arrive in the mail is not going to be an excuse that holds water with a lender," she says.