Sean Pyles: Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Sean Pyles.
Liz Weston: And I’m Liz Weston. To send the Nerds your money questions, call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD or email us at [email protected]. Hit that “subscribe” button to get new episodes delivered to your devices every Monday. And if you like what you hear, please leave us a review and tell a friend.
Sean: This episode, I am joined by our occasional co-host Sara Rathner to answer a listener’s question about whether to rent or buy when moving to a new city. But first, in our “This Week in Your Money” segment, Liz and I are going to talk about the so-called Great Resignation and how to know if now is a good time for you to find a new job. So you may have heard this term, the Great Resignation, which was actually coined by Anthony Klotz, associate professor of management at Texas, A&M University. And it’s true a lot of people have quit their jobs in 2021. According to the Bureau of Labor Statistics, 4 million Americans quit their jobs in July alone.
Liz: Yeah. And there are a lot of reasons why this is happening, and it actually started before the pandemic and it just really accelerated during it. But what Klotz says is that a number of workers have had pandemic epiphanies that inspired them to pursue new careers. Some of the workers were burnt out, and others said no to returning to the office. Some were worried about their safety and other people just decided, “you know, life is short. I’m going to do what I want.”
Sean: Yeah. I think that being told you have to go into a workplace that you don’t feel safe in, in the face of a deadly pandemic, made a lot of people realize, “I can do something else with the brief time that I have on this earth, and it’s not going to be carrying drinks to people that are going to yell at me at a table or folding a bunch of sweaters at the Gap,” which is something that I experienced early on that made me change where I was going with my career.
Sean: But leaving your job is no small decision. There are a lot of factors to consider before making such a big life-changing jump, and Liz and I wanted to talk through a few of them. One that is really important to think about when you’re considering whether to leave your job is to look at your total compensation for your current position. And that’s beyond things like your annual salary. It’s important for people to think about the compensation package that they have for their job, things like health insurance and the other perks like cell phone reimbursement or a gym membership. So you can see in terms of an actual hard number, how much you are getting from your current position.
Liz: A lot of people don’t realize, if they have health insurance, how much their employer is contributing towards that. And there are a lot of other benefits that might be part of your package. So one of the places you can go to find out what you’re being paid is your paycheck.
Liz: So in addition to the salary, take a look at all the additional perks that might be on there and get a very good idea of where you stand. Also, think about what benefits you might be using in the next few years. Like if your company has infertility coverage, for example, or there’s something else that you might be able to take advantage of — braces for kids, for example — that’s something to add in as well so you know what you’re being paid in total.
Sean: Yeah. And on the flip side of that, think about what you might be giving up in terms of compensation if you leave now. Think about some benefits that vest over time, such as stock options and 401(k) matches. It might be worth waiting at a job a little bit longer if you know you have some stocks that are going to vest in the next six to 12 months.
Liz: Yeah. Vesting basically just means getting ownership over time. Like with 401k(s), your money is always yours. When you put it in, you can take that and go, but the match might be given to you over time. So you wouldn’t get the full amount. You don’t want to leave right before some cliff where you would get a lot more money for staying just a little bit longer.
Sean: Exactly. And next, once you have this number of your total compensation from your current job, think about what you might be getting from a new job. It’d be great if you actually have an offer from a potential new employer to see, side by side, what they are offering you compared to what you have right now.
Liz: A lot of people don’t negotiate at all. It’s something that your manager expects. It’s something that the person who’s offering you the job expects. What you want to do is do a little research. Now that you know what you’re being paid or what you were paid at your last job, what the total compensation package is, go to salary.com, go to GlassDoor or Robert Half, who also has a compensation review. Look at what similar positions are being paid so you have some idea of the range.
Liz: And, one of the ways to find out is to talk to people who have had the job. And they might be a little sensitive about exactly what their salary was, but you can ask, “OK, what was the range for that job? What’s the usual pay? Give me an idea.” And that can open up the discussion so that you can get some information that can help with these negotiations.
Sean: Yeah. And LinkedIn can be really helpful for that as well. Just reach out to people who actually are currently working there, maybe in the same department that you might be looking to get a job in, and see if you can pick their brain for a little bit and get an understanding of the workplace culture and also things like benefits.
Liz: Yeah. And when you are looking at the benefits of the new job, ask about waiting periods. This is something thing that drove me crazy when I ran into it. Some jobs make you wait up to a year to join the 401(k), for example. That’s incredibly expensive.
Liz: You miss out on the match. You miss out on the money that you could have put aside, you have to pay extra taxes. It just sucks. So, if they do have some kind of a waiting period, see if it can be waived.
Sean: Almost everything is up for negotiation when you’re about to start a new job. So that’s really worth considering and bringing up in conversation with your potential employer.
Liz: Another waiting period that you might not be expecting is for health insurance. Some employers make you wait up to 90 days to get that. So again, if you can negotiate getting health insurance right off the bat, that’s great. If you can’t, you want to make sure that at least you have coverage for that interim period.
Sean: Yeah. And for me, when I hear about waiting periods like this, that raises at least a yellow flag in my mind about what their workplace and employee benefit culture might be like. So I would maybe give a second thought to joining a company that’s like that.
Liz: Do the same thing with the new job that you did with the old job and make sure that you’re including everything, but it is important to find a place that is a good fit for you overall. The culture, the lifestyle, is there flexibility enough? Is the location where you want to be? Can you work from home? All that stuff should be a part of the calculation.
Sean: Yeah. I think for me, my lifestyle, my work-life balance is just about as important as my salary and the benefits that I’m getting. Because at this point I’m used to a kind of comfortable way of living and working where I start my day on the early side, and maybe I go for a midday jog or a walk with my dog. Maybe I take a little afternoon nap. NerdWallet allows us to have that kind of flexibility, but not all places do that.
Liz: And keep in mind, there really is a labor shortage in most fields. Companies are having a really hard time attracting the people that they want to hire. So that gives you as a worker, a heck of a lot of leverage.
Liz: I don’t think I’ve seen a situation like this. Definitely not since the Great Recession and I’m not sure I’ve ever seen something like this in my working lifetime. So this is kind of a moment to take advantage of.
Sean: It’s interesting because a lot of employers will say, “Oh, we do have a labor shortage.” And a lot of employees will say, “I have a salary shortage. I’m not getting paid enough to do this kind of work. And now, for the first time in many years, I have leverage. So I can demand a little more and I’m not going to go to a job that doesn’t pay me enough.” So it’s kind of two sides of the same coin.
Liz: Power to the people, man.
Sean: Yeah, absolutely. That is one thing this Great Resignation is teaching all of us. And with that, I think we can get on to this episode’s money question conversation with Sara Rathner.
Liz: All right.
Sara Rathner: This episode’s question comes from Charlie in San Diego. They write: “I’m a 28-year-old single male with a golden retriever living in a rental 2-bed, 2-bath condo in San Diego, California. I work in biotech as a software engineer making decent money. I’m looking to get out of the renter business and into homeownership, but I’m a bit hesitant to make the jump. I’ve heard the rundown of factors to consider for such a decision, but I’d like to know what the NerdWallet take is for someone of my description.
Is there an opportunity for someone like me to finally get into the housing market? While I currently reside in San Diego, I’d be interested in relocating to areas with a comparable social atmosphere (Portland, Salt Lake City, Austin, Seattle, Boulder, etc.) if there’s a housing-related financial incentive to do so. Related: What are the best tools to use to discover opportunities in the housing market? (I currently check Zillow listings every so often.)
Thanks for the show! Charlie”
Sean: Charlie, I just want to say thank you for the level of detail that you gave us in this question, including the fact that you have a golden retriever. This is the kind of stuff that we love to hear from our listeners. Although, we may need a photo of your dog. So please email that to us at [email protected].
Sara: Yeah. If you’re going to mention your pets, you’ve got to pay the pet tax.
Sean: Yeah, absolutely. And we may even post it on our social. Who knows? We just want to see your cats, dogs, geckos, whatever you have. Anyway, to help us answer Charlie’s question on this episode of the podcast, we are joined by one of our favorite mortgage Nerds, Holden Lewis.
Sara: Welcome back, Holden.
Holden Lewis: Hey, guys. Thanks for having me back.
Sean: Always great to have you on. So, our listener Charlie is deciding whether to rent or buy, and it seems like it’s less a financial decision than it is a personal and somewhat social decision. What are your thoughts on their situation?
Holden: Oh, I totally agree with that. Rent-versus-buy decision — it’s often more about where you are in life, not about the cost, and that’s why I want to talk about the golden retriever.
Sean: Go into it, Holden.
Holden: So boomers and people of my generation — I’m stuck between boomers and Gen X, I’m what they call generation Jones — we’re kind of like boomers in that we tended to get married, have kids and buy a house, often in that order. Not always, but usually all three were in a fairly short time. And that’s what I did. But millennials are often buying homes independent of having kids or even of pairing up. A lot of millennials, they get the hankering to buy a house because they have a dog or they want a dog and they want to give it a backyard.
Sean: I can completely relate to that.
Holden: Charlie is doing what a lot of people do. If you’re wondering if it’s weird to buy a home because you want space for a dog, the answer is absolutely not. You’re doing what a lot of people do. That’s kind of the entree nowadays for a lot of people to homeownership, is a space for a dog.
Sean: And that’s a big part of why my partner and I bought our house in Portland when we did, because we moved here from San Francisco wanting to be able to live in a city where we could afford a house. Obviously, we’re not multimillionaires, so we can’t do that in San Francisco. Portland seemed like a great fit for us. We were here for two months before we adopted a dog. And then right upon adopting the dog, we realized that this is not an apartment dog. She doesn’t need to be constantly running, but she needs some outdoor space. And so that moved up our timeline for buying a house by about a year and we ended up getting a place that had a backyard. And now the dog just lays bathing in the sun all day long, practically.
Holden: Well, OK. Here’s what I’m wondering, did your parents roll their eyes at this?
Sean: Not really, actually, because they were just happy that we were able to get into the housing market at all. And they wanted us to be able to buy something, and so if that was the impetus to get us into being homeowners, why not?
Holden: All right. So, OK. Look, when we talk about money, NerdWallet has a rent-vs-buy calculator. And it lets you see whether buying or renting will cost less in the long run. And that’s fine. I’m totally for running the numbers, but owning a home isn’t just a question of dollars and cents. And we grew up in this culture that valorizes homeownership, and it’s a rite of adulthood for a lot of people, even if it costs more than renting, which is debatable in a lot of cities, but it might be worth it. You can play with the dog in the backyard. You can dance in the kitchen and not bother the people downstairs. It’s really, really great.
Sean: You can have your own garden. That was something that was a big appeal for us as well with getting a home out here. You could just have so much more freedom and independence to do what you want with the space that you’re living in without having to worry about whether you’ll get your security deposit back.
Sara: I mean, I painted the walls of my office, like, dark red. I never would’ve done that at a rental, but here I am sitting in my red cocoon and I love it. I rented for almost 14 years before buying a house, so . . .
Sara: I’ve definitely lived the apartment life in two different cities, definitely had downstairs neighbors. They could even hear my cats walk.
Sean: One thing I also want to dig into is how to find a house in a new city that you might be moving into, because Charlie’s in San Diego right now, but there’s different cities that they’re considering — Portland, Salt Lake City, Austin, Seattle, Boulder — they’re all pretty different. So no matter where they move to, which may depend on their job and other factors, I think it’s important to spend at least six to nine months renting in that city so you can get a feel for what the different neighborhoods are like and where you might want to buy.
Holden: Some of this is just expanding the universe of cities to look at. And then I don’t know — vacationing in them or spending long weekends in them and just scoping them out. My two best friends live in the Pacific Time zone and they kind of think that the world begins and ends there. But Charlie is definitely looking on the west side, but there’s cool places elsewhere. Houston is the most diverse city in the country. Really, really lively, has a great arts scene, dining — and Dallas-Fort Worth are wonderful. I’m in the process of moving back to my hometown of Fort Worth.
Atlanta is really cool. So, there are places in the South that Charlie might want to look at too — kind of break out of his comfort zone. One of the things to do is to look at the different cost of living in places. And NerdWallet has a cost-of-living calculator, where you can put in where you live now, what your salary is and your target city, and just see how far your money would go in that city. Example, if you move to Portland it costs 3% less. The cost of living is 3% less in Portland than San Diego. But in Austin, it’s like 29% less.
Sean: It’s a big difference. Although, the housing market is really competitive in Austin just like in Portland.
Holden: Can’t find a place in those places.
Holden: Houston, Dallas-Fort Worth. Yeah, they’re different. You might be able to find a house more easily than in say Portland or even Boulder.
Sean: Yeah. And one quick note for our listeners, I’m going to have links to both of these calculators, the rent versus buy calculator and the cost-of-living calculator in our show notes post, so check those out @nerdwallet.com/podcast.
Sara: That’s another thing to think about actually, because the competitiveness level of the housing markets in some of the cities that Charlie’s considering, there are certain cities right now that you’re basically just shut out. And so that works against you in that it lowers your options, but it also maybe could help Charlie cut out a couple of cities and make the decision a little bit easier. If a super-competitive city like Austin just is a no-go for buying property, then maybe that opens up a few other options. Or they might love Austin, move there and rent for a while, see what they think, and then decide to buy once things calm down a little bit.
Sean: One thing that was interesting to me in Charlie’s question is that there wasn’t really a question of whether they could afford a house in any of these cities. And there is a huge price range between something like Seattle and Salt Lake City, but they were more focused on social atmosphere and whether there are any housing-related financial incentives. So I want to focus on each of those, starting with social atmosphere. And I want to talk with you guys about how you guys have made friends as adults in new cities that you’ve moved to. This is something that a lot of people struggle with. Do you guys have any thoughts about this?
Sara: Yeah, so I moved to D.C. when I was 22, which is like prime time to move to D.C. That’s, like, everybody’s an intern. So it was pretty easy to make friends there because I was surrounded by so many people my own age who were kind of in the same life stage. And then I lived there until my mid-30s. So friends of friends are great. So if you’re moving to a city where you already know a couple of people, just kind of tack yourself onto their plans and meet some of their friends. They’re already vetted by people you like, so that’s really helpful. And then you have a dog, Charlie, so go to the dog park.
Sean: I was going to say, that’s how I made my best friends in Portland is we happened to have dogs that were similarly crazy and attracted to each other playwise. And now we still hang out with them all these years later.
Sara: Yeah. I mean a golden retriever is like a person magnet. You can’t think of a better dog to just bring everybody to you. And they’re so friendly and you can use your dog as a barometer. If your dog wants a belly rub from somebody, they’re probably a nice person.
Sean: But it does take a little bit more intentionality to find friends when you’re an older adult. I moved to Portland when I was 27 and the dog park was my No. 1 spot to make new friends. And also, like you said, Sara, friends of friends. And then we found friends through my partner’s co-workers at the office here in Portland, and even people who have had similar interests. My partner was part of a rugby team for a little while and we met some people through there. So you have to go out of your way a little bit more than you had to when you were, like, 22 and going out all the time. And obviously, in the age of a pandemic, it’s not super easy to do that in the same way, but it is possible if you find people who have similar interests to you and go where they are.
Sara: Pick activities where it’s not awkward to show up by yourself. Sometimes you go to a party or something and if you walk in by yourself or you walk into bar by yourself, you’re kind of like that person standing there by themselves, awkwardly holding a drink. But if you go to some sort of social activity or hobby where people show up by themselves, maybe a neighborhood book club or some sort of class or volunteering experience, everybody’s showing up by themselves. That means everybody’s open to talking to new people. So right off the bat, you’ve eliminated the awkwardness factor. I’m going to put in a plug for improv comedy classes.
I know people make fun of them, but it’s a really great way to meet new people because you play and you sort of let yourself be vulnerable around people. And it kind of brings down the barriers of a room full of strangers, and it kind of turns you into friends pretty quickly. I mean, not to brag, but it’s how I actually met my husband. So Charlie, if you’re in the market for a significant other, I have a very good friend who also met her spouse through improv and she said, “Sara, do improv, you’ll find a boyfriend. It’ll change your life.” And I was like, “I don’t think that’s true.” Turns out she was right about all of it. So you heard this here first, Charlie, do improv, it’ll change your life.
Holden: Really neat idea.
Sean: OK. Well, I also want to see if there are any housing-related financial incentives to moving to any of these particular cities or regions. Holden, are you aware of anything like that?
Holden: OK. So let’s talk about financial incentives. First of all, there is more availability for people with low to moderate incomes. Well, I mean Charlie says he makes a decent income, probably has a good credit score. So the financial incentives may be limited, but there still might be programs to take advantage of. NerdWallet has a page of first-time home buyer programs by state, so you can scroll through it. You click on a state to see details of programs there. And you might be surprised at what you find. For example, in preparation for this podcast, I looked at Washington state, and there are our first-time home buyer programs there that you can take advantage of if you make up to $145,000. If Charlie wants to move to Seattle and he makes under $145,000, there might be some kind of first-time home buyer programs there for him, and other states too. You can just go to that page, click on the state, see what they have.
Sean: OK. And I also want to turn to the part of Charlie’s question around how to find opportunities in the housing market. Zillow is one that people go to a lot. I still look at it even though I have my own place. It’s just fun to creep around but what other options are there for people to look at?
Holden: The most important thing, move to the place, move to the city, rent for like six months or 12 months and just really explore neighborhoods. Just figure out where in that metro area you want to live. You can focus your search a lot more easily there. You just might find it — I don’t know — more fun to drive around and look for sale signs than to search on Zillow because you just kind of get a sense of the lay of the land and, oh, this is on top of a hill and that kind of thing.
Sean: There are a lot of things that can’t be captured in a listing on Zillow. Like what is the smell in the air? Do you have nice trees in the neighborhood? Is there a highway nearby that’s super noisy? These are things that wouldn’t be able to be captured in a few words on a web page.
Sara: Yeah. I like looking up a neighborhood’s walk score — walkscore.com, I think is the website. And that not only tells you how walkable a neighborhood is, but it bases it on what sorts of amenities are available within a certain distance of a particular address. So you can find grocery stores, restaurants, coffee shops, drugstores, all of these things that you don’t necessarily need them when you’re on vacation in a city, but when you live there and you’re running errands, you want to know how difficult it is to complete all of your Sunday shopping. Can you walk everywhere? Do you have to drive 20 miles to get to the nearest grocery store? Those things really matter on a day-to-day basis.
Holden: They really do. And I’ve been cursed to live most of my life in places with low walk scores. It’s like, “Oh, I want to get some Chapstick, get in the car. Ugh.”
Sara: Yeah, I’m the opposite. I did not own a car for a really long time I was living in downtown D.C. And even where I live now in Richmond, Virginia, I live in a very walkable neighborhood and I’m within a mile of four grocery stores, two drugstores and a bunch of coffee shops, which I love, working remotely. I can take a break during the day, go get a cup of coffee, say hi to all the neighborhood dogs.
Sean: I’d say I have something somewhere between both of you guys where I can walk in 10 minutes and be on the main neighborhood drag, where there are restaurants and little shops and things like that. But my actual neighborhood is pretty residential. And so, similar to how you know all the neighborhood dogs, I also know all the neighborhood families and everyone makes a point to look out for one another, which I think is very particular to Portland, unlike anywhere else I’ve ever lived. People really care about the community and who your neighbors are. And if we’re out of town for a week, they’ll come and get our mail and vice versa. So that’s something to think about too — is what sort of feel do you want from your neighborhood? Do you want to really know your neighbors and be involved in your community or do you kind of want to live on your own and do your own thing, which is something I think he can get more of in a city like Seattle versus Portland.
Sara: As I get older, I value that strong community a little bit more. When I was, when my early mid-20s living in a really urban area, I didn’t know too many of my neighbors other than saying hi to them at the mailbox.
Sara: My friends were people who didn’t live in my building, didn’t live on my block. Now, I live in a pretty walkable area, in a house, but I know everybody on my block, we say hi to each other all the time, we water each other’s plants. It’s like really . . .
Holden: It’s very charming.
Sara: It’s very charming. It kind of has that small-town feel in a somewhat major city. And Charlie, you might not quite be there yet, but it’s really nice to have the feeling of knowing the people around you. It helps you just feel like you’re part of something bigger.
Sean: You’re less anonymous. And that was something that was a big transition for me coming from San Francisco to Portland, is that people on the street here say hi to you when you walk by instead of averting their eyes, which happens in most other cities. And my first reaction when people would say hi to me on the street would be to say, “I don’t have any money,” which I felt like a huge jerk doing, but it was a matter of self-defense and preservation and a habit I’d picked up after years of living in San Francisco. And once that wall broke down, I found that I just felt more relaxed and comfortable and at ease, being around my neighbors and getting to know them, and having them get to know me.
Holden: Sara, I’m glad that you have social graces still. I live in Florida now and I’m going to move back to Fort Worth, and I’m fixing up my mom’s house to move into it. And I was out front doing some work and some people walked by on the street and said hello to me. And it’s like, “Hey, I’m Bennett. This is Ashley. This is our son, Max.” and I was like, “Hello, Max,” and everything. We talked for a while and they left and I realized that I had forgotten to tell them my name.
Sara: Oh. I’m sure that they will forgive. They seem like nice people.
Sean: I think that we might be able to chalk that up to being a result of the pandemic and not being around new people for a year and a half or so at this point. I definitely feel like my social grace is a little shakier than it used to be. So I feel like this is probably something that you’ll be thinking about longer than they will. And if you’re moving there, you’ll see them again soon anyway.
Sara: Yeah, Charlie, if you do decide to move soon, just remember that everybody you meet has forgotten how to people.
Sara: And you might have also lost that skill set as well, but there’s nothing like moving to a new city to motivate you to try new things. And so get on some email lists for local institutions like museums, other cultural events, because they might have some fun events to go to. I don’t know about the rest of you, but making eye contact is really hard.
Sean: If anything, I feel like I am hyper-focused on eye contact because it’s with a mask on pretty much the only way you can convey how you’re feeling. So I do a super smize to almost exaggerate how friendly I’m trying to come across to someone that I’m meeting on the street. That’s just me though.
Sara: Yeah. I combine them. If I’m wearing a mask, I combine the smize with the head nod. So it’s like really just putting my whole neck up into letting somebody else know that I am trying to greet them in a pleasant manner. And it feels really weird.
Sean: All right. Well, Holden, do you have any final thoughts for Charlie or anyone else debating whether to rent or buy in a new city?
Holden: Really, the important thing is just to scope out your target neighborhoods. Find your city and rent for a while and go to various neighborhoods, walk around, just see. You’re going to get the feeling of what it’s like to be there. Just something that you can’t get from Zillow or even a walk score — just that, that sense of neighborhood that you get from actually being there and just walking around.
Sean: Well, thank you so much for talking with us, Holden.
Holden: You’re welcome.
Sean: And with that, let’s get on to our takeaway tips, and I can kick us off. First up, do the math. When debating whether to rent or buy, know how much house you can afford and how long it would take for you to come out ahead financially if you do buy a house.
Sara: Next, think about the emotional aspect too. Buying a house can give you pride and a sense of accomplishment and a backyard for your golden retriever, but renting can afford you more flexibility.
Sean: And lastly, get to know your new city. If you’re moving to a new city to buy a house, consider renting for a few months to first get acquainted with where you might want to settle down long term.
And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected] and visit nerdwallet.com/podcast for more info on this episode and remember to subscribe, rate and review us wherever you’re getting this podcast.
Sara: And here’s our brief disclaimer, thoughtfully crafted by the NerdWallet legal team. Your questions are answered by knowledgeable and talented financial writers, but we are not financial or investment advisors. This Nerdy info is provided for general, educational and entertainment purposes, and may not apply to your specific circumstances.
Sean: And with that said, until next time, turn to the Nerds.