I saw this yesterday but avoided posting because I knew which direction the discussion would go anyway!
Thank you
mbmasters for chancing the post. I'm sorry you were put off with the discussion at first, but appreciate your venturing in finally.
Although I believe in the like-to-like comparison geeta promotes, I'll leave that as I can see how you're trying to view your own personal situation which is fair enough.
Thank you. As I said over and over, I believe the like-to-like is accurate and very useful, particularly as a starting place. But I'm putting forth my own personal situation for those who can find it useful; as well as for helpful input.
However, I do think you need to still make some adjustments if you are trying to gauge the financial impact for your own situation.
And I shall be attentive and take notes.
(1) On rare occasion is comparing a mortgage to rent fair. Your mortgage is impacted by downpayment, mortgage length, interest rates, etc. Your $1061 could be $800 interest and $261 building equity. In that case, the cost is just $800 a month not $1061 as the rest is building savings. Also rents rise over time while a fixed rate mortgage in the US never goes up. Lastly, property goes up in value in the long-term (not so in the current short term!). This all makes rent vs mortgage a bad comparison. Instead, consider how much your current US place would cost/month if you were renting and use that instead.
Good suggestion. I addressed this in a post later on (actually just recently). But I did also take this into consideration; just didn't want to be pedantic as my original post was to be meant to be simplistic (fat chance now, eh!
). Also, as many economist models and threads on this forum is to compare monthly expenses to monthly expenses, I cannot discount the actual total deduction from my bank account. But I do see your point. Please see my recent post and I will also calculate renting a place in a London 'burb similar to mine. This is very helpful. Continue, please!
(2) You subtract property taxes but not income taxes. By your account, Texas is kind in income tax but punitive in property tax. US 2007 taxes on $100,000 for a couple are $13,473 federal (assuming standard deduction + 2 exemptions) and $9,100 social security while 2007 UK taxes on £10K+£70K are £4135 NI tax and £20,197 income tax. Therefore I would add to your exhibit $1881 and £2028 for income taxes.
In fact, on my own speadsheet, (my post was a basic excerpt of the famed "food, shelter, clothing, transportation"), I took those figures straight off the top of gross income. The two remainder sums at the end of my first posts are indeed net of taxes; both UK and US.
Again, of course, I will not overlook them. (Didn't imagine anyone would want to know my whole shooting match.
) In fact, I have done extensive comparisons of the remainders net of both UK and US taxes using
www.listentotaxman.com for UK income taxes and
www.paycheckcity.com for US income taxes. Depending on your mindset, you'd either be proud, or embarassed for me how pedantic I'm being about the details.
Just didn't want to muddy the waters of my original already verbose post. But it's very helpful to compare your outcome with mine and I appreciate your taking such effort with that. I can see you put pencil to paper, as I did.
(3) You put 2 cars in at a cost of $1021. As you mentioned your cars last 8-10 years, make sure the loan you use to calc monthly payments is an 8 year loan and on inexpensive cars not a BMW and a Lexus! If not then part of your payment is building equity/savings. Two $20,000 cars on 10% 8 year mortgages cost $607 a month. Also, like a mortgage your car payment wont go up but London transport isn't so lucky! You should also assume you will rent a car from time-to-time, my budget when I first moved here (pre-kids, pre-car!)assumed once every other month we rented a car for a long weekend, approx £130 + fuel costs.
Although our cars are 8 and 10 years old, we did not (and rarely do) purchase them brand new. Rather, we purchase off-lease (other people's) then finance them for the duration. We are not luxury car people ordinarily. Just something reliable and comfortable, relatively inexpensive to insure, and gets from point A to point B. So my monthly calc payments are accurate and for the auto loans we had. (I can see how you might not have thought they were, since I failed to provide this tidbit of info, causing you perhaps to assume that we've owned the cars for 8 and 10 years. My fault really.
)
(4) Travel home - not sure if you visit family often but if you do, count the airline cost of 1 or 2 visits to the US each year.
Funnily enough, and I stated this someplace in a follow-up post, domestic airfare to visit
our folks is nearly always more expensive from DFW than from UK. Put another way, it actually costs me less to fly from London to "Podunk, USA" where our folks live, than it does to fly from Dallas/Fort Worth to "Podunk, USA". And that's directly comparing USD to USD (forget the favourable exchange rate!) Now I know for a fact that isn't the same for everyone; it wasn't the case for us in many of the cities we lived in in the US, but it is the case for us in DFW.
That has always been a bone of contention for us while in DFW. But no more! And don't worry, on my massive multi-page spreadsheet, these trips too are accounted for. But again, I'm glad you posted that, as I know some US inter-corporate transferees have told me that they get 2 trips annually, while others forgot to negotiate for that. So you've reminded us all.
Again, these changes are meant to make it more "like-to-like" for your specific situation. Having said the above, in my case I never concentrate on what a move does to my costs but instead to my savings. Why should you care if your costs double when if you move to London your savings triple!
A person after my own heart. Cheers!
There are indeed a few lucky professions which are in demand over here and so pay better than they do in the US, glad your other half is one of the lucky! Plus once you get to London the career opportunities are probably much greater than in Texas so in a few years the salary is more likely to move up significantly as well.
And now I feel quite quilty for devulging it, but oh well, it may help with further discussion and for members who join after me. And yes, we're glad too that he's apparently one of the lucky ones. While appreciative it isn't more the case for others.
Most important though, it's a great experience living in a foreign land, good luck!
Hoorah! Thanks so much and thanks for the tips. If you can think of anything else...anything at all, I'd be most grateful. Fortune favours the prepared!
