Have you been peeking?
Checking your investments. Such fun.
Checking your investments. Such fun.
I was chatting with a neighbor here in Cleveland and she mentioned that a friend felt that he was shut out of the housing market due to rising prices. She leaned in for emphasis and added, “In fact, he got outbid by $25,000 on a house recently”. Being from Toronto originally, I had to suppress a snicker. Although I sympathize with her friend’s plight, it felt like her story was missing a zero. Toronto housing bids regularly jump by hundreds of thousands and often sell for $250,000 or more above asking price. That is more than the price of a whole Cleveland house. The Toronto housing market was an enigma while I lived there. Trying to explain it to Ohioans is another thing entirely. Moving here is clearly an opportunity for slashing housing costs.
Deb and I dated in the 1980’s, and were reunited by fate and Facebook 35 years later, when we were both divorced and single. We married on the Valentines Day just before Covid hit. She is a Cleveland native with strong ties to the city, so we bought a home here and are enjoying our new (albeit somewhat locked down) life together. Having lived here over a year, I find the the contrast between the two cities striking.
Toronto is a world class city that is safe, beautiful and easy to like. But the cost to live there has spiraled out of control. A couple hours of downtown parking runs $35, assuming you can find a spot. Young professional couples are struggling just to pay rent. A decent one bedroom apartment can easily run $2,500 a month and a livable single family home is well over a million. For many younger people, most of their life revolves around finding successfully bidding and winning, and then paying for their home. Don’t let my kids see this, but nearly 40% of Toronto homebuyers get parental financial help. Commute times (remember those?) have stretched to close to an hour, adding stress and limiting family time. Housing costs, increasing incomes and commute times dominate the news. There has to be a better way, and maybe there is.
Within the city of Cleveland, live-able, detached homes can be had for less than $100 a square foot. The land price is low and 50′ lots are common. Prices rise to $200-$300 a square foot in the trendier areas like Tremont, West Lake and Rocky River.
Yep its a former rust belt town with high poverty rates and the Cuyahoga River did indeed catch on fire in the 70’s. And there are plenty of neighborhoods I wouldn’t drive through. Lots of worn down housing tracts and boarded up storefronts.
But there are lots of great areas to live, work and play. The city is being reborn as a major healthcare, advanced manufacturing and technology hub. Downtown holds 3 major league sports teams including the 2022 Super Bowl Champion Cleveland Browns. (You heard it here first!). Cleveland’s Playhouse Square is second only to New York’s Broadway for live entertainment. They cleaned up the river now and the city’s bike paths are car-free and go for hundreds of miles. The museums, and art galleries are all stellar and some are even free. And for music lovers this is the place to be. The term “Rock n Roll” was invented here and its spirit lives on in dozens of great music venues and in the ultimate shrine, The Rock n Roll Hall of Fame. In short, it’s a bit of a hidden gem.
Our home is on a quiet, dead-end street. Our 100 x 120′ yard is home to chipmunks, deer and every kind of bird. The street is filled with mature trees and the homes are set well back from the road. 6 bedrooms gives us 3 rooms for sleeping, a craft room, an office and a guitar studio. Our basement holds a gym, pool table and workroom. A 2 minute walk gets us to a beautiful park.
Lake Erie, the airport, downtown, and Cavaliers, Browns and Indians games are just a $15, 20 minute Uber ride away. 17 colleges and universities are within a 30 minute drive. Homes sell for about 1/3 of the cost to rebuild them. You can also think of that as meaning that the lots have large negative value! This type of home would be out of reach for all but the wealthiest Torontonians. Here it is affordable for a professional couple.
Income taxes are lower in the US, but it depends on the situation. A $200,000 single earner will pay $69,239 in income tax living in Toronto vs $63,268 here in Cleveland. But the US system allows income splitting, so a couple could claim a household income of $200,000 and pay just $52,324. This is a big benefit for couples where one significantly out-earns the other. State income tax approaches vary widely from none at all to flat or progressive schemes. California’s is the highest with a top marginal rate is 13.3%. Adding that to a top federal rate of 37%, you get to taxes that start to look, well, Canadian.
Gas is about 33% cheaper here and parking is a fraction of Toronto rates (some of the meters still take change!). Home and car insurance are also about 20% less. Cell phone plans are much cheaper (my T-Mobile 5G plan includes 6 unlimited lines for $170). I recently bought a round of 6 beers at a local pub and got change back from my $20. Sales tax is just 8% compared to 13% in Toronto. That 5% difference is like having the world’s best reward credit card on every purchase.
Health care is quite different than in Canada. Other than prescription drugs, dentistry and elder care, Canadians don’t give health care costs a lot of thought. Here, the plans are complex to understand and the premiums are pricey. Those with full time jobs have coverage with a payroll deduction. Others need their own coverage. Plans are typically about $700 a month for individual coverage with deductibles in the range of $3,000-$5,000. At 65, Medicare takes over with broad coverage and a monthly premium of $148.50. Prescription drug prices are typically higher than Canada, but there are ways around that.
I used the Toronto to Cleveland comparison as just an example. My move made me realize that there are all kinds of options that most of us never consider. There are locations with lower housing costs within your country and around the world. Sites like Expatistan and Numbeo can help you compare the cost differences within a country or internationally while sites like Bestplaces show the differences within US cities. It could be as easy as moving further from a major center or to another part of the country or even internationally.
Accurate comparisons are complex, given different rates on taxes and variations in housing costs, food and transportation. Quality of life changes by city and can be difficult to gauge. The online data provides part of the story, but a field trip is needed to get a more complete picture.
Technology had been progressing, but Covid really moved things forward. Zoom was around long before the virus, but it was everywhere afterwords. Companies had started hoteling to save office costs, but Covid threw us all into remote working approaches we didn’t know were possible. Everyone became an overnight remote work expert. Covid accelerated the change.
In summary, 3 factors have changed the math on move decisions:
With housing being our single highest cost, it’s worth some math to see if a move might be your solution to slashing housing costs.
Have you thought about slashing your housing costs through a move? Let me know in the comments below.
Cover photo credit Unsplash
In the olden days, pre 2020, we all paid scant attention to the condition of our homes. Back then, we focused on the snack we were grabbing in the kitchen, the dog we were leashing for a stroll and the barbecue out on the deck. Now that we are all held in house arrest without bail, we are starting to see the aging kitchen from which the snack came, the scratched floor underneath the dog and the rotting deck under the barbecue. At virtual dinner parties and Zoom wine hours, the conversations turn to home improvements. And with our Stimulus stipends spent, we are all starting to wonder how to save big on home improvements.
We recently had 3 situations that nicely illustrated some nifty ideas for savings. With some simple principles we saved $7,000 on the first project, nearly $1,200 on the second and $5,000 on the third. The first was right here at Cashflow Cookbook Global Headquarters. That big chimney on the cover picture needed some work. The second was a dryer that developed a heat and motion phobia. The third was a garage rebuild that was close to a full, well, rebuild. Each project highlighted a different idea to save big on home improvements. To illustrate, let’s take closer look at each of these examples.
Nothing says a romantic night like a crackling fire, a bottle of Pelee Island wine and a good Netflix series. Unless of course the chimney inspector says no fires until the chimney is fixed. Who knew that a 1938 chimney would have such issues? After much peering up our chimney, it was decided that a relining was needed to remediate the flue cracks. In other words, about $10,000. Turns out you can put a price on romance and indeed, money can buy happiness.
In true Cashflow Cookbook form, I called around to check pricing. Five chimney places all said that it would run $350 a foot for a stainless steel chimney liner and that, on a 25 foot chimney that would come to about $8,750, plus tax. Seemed like some sort of chimney flue collusion. I noodled the thought of clamoring up our slate roof brandishing a 25 foot stainless steel tube, but the wind was picking up and rain was threatening. What could go wrong?
Wives have a sixth sense about husbands leading themselves into danger and so it was that Deb developed a sudden interest in chimney lining. She found a chimney specialist with a different approach and suggested that I call. I got through to Brad right away and he indicated that he has a special machine that relines the chimney with concrete, fully safe and guaranteed. He had been relining chimneys with concrete for over 20 years. Google glowed about his work with dozens of positive reviews. Total tab? $1,750. In conclusion, shopping around is great, but sometimes a different contractor can bring a different approach. $7,000 in the bank and on to the next chance to save big on home improvements.
When my mother-in-law’s dryer packed it in, my thoughts turned to a trip to Home Depot. My brother-in-law and I got together to craft the plan. I brought a credit card and he arrived with his toolbox. Hmm. I’m fairly handy, but hadn’t spent much time on the inside of a dryer. But I remembered fixing a broken ice-maker and I dashed home to get my iPad. I set it on top of the dryer and surfed over to my friends at repair clinic. Entered the make, model and symptoms and there are all of the possible issues, how to test for each, and a little video that shows each step. Nice! With some safety glasses and the right tools, my cat could fix this dryer**. The Repair Clinic even sell the parts! Boom. We found the problem on the third issue they listed. Turns out that a little piece of plastic had broken off the door switch. A $9 part and about 30 minutes of diagnostic work. Another $1,200 saved, some good bonding and an excuse for a celebratory beer.
Don’t underestimate what you can tackle yourself. There are so many great videos and PDFs out there to light the path for you. Bring along an in-law for some extra knowledge and know how. You got this. DIY is another great way to save big on home improvements. Another trick is to see if your contractor will let you help, building your knowledge and savings. I tried this approach on a deck rebuild a few years back, check it out. Let’s take a look at one more idea.
A relative in town had a garage that needed some care and attention, including but not limited to a new roof, soffit, fascia and gutters. Although price is important, the wrong contractor could turn the situation from bad to worse. We networked our way to a few contractors and kept a spreadsheet with their name, company, years in business, sense of their competence, their approach and pricing.
Steve had done some work on a neighbor’s house so we tracked him down and he showed up for the estimate. He had a clipboard and a tape measure, but strangely, no truck. Teleportation? Alien beam down? He scrambled around the roof, flailing his tape measure and muttering as he scribbled down numbers. Not too promising. Chad was next, and gave the garage a good staring from the ground. He disappeared into his truck to “work some numbers” and pronounced the garage dead. It needed to be razed and start over. He would reluctantly attempt the rebuild but it would run a good $12,000.
And so it went, until we asked a well regarded garage door man who he would use. Robert was the man for the job. He showed up for the estimate in a crisp white (terrestrial) van with custom cabinetry inside of his own hand. Nice. Some careful measuring, a firm Covid elbow tap and he was off, leaving only a promise of a next day quote. Sure enough, there it was in all its detail, including a price of $7,000.
His work was stellar and he even ran wiring for a garage door opener. The floor was swept clean and everything was tight and true. Shopping around and working referrals is a another key to big savings on home improvements.
** I should note that our cat, Susan, is blind and really not great at appliance work. She is, however, an accomplished lounger.
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How have you saved on home improvements? Let me know in the comments!
Take care and stay safe.
I made a bad decision in the summer before my senior year of college. It could have been a total disaster,