Q: My husband and I live in a very expensive city, and the high rent is killing us. We pay bills late, default on loans, and struggle constantly to make ends meet. We've stayed here because this city offers the best jobs in our chosen fields. But now we're wondering if we should move somewhere with a lower cost of living, even though our ruined credit scores could make getting a new lease difficult. What's your advice?
A: I don't think relocation is right for you—it feels to me like an attempt to run away from your problems, which means you'll just end up making the same mistakes in a new town. Why am I so sure? It seems that you've let this situation go on for a very long time. You've defaulted on loans, plural? That's a sign that the two of you don't understand how to live within your means.
Let's start with your everyday spending. I sense that you and your husband aren't aware of where your money is going. Sit down with the past year's credit card and bank statements and tally what you've spent on food, entertainment, housing, clothes, and transportation. Then compute a monthly average for each. Next step: Cut each category by 20 percent. Don't tell me it's impossible—it's not. This is about being conscientious and challenging yourself to do everything you're doing now, but for less money. Opt for the subway, not taxis. Give last year's wardrobe another spin this year. Save the expensive restaurants for very special occasions. And cut nonessential expenses down to the bone until you're more secure. If you are still underwater after six months, it's time to think about the big S: yes, the suburbs. Perhaps you need to move 10 or 20 miles out and commute. You can still work and play in the city, but as many couples have learned, living outside it saves you plenty. Make sure you factor in the expense of commuting—ideally by public transportation—and aim for a monthly housing cost equal to about 30 percent of your gross income.
If you do choose to start over elsewhere, make a clear-eyed decision. Costs may be lower in another city, but salaries could be as well. Online calculators such as the PayScale Cost of Living Calculator can help you figure out the math of relocating. As for winning over a potential landlord who cringes at your credit scores, your best option is to offer a bigger security deposit.
But remember: All the advice in the world won't do you any good until you both buckle down, get serious about spending wisely, and stop robbing yourselves of the future you want.