Are you using the cost of living review for 2021 for the economical truth because you want to move?
What is the real truth behind cost of living 2021 projections and moving from state to state?
The lock-ins, shutdowns, and extended lack of mobility of 2020 has many people wondering if they should move to a warmer climate, safer and more affordable state. Ultimately, the best strategy for making your move is knowing what it will cost to live in your new dream home, in your new dream state.
Affiliate Marketing Disclaimer: This article contains Amazon affiliate links. Financial Disclaimer: This article contains strategies that I use personally, but should not be taken as a prescribed method of use for you.
- Determine the 2021 cost of living expense for you
- Create a cost of living comparison by states
- Affordability truth derived from cost of living calculations
- The most expensive states for cost of living in 2021
- A listing of the least expensive states for cost of living in 2021
1. determine The 2021 Cost of living Expense for you
My first question is what does the cost of living really consist of for me? Simply put the cost of living is the monthly to yearly amount of money you and I need to live comfortably. The cost of living varies from person to person, so it is hard to use the cost of living from another person.
Therefore I created a budget showing the cost of the following items to determine my cost of living. I averaged all of these (except expenses for children and healthcare) for 3 months using the highest bills of the year.
- Housing: rent or purchase monthly cost
- Food: grocery bill and eating out cost
- Utilities: electric, gas, water, cable. internet, phone
- Transportation: car payment, insurance, gas
- State Tax: for food, property and transportation
- Children: lunch, transportation and school
- Healthcare: what changes do you need to make
2. Create a Cost of Living comparison by states
Next, you create a list of three different states where you would like to live. Then you need to compared your states. Next, use your information to compare the cost of living. You want to get as close as possible to the penny of your monthly costs.
My plans include a cost of living comparison by states because I want to move from Michigan to Florida, Louisiana or Texas. Once I decided that I wanted to move, I created my cost analysis and started comparing these warmer states to Michigan.
Nonetheless, I am wise enough to know that every region has its down falls, so I investigated home insurance including flood insurance. I also checked out the number of storms or other bad weather associated with living in those three states.
3. Affordability truth derived from Cost Of Living Calculations
Remember the saying, numbers don’t lie. Use the numbers in your cost of living calculation, be truthful with yourself about budget and what is affordable.
I used two types of comparison strategies to complete my cost of living comparison by states. First, I used the cost calculator provided by salary.com to review the cost of living index for major cities in Michigan. Then I used the cost of living calculator provided by smartasset.com to investigate cities that were not listed in the Michigan city listing because they are not in Michigan.
I used the smartassest.com cost of living calculator. My cost of living comparison results showed the following when I compare Shreveport, LA to Pontiac, MI. The cost of living in Shreveport, LA is 1% higher in taxes, housing and food. If my annual salary is $59,850. in Pontiac, MI, I need to earn $60,261. to have the same standard of living in Shreveport, LA.
I made the same comparison with Humble, TX. Using the same annual salary of $59,850. for Pontiac, MI, this comparison shows that I need to earn $60, 772. for the same standard of living. The cost of living in Humble, TX is an average of 2% higher in taxes and housing. But, the food costs are lower, which creates the 2% rate difference.
My last comparison is with Jacksonville, FL. Once again I used the annual salary of $59,850. for Pontiac, MI, this comparison shows that I need to earn $71,867. for the same standard of living that I have in Pontiac. The cost of living in Jacksonville, FL is an average of 3% higher for a combination of taxes, housing and food than Pontiac, MI.
4. Most Expensive States for living in 2021
These states rank from number one to number five for their living expense. They are the most expensive states from the east to west cost for living expenses in 2021.
As reported by the world populations review, the following 4 states and the District of Columbia were found to be the most expensive places for living in the US in 2021.
#1 Hawaii: Voted to be the #1 most expensive state due to the whopping cost index price of 192.9. The average cost of a home is $1,158,492.00. The average electric bill is $388.65 and food prices are astronomical as well.
#2 District of Columbia: Voted #2 in the most expensive state review due to their over-sized cost index price of 161.1. Although the cost of housing index in Washington D. C. is an unbelievable 279.2, it is quite a bit less than the 318.6 in Hawaii. In addition, the average cost of a home in Washington D. C. is $638.914.00, and renting is nearly $3,000.00.
#3. California: Voted #3 in the most expensive state review because of their cost of living index of 138.5. The transportation cost in California is 132.4. However, eating is not far behind with a grocery cost index of 117.3.
#4. Oregon: With cost of living index of 134.6, and grocery index of 113.8, Oregon is the fourth most-expensive state to live in within the United States. The median home value of $549,358.00 is slightly below that in the District of Columbia.
#5. New York: The fashion capital of the world, has a cost of living index of 133.7, with grocery cost at 113.7. New York landed at the fifth most expensive state in the United states. However, the housing index in New York is slightly above that of California’s 227.3 with a cost of 204.4.
5. least expensive states for living in 2021
These states were voted to have the least expense for cost of living in 2021. Most of these states are located in the mid-southern region of the United States.
The average cost of living index is 104.63. The reported cost of living in these 5 states falls almost 20 points below the national average. As a result, they are voted as the least expensive states for living in the US in 2021.
- #50. Mississippi with 86.1, voted #1 for least expensive
- #49. Arkansas with 86.9, voted #2 for least expensive
- #48. Oklahoma with 87.0, voted #3 for least expensive
- #47. Missouri with 87.1, voted #4 for least expensive
- #46. New Mexico with 87.5, voted #5 for least expensive
The Truth About the Cost of living adjustments
What is a cost of living adjustment and how does it affect my move from one state to another state? The office of personnel management (opm.gov) defines the cost of living adjustment (COLA) as the change in the consumer price index (CPI).
Accordingly, the Department of Labor calculates the CPI each year to determine the COLA for urban and clerical workers. In addition, other COLA determinations and changes are handled by various other federal departments.
Should you include your cost of living in your cost analysis? I would not include the COLA until I received the money. In addition, if you are moving to another job, you may not receive a COLA increase, and the difference may create a bigger problem.
Therefore I would not include the cost of living adjustment in my cost of living calculations.
Conclusion
We begin by asking for the real truth behind the 2021 cost of living projections. We also ask if you are a person who is looking to move from one state to another state? Next, we state the importance of creating a cost of living expense list before you move. Also, we suggest that you compare three different states.
Then we state that the truth is found in numbers and that one of the best things you can do is find your affordability in your numbers. We also provide the link to the cost of living calculator by smartassets.com. I used it for a comparison of three states.
After that, I posted the five most expensive states and the five least expensive states for living costs in the U.S. I ended with a report on the cost of living adjustment (COLA).
If you enjoyed this article, take a look at some of the other articles in our Senior Sense Makes Cents blog area.
Resources
- Cost of Living In Michigan https://www.salary.com/research/cost-of-living/mi
- Frequently Asked Questions https://www.opm.gov/faqs/topic/retire/index.aspx?cid=422637f6-1d45-4863-9549-b2b605155b40
- How Does The Cost of Living In Your Area Compare? https://smartasset.com/mortgage/cost-of-living-calculator#us/purchasing-power
- Nerdwallet’s Cost of Living Calculator https://www.nerdwallet.com/cost-of-living-calculator
- World Population Review https://worldpopulationreview.com/state-rankings/most-expensive-states-to-live-in
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