How to decide if a salary bump is worth the move or another article from years ago that I never published because you know all this stuff already and it’s too much excruciating detail that nobody but me cares about.

My friend Mimi is contemplating relocating from Chicago, Illinois to Sydney, Australia for her job. The assignment would last anywhere from 18-24 months and comes with a cost of living increase. She asked me, since I’m trying to impersonate a personal finance guru, if the move was “worth it.”

So I asked her some questions and ran some numbers. 

What are the one-time expenses for the move? Is there anything work is not covering?

• Movers/moving: $0
• Initial Flight from Chicago and final flight from Sydney: $0
• Potential expenses due to quarantine: $200
• Refrigerator/washer/dryer: ~$1,000
  • Most apartments in Sydney do not come with these major appliances, but Mimi will be able to sell them when she moves to recoup some of the cost.
• Security deposit for new apartment: ~$3,000
  • She may receive part of her security deposit from her old apartment in Chicago to offset this cost and she may recoup some of this when she moves out of Sydney.
• Flight home once: ~$1300
  • Mimi can’t imagine going two years without seeing her family and expects to fly back at least once, if not twice, while she’s there. Sydney is about as far away from Chicago as one can get. I think.

Total one-time expenses: $5500

What are the increased monthly expenses Mimi will encounter? What’s the cost of living difference? 

• Increased work commute costs: $76/month
  • Mimi’s current cost of commuting is about $50/month and decreasing fast due to increased bike riding. A twice-daily bus in Sydney would cost: $126/month. She may bike to work in Sydney and get this down as well.
• Increased rent: $2,000/month
  • Mimi currently has a 1.5 bedroom apartment in Chicago and pays $1,100/month. A similar apartment in Sydney would cost her $3,100/month. 
  • She could offset some of this by getting a roommate.
• Increased cost of living generally: $250/month
  • Sydney is about 50% more expensive than Chicago for everything else. Mimi’s variable expenses run about ~$500/month currently. 
    
• Cost to transfer money: 3%
  • Mimi is getting paid in US dollars, so she’ll have to transfer money for rent, utilities, etc to Australian dollars. 
  • Both banks (the U.S. bank and the Australian bank) take fees with each transfer. This is partially offset by the higher interest rates Australian banks give for savings accounts.
• Exchange rate.
  • The current exchange rate is in Mimi’s favor by about 3 cents. $1.00 U.S dollar is worth $1.03 Australian dollars. The exchange rate cancels out the cost to transfer money.
  • This could go up and be even more in Mimi’s favor or swing the other way and be even worse. It looks like the exchange rate has dipped dramatically recently.
• Additional taxes?
  • Mimi has to pay Australia taxes and U.S. taxes and even Illinois state tax if she wants to move back to Illinois after Sydney. Exact amount is unknown and the biggest variable.

Approximate new total monthly expenses: 
($3,000 – rent + $126 – transportation + $750 – variable expenses) = $3876

Yearly expenses increase 
($3,876 – estimated monthly expenses in Sydney) – ($1600 – current monthly expenses in Chicago) = $2276/month increase.

$2276 * 12 = $27,312 increase in expenses per year. 

The relocation package comes with a $65,000 cost of living increase per year, but I understand that most of it will be eaten up by taxes. 

Mimi is me

Above is an article from 2013 that I started and never published.

In case you couldn’t tell, my friend Mimi was actually me. Sneaky, I know. She’s my financial avatar. 

It’s funny reading this today and trying to nickle and dime that experience. It makes me cringe! 

The correct answer is go. Go. Go. Don’t care about the money and go have adventure. You can be a lawyer in Sydney, Australia. Go go go. Do it. Just do it.

Life is a trip if you treat it that way. Do instead of not do. Grow instead of stay in place. Explore instead of deciding to turn into a hermit. 

And it worked out quite well! I did negotiate, as I’ve told you.

I always build in cushions when I budget and I knew my estimates were on the high end. Here’s the expenses with the 20/20 hindsight.

***

Movers/moving: $0
I wish I had negotiated here, too. My firm spent more than $20,000 to ship my stuff there and back. If I had asked for $10,000 in cash to just buy everything in Australia, I’d have more money in my pocket, less money would come out of my employer’s pocket, and the whole deal is probably better for the environment. I’d probably recoup most of my money when I left by selling it, anyway.

Initial Flight: $0
Heavenly business class, baby. I got to fly on the second floor of the airplane. I didn’t even know airplanes had second floors.

Actual expenses due to quarantine: $0
I packed within the guidelines and had no quarantine issues.

Refrigerator/washer/dryer: $0 
My apartment came with a refrigerator and a dryer, but I bought a used washing machine off Gumtree.com for $150 and borrowed a wheel cart thingy and a buddy and hauled it the few blocks to my house. I sold the washing machine for $150 when I left to the people who were renting my apartment next. Lucky jerks.

Security deposit for new apartment: $0
I received the entirety of my security deposit back for my Chicago and Sydney apartments when I left said apartments.

Flight home: $800
I flew to the U.S. once for a cousin’s wedding for $800 roundtrip.

Increased work commute costs: $0
In Sydney, I walked to and from my apartment and work every day except perhaps twice when it was raining buckets and then I took the train.

Increased rent: $2,000/month
Sydney is expensive, but I loved my apartment in Darlinghurst more than any other apartment or home I’ve ever had. I would go back and live in that same space in a heartbeat. That’s why I said those jerks who bought my washing machine were lucky. They weren’t really jerks.

Increased cost of living generally: ?
I’m too lazy to calculate this specifically, but I did spend more in Sydney than I did in Chicago. I went out a lot.

Cost to transfer money: 0-3%
In the beginning, I paid the 3% fee to transfer money, but soon I found a buddy or three that would transfer me Australian dollars and I’d transfer him U.S. dollars. That’s how to thwart that transfer fee!

Exchange rate:
I live a charmed life. When I was negotiating for this move, the exchange rate was $1.00 U.S. dollar = $1.03 Australian dollars. When I left Australia nearly two years later, the exchange rate was $1.00 U.S. dollar = $1.40.

Additional taxes:
Taxes were the biggest variable and ate up most of my cost of living adjustment and why I believe I would have been better off financially staying in Chicago. But I got a good tax return come tax time from Australia and the United States, so I don’t know.