To cut costs, move to small-town USA

Finding the right compromise

After losing his dream job in the 1990-1991 recession, Rob Bennett made financial independence his goal. A former reporter covering tax legislation on Capitol Hill, Bennett took a corporate job "for the money" and started saving as much as he could. He and his wife, Mary, paid off the $148,800 mortgage on their Arlington town home in four years while researching small towns where they could live inexpensively.

Blowing Rock, N.C., was an early favorite but was too far away from Bennett's elderly parents. So the couple settled on Purcellville, Va., population 5,000. They sold their town house for $260,000 and paid $220,000 cash for their Purcellville home in November 2001, shortly before the birth of their second son (the boys are now 7 and 5). Bennett left his corporate job and became a self-employed writer.

"Most of our basic costs have either been eliminated . . . or are covered by earnings on our investments," said Bennett, 50, who wrote a book about his experiences called "Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work" and who runs the PassionSaving.com Web site. "So the amount that I need to earn on the writing business is small."

Technology helps make up for what Bennett sees as Purcellville's two big deficits: no movie theater or bookstore. Netflix and Amazon.com help fill in the gaps for his family, he said, but others may miss city entertainments and conveniences more.

"People seeking to make this sort of move need to think through each aspect of their daily lives," Bennett said, "to make note of what conveniences of a larger town they will miss."

Bennett also notes that there are some tensions between longtime residents and the more educated, affluent families (like his own) that have discovered Purcellville in recent years.

Before you start packing

If you're considering a move to a more affordable area, the following suggestions may help you decide whether to move and where to go:

Do your research. Bennett's bookshelf includes "The 100 Best Small Towns in America" by Norman Crampton, "The New Rating Guide to Life in America's Small Cities" by Kevin Heubusch and G. Scott Thomas and "Moving to Small Town America" by William Seavey. The Internet can help you sort through the possibilities as well.

Crunch the numbers. What you'll pay for a house is just the start. Find out what you'll pay in taxes -- on income, sales, property, business -- as well as for utilities, food and other basics. Cost-of-living calculators like this one at Sperling's Best Places can give you a general idea of how far your income will go in a new area, but you may need to do some on-the-ground research for smaller communities.

• Video: How much house can you buy?

Don't forget transportation costs. If you'll be driving longer to get to work, you'll have to weigh whether that time and cost is worth a lower home price, said Brad Stoh, co-CEO of Bills.com. "And if you move far from family but end up with frequent air trips back to visit aging parents," Stoh said, "those costs must be considered."

Investigate the local economy. What happens if you lose your job? Could you get another one without moving again? All things being equal, an area with a robust economy is usually a smarter choice than one that's moribund or dependent on a single employer.

Consider the trade-offs. Many areas with lower housing costs experience slower appreciation than higher-cost cities. If the area you choose grows rapidly, on the other hand, it may suffer the kind of growing pains -- congestion, crowding, higher taxes, crime -- that you were trying to escape by leaving the city.

Activities: The smaller the town, the fewer the opportunities for shopping, dining and indoor recreation, although the outdoor recreation possibilities may be far greater.

Culture: I'm not talking about symphonies and opera here, but rather the "feel" of a place and how welcoming it is. No matter who you are or what you're into, you can always find kindred spirits in a big city, but that might not be true in a smaller place, which tend to be more homogenous. Small towns and rural areas can be particularly lonely if you're single or your political views or lifestyle are out of step with the area's mainstream. The only way to really know is to go and check it out yourself, preferably with an extended visit, before you decide to move.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.

Published March 8, 2007

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