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Think Before You Ditch the Big City for a Small Town : Lifestyle: Relocation is possible if you plan wisely for the financial changes you're certain to encounter.

January 02, 1991| This story originally appeared in Changing Times magazine.

Maybe it will happen while you're lounging on the beach. Or drinking in the night air and the stars on the porch of a mountain cabin. Or visiting friends in a town where 10 minutes is considered a long commute and the kids bike-pool themselves to baseball practice.

Wherever you choose to get away from it all, the idea is almost certain to occur to you: Why go back? Why not live where the pace is slower and the costs are lower? In a small town, you could buy a house for a song. The kids could walk to school. You could walk to work.

Assuming, of course, you could find work. End of reverie. Dreams of chucking the big city often end abruptly when you're faced with the reality of finding a job in a small town. And not without reason. Most new jobs are being created not in small-town America but in suburban rings around big cities. Still, there are many who have beaten the odds.

To make such a move successfully, you need to be sure finances don't throw you a few curves. Living costs generally are lower in small towns but not across the board. Your federal tax bill could actually go up. Because housing costs are likely to be lower, you won't have as much to deduct in interest expenses and property taxes. That's what would happen if you moved from, for example, Los Angeles to Carson City, Nev.

Your outlays for food and certain services could also shoot up. Cities of 50,000 to 60,000 are pretty developed markets, but in the hinterlands goods and services can be more expensive, says Thomas Peiffer, executive vice president of Runzheimer International, a relocation consulting firm in Rochester, Wis. Groceries, for instance, cost about 13% more in Medford, Ore., than in Los Angeles.

On the other hand, housing and transportation could cost you so much less that your overall expenses would go down--provided you avoid the home equity trap.

City-dwellers who sell their homes for big bucks sometimes try to get around the capital gains tax by sinking all that money into what amounts to a palace in a smaller town. Peiffer suggests it would be smarter and would improve your future cash flow to buy a comparable home for a lot less, take the capital gains tax hit and pocket the rest.

The cash will come in handy because the act of moving itself could cost you a bundle. Runzheimer estimates its corporate clients pay about $40,000 to relocate an employee. That includes the cost of house-hunting trips, temporary living arrangements, real estate agents' commissions and closing costs, and sometimes even an allowance to redecorate the new home.

Move yourself and the costs probably will be lower, but you'll have to pick up more of the tab. Tax deductions will soften the blow. You'll be able to write off all direct costs associated with your move, such as transporting yourselves and your household goods to the new site, provided your new job is at least 35 miles farther from your old home than your old job was.

A corporate relocation has something else going for it: a job when you arrive. Finding one on your own could be the biggest challenge you face when you decide to move.

Writers, computer programmers, consultants and others with home-based jobs won't have it so tough. All you need is a fax machine and access to transportation and you can live anywhere, says David Savageau, co-author of "Places Rated Almanac" (Prentice-Hall; $16.95). You also have a leg up if you're in what Savageau calls a generic occupation--nursing, teaching, law--for which job opportunities exist just about everywhere.

If part of your reason for moving is to become a bigger fish in a smaller pond, you'll boost your chances of finding work if you look for a city with an areawide population of at least 100,000. You'll find a reasonably varied environment for jobs if you want to work for someone else, or markets and business services if you want to run your own business. In fact, one of the biggest mistakes you can make is figuring you can take your job with you by starting a business in a town that's too small or too isolated to support it.

You'll probably make less money in a smaller city, but the cost of living may be lower, too. So you should decide whether you'll come out ahead. If you are earning $50,000 in Washington, and move to Asheville, N.C., for example, your equivalent salary will be about 14% less, according to a data base developed by BTA Economic Research Institute in Newport Beach, Calif. But your living expenses will drop even further, by almost 18%. If you are making $50,000 in Houston, on the other hand, you can expect to earn 13% less if you move to Santa Fe, and your expenses will be about 6% more.

Chances are you're concerned with less-quantitative aspects of life in a smaller town: a more pleasant climate, safer streets or more outdoor recreation facilities. For information on those subjects, consult "Places Rated Almanac," which ranks those amenities and more for 333 metropolitan areas. A second book, "The Rating Guide to Life in America's Small Cities" (Prometheus; $16.95), focuses on what author G. Scott Thomas calls "micropolitan" alternatives--219 cities too small to qualify as metropolitan areas.

SchoolMatch ((800) 992-5323), in Westerville, Ohio, will send you information on school districts in the area to which you're moving. You fill out a questionnaire listing your priorities and SchoolMatch searches its database for 15 school systems that come closest to meeting your needs (there are separate questionnaires for private schools). The service costs $97.50.

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