Calculating the net income of a position requiring temporary relocation.
A job seeker can easily make a mistake by accepting a position requiring temporary relocation. Here are some of the pitfalls of which you need to be aware.
If you are job seeking, especially in the tech sector, you might get recruiters reaching out with temporary contracts that require relocation. If you aren’t careful, you could end up losing a LOT of money. Our post on comparing income for different positions is a starting point. However, a temporary relocation adds additional complexity.
Suppose the phone rings and a recruiter calls with a 4 month contract in a city 150 miles away. The salary is comparable to local positions. You can commute on the weekends via train or plane. It sounds like a good deal, right? Whoaaa. Not so fast there partner!
First of all, you need to know the details. A recruiter might say “You’ll work onsite for 3 days a week and can work remote the other two”. That would be great. Head to the location Tuesday night and head home Thursday night. HOWEVER, did you get that in writing? I thought not. What happens with unemployment benefits eligibility? How long do you have to float any reimbursable expenses? What expenses do you incur with your house? What happens if your contract is terminated early?
It’s all in the details.
Suppose you can commute back home on the weekends. Great. But, who pays for it? It is really easy for a recruiter to say “We will cover your commuting costs”. HOWEVER, get that in writing. Also, it’s now time to do some math. Suppose the average train ticket is about $100 plus about $80 per week for Uber or Lyft. That is about $720 dollars out of pocket per month. When would you get reimbursed? You will be taking on a lot of other expenses. Floating $720 per month is a lot of cash. Plus, you will probably need transportation at the remote site. If you take the train or plane, you will either have to rent a vehicle, take Uber or get a trail pass. That can add between $100 to $500 per month. As you can see, the costs are starting to mount and we aren’t even there yet. One solution would be to get a company credit card for travel expenses including all meals while en route.
Most places will probably put you up in a hotel for a week or two. But, will they put you up in a hotel for the entire contract? If so, great. But, once again, make sure you aren’t stuck floating the hotel bill until accounting gets around to reimbursing you. If you have to get an apartment or room consider that you will spend a lot of your own time searching for suitable accommodations. That perfect room might be in a house with a Rottweiler who has a nasty disposition and a liking for chewing on your shoes. Or maybe their 14 year old kid likes to play heavy metal until 3 am. . You will need good credit along with at least the first month’s rent and a security deposit. Oh, and don’t forget that you should have renter’s insurance.
If you get an unfurnished apartment, you will need to have basic appliances, perhaps a bed and table, dishes, and other amenities. You will either have to U-haul the items to your new location or buy them on location. That will amount to a couple of hundred dollars at a minimum. Also, once your contract is done, you will probably have to dispose of the furniture, appliances and other household items.
In some cases, people will rent a room from someone. Will that room come with Wifi? If not, add in the cost of a Wifi hotspot and pray that Windows doesn’t decide to do some massive updates.
Are utilities included? What is the average monthly cost?
What happens if you commit to a lease and get let go the next day? Answer – you are holding a very expensive bag.
Cost of living and miscellaneous expenses
If you are on a temporary assignment, the odds are that you will be eating out more than normal. This might not seem like much but add up the cost of lunch and dinner out for a week.
If you are working in another state, most likely you will fall under their unemployment compensation rules. If you don’t have sufficient qualified time in your home state, you will find yourself in a position where you are not eligible for benefits. Suppose an employer tells you “You need to work onsite for four months and then you can work from home”. That sounds great BUT… Did you get that in writing? Even if you did, that probably holds no weight. At the end of the project, you might find yourself unemployed with no safety net.
Expenses for your house.
Some expenses depend on if there will be other people in the home to handle day to day issues. If you are in a townhouse where you don’t have to worry about snow removal and grass cutting, you are a step ahead. Let’s assume a scenario where there is no one else to take care of the house. There are a number of things you have to consider.
An empty house will invite thieves or worse yet, squatters. Having squatters move into your house would be a huge disaster (Yes, squatters will move into upscale homes). That means installing a security system and cameras.
What happens if you leave on a Monday and the sump pump fails during heavy rains. Unless you pay someone to check your house at least once in the middle of the week, you could come home to find your possessions floating in two feet of moldy water. Also, what happens if your heater fails during a deep freeze? This may sound paranoid but I had a friend whose new heater failed during a cold snap. You can purchase wifi thermostats and water alarms as well as cameras to keep an eye on things. You can also pay someone you trust to look after your house.
Nothing says “ROB THIS HOUSE, PLEASE” like an overflowing mailbox. You can get your mail stopped or forwarded but that can cause logistics issues. You could also purchase a mailbox that has a large holding area as part of it’s base. That would set you back about $100.
Another issue is that you might miss time sensitive mail such as a jury duty notice or correspondence regarding a financial account.
Lawn and other maintenance.
I’m on 2 1/2 acres. About an acre of that is woods but I still need to mow it every couple of weeks. I also have a 22000 gallon pool that if left unattended will start to resemble a science experiment gone berserk. My best guess is about $150 or more per cut and about $100 per week for pool maintenance. Oh, and I would have to leave the water on for the pool company. I would prefer to shut it off if I’m away for more than a couple of days. That totals about $800 to $1000 per month.
Many municipalities have ordinances about snow removal. My driveway is 150′. I have no idea what it would cost but it is probably more than a super duper mocha latte with foam and honey syrup at Starbucks.
What happens with your trash when you come home for the weekend? Hopefully a neighbor will put your cans out and put them back. If not, you need to pay someone to do that.
Not being able to do routine work around your house can result in significant expense.
It is a little difficult to schedule a face to face job interview for a position back home when you are 150 miles away. You would need to start your job search at least a month before the end of the contract. Even at that, you can expect some time with no income.
Many people in Tech do at least some work on the side. This can be for extra income or simply to work on new projects. You won’t be able to schedule any face to face meetings except perhaps on the weekend. If you do something like eBay trading you will probably have to curtail that as you probably won’t be able to ship your products while away.
At the very least, you need to check into the tax implications for local and state taxes if you are working out of state. You might end up with a lower tax liability but that is unlikely.
If you aren’t routinely seeing a doctor, great. However, if you are, then you need to consider the implications of finding a doctor at your temporary location. The same is true of any prescriptions that you might need, especially those that are sent via the mail due to your insurance company rules.
Wear and tear on you.
This is intangible but commuting will take a toll on you. Everything is fine when your ride gets you to the terminal on time and the trains or planes are on time. However, getting stuck in traffic and missing your train/flight could result in hours sitting in a terminal.
If there are any emergencies at home, it could be extremely stressful trying to handle them remotely.
You can’t pay the mortgage with promises.
A recruiter can make a lot of promises. Without getting into the integrity of those promises, consider that almost none of those promises are binding.
There are many hidden expenses when you take a position or contract requiring temporary relocation. There are also some non quantifiable issues. To Recap:
- Commuting costs and floating those costs while awaiting reimbursement.
- Housing costs, renter’s insurance, appliances etc.
- Unemployment benefits implications
- Home expenses
- Home monitoring
- Lawn, Pool, Snow removal
- Inability to job search
- Possible lack of income from side jobs
- Tax rate implications
Some things you should try for when negotiating a remote contract would be:
- The company provides a credit card for all commuting expenses.
- The company pays for any railpass needed.
- You get a signing bonus that covers the upfront costs of an apartment or room unless they provide the housing. Better yet, the company gets billed directly for the apartment or room.
- A salary that is about 20 percent more than the salary you could get locally to cover added expenses.
- Everything should be in writing.
- You should get, in writing, a promise that you could travel home immediately in the event of a family emergency or problem with your home without losing your position.
- How to calculate the true net compensation for a position.
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