Question

You just graduated from college in Denver, CO, and you are considering moving to Brownsville, TX, to be closer to your extended family. In Denver, you estimate that you can live off of a $28,000 salary, based on your current budget.

Groceries	$200
Housing	$800
Utilities	$40
Transportation	$100
Healthcare	$300

Brownsville Adjusted Salary: $23,275

Groceries:	$ 175.37
Housing:	$ 528.34
Utilities:	$ 36.58
Transportation:	$ 99.58
Healthcare:	$ 273.45

1. What percentage less is the Brownsville salary than the Denver one?

2. Will it be enough to cover the percentage increase in expenses?

3. Does it make financial sense to move? Why or Why not?

Answer 1

1. Salary in Denver = $28000

Salary in Brownsville = $23275

Hence, Brownsville Salary is lower than Denver Salary by (28000-23275)/28000 *100% = 16.87%

2. Expenses in Denver = 200+800+40+100+300 =  $1440

Expenses in Brownsville = 175.27+528.34+36.58+99.58+273.45 = $1113.22

Decrease in Expenses = (1440-1113.22)/1440 *100% = 22.69%

Since the decrease in salary is lower than the reduction in expenses, it will be enough to cover the decrease in expenses

3. Reduction in Salary amount = 28000 - 23275 = $4725

Reduction in Expenses = 1440 - 1113.22 = $326.78

Financially it does not make sense to move since the dollar salary has reduced more than the dollar decrease in expenses