I recently wrote an article (https://militaryfamilyinvesting.com/2020/07/27/big-city-spenders-vs-small-city-entrepreneurs/) about a big city couple who likes nice things versus a more grounded small city couple. The small city couple, making 50% less money per month, was able to invest 150% more money than their big-city counterparts. Now I want to look at some ways the Big City Spenders can increase their investable income. Let’s do a quick refresher.
The couple, Big Mike and Big Jessica have 2 kids. They have a $1.2 million house and two nice new cars. They spend roughly $3000 on entertainment. They have roughly $3,500 a month to invest.
The Bigs start to read on how they can build multiple income streams. They see a huge opportunity and decide to jump in. They find a huge 3 unit living compound right across from the beach. It costs $3,209,000 and is a total of 4314 sq ft. The main complex is 1850 sq ft and has 3 bedrooms and 3 bathrooms. The other two units are 1232 sq ft each and have 2 bedrooms and 1 bath.
The couple already has $400,000 invested in the current home. They sell it for a $400,000 profit. They also add $200,000 of their saving money to be able to put $1 million down payment into the home. The mortgage will be $11,500. They move in and are able to rent the townhouses out for $4000, being as they are this close to the beach. They also move Big Jessica’s mother into the main quarters to help with the children. She is able to watch the kids for free and also manage the 2 rentals in her free time.
They both decide to downgrade their cars and move into two paid off $30,000 cars. Having more time on her hands, Big Jessica is able to start a blog and YouTube video on how to succeed in Southern California. She is also able to merchandise. All said, she makes $4,000 a month from her different revenue streams. Big Mike also starts a small mentorship program for young software engineers. He has years of corporate knowledge and wants to help the younger generation succeed. He does not charge much but he brings in $2,000 a month. They also have been working on their dividend portfolio over the last few years and it has reached $1,500 a month. Due to all their new activities, their entertainment expense is $600 a month. Let’s run the new numbers.
Wow, what a difference a mindset makes. Instead of buying nice cars and dining out, the Bigs compromised a little. They get older cars and paid them off. They used a lot of their free time to build up small businesses and business income. They invested in dividend-paying stocks. Now they are sitting on top of $240,800 cash flow a year after expenses are paid. Now the income generation cycle starts. They start to make money from their businesses, which leads to more money being invested in stocks. The stocks now pay more dividends. Before you know it they buy another rental property. And so on and so far. The most important thing is they are still in love and a family. Mom is there with the grandkids and she couldn’t be more proud of how the Bigs have become a truly wealthy family.
Leave a Reply