If you want to accomplish the most difficult thing in life, try buying a house in a big city while having a family. I cannot think of a more demanding position to be in as an adult.
However, we can achieve anything we put our minds toward, so let’s move forward with a positive mindset. We must first write down our goals and put 110% effort into reaching them.
Welcome back to the Saving for a House Down Payment series (part 1, part 2, part 3, part 4, part 5), where we buy homes no matter the circumstances.
Roth IRAs vs. HSAs
Think and dream big. We must ensure we have the correct mindset for making an enormous purchase. The book “Think & Grow Rich” gives us daily affirmations to help us reach our goals.
These reflections don’t work by magic; they work because you focus on what is important. I read this book in 2020, and my finances have improved dramatically. I also understand I have to be extreme toward my dream.
Buying a $1 million home in a big city will be tough. Heck, this amount doesn’t get you much here in San Diego. We will have to pull out all the stops to save a $200,000 down payment within a couple of years.
How to save $200,000 in less than three years. Let’s be honest; the real estate market undergoes major shifts every 2-3 years. You can’t take 7-10 years to save for a down payment because the entire market will have changed.
Turkey vs. Turnkey 2
So how do you accelerate your savings? There are two significant ways to save this type of money 1) live below your means and 2) increase your income.
Living below your means in a big city. What are you willing to do to achieve your goal? Are you ready to sacrifice time with your family or move to a tiny apartment?
Let’s say you are earning $120,000 a year in San Diego. Most of your income will go to housing and transportation costs. How do you reduce the amount you pay toward shelter?
I would send my spouse home to their parents for 1-2 years. Yes, it won’t be a popular option, but it is necessary.
Pumpkin Spice & Royalties 2
If your spouse brings your child to Flagstaff, Arizona, to live, you’ll save a ton of cash. Your parents probably won’t charge rent, so you only need to provide money for expenses.
Reduce your costs in the city. While your spouse lives with their parents, you’ll have to double down on saving and investing. If you bring in $10,000/month, at least $5,000 a month must go towards your down payment.
But you can’t stop there. You will need to create additional income streams to accelerate your savings rate. Having a single source of income will limit your ability to get ahead of the power curve.
Because you are on an expedited timeline, passive income is not the best solution. Passive income usually takes 3-5 years before you see the fruits of your labor.
How to Thrive in a Long-Distance Relationship
You will need to join the gig economy and perform as much work as possible. However, you can plant the seeds of passive income during this time.
Hopefully, you will be in your mid-20s or early 30s at this point in life. As you reach the age of 40, your ability to work multiple jobs and handle various tasks diminishes. Heck, you are just getting too old to perform numerous daily tasks.
More money, more problems. Leaving your family for two years isn’t ideal, but you must build wealth. $200,000 is a lot of money, and it isn’t going to save itself.
Saving this much money will strain your relationship, so plan for it. I went to Japan for two years, and we saved over $200,000. Luckily, we already owned multiple properties before I left.
Fruits of the DGI Tree
Today, we are reaping the benefits of our sacrifice. Our rental rooms pay us $800/month each, and our rental homes are now producing $400/month free cash flow.
My books give me a little extra spending money per month, and my job is lucrative. We are firing on all cylinders, but we are saving and investing more than ever—no time to start spending again.
Hard work always pays off. I tell you this because your sacrifice will pay off in the long run. You have to have a vision of what you want from life.
The Magic of Compounding
What is your dream retirement and lifestyle? If your dream is owning a big home, two Teslas, and putting your kid through private school, you’ll have tough time-saving money.
The problem is that there is always a bigger home, a newer car, and a better school district. Most people in the city get lost in the city lights. It’s a glamorous but costly lifestyle that can lead to financial ruin.
However, if you dream of providing a safe, clean environment for your family and never worrying about money again, you will come out ahead.
Is Budget a Bad Word?
With a high salary, you can save money very quickly. You can put your money into safe investments like Certificates of Deposits, Series “I” Bonds, and High-Yield Savings accounts to grow your down payment faster.
Keep a good head on your shoulders. The toughest part of living in a big city with a family is seeing through the masks. It looks like every other family is doing well. They are going on Disneyland trips in their expensive Rivian trucks, and you are driving a Ford.
Please do not buy the hype; they are broke. Roughly 10-13% of Americans make over $100,000, and over 60% of people cannot produce $1,000 during an emergency. You do the math.
Only 1 and 10 people you see on the street are making over $100,000 from their job. You have to start seeing the world as it exists in the financial reality. Most people you see and interact with are broke.
Retire Rich, Retire Comfortable with a Business 4
Once you understand this, you can be proud to drive your Ford. You will recognize that the person driving the $30,000 car is wealthier than the person driving the $100,000 car.
Conclusion. Big cities are all illusions, just fancy smoke and mirrors. If you get caught in the big city magic trick, you’ll be working until you are 80.
However, if you can live a small-town life in a big city, you can amass great wealth. Keep your living expenses low, sacrifice family time for 2-3 years, and continue to increase your income.
The Dividend Debit Card 2
You can save $200,000 in two years easily with the right mindset. If you want to save while keeping up with the Joneses, you’ll bleed money. If you are willing to look like “the average Joe or Jane,” you will put yourself in the top echelon of Americans.
My wife and I are living the American dream. We save and invest over $5,000/month while having money coming in passively.
Yes, we are far apart for a couple more years, but we both will retire before age 50. That will give us at least 20 solid years of travel and spending time without working a job.
Are you willing to do what it takes to succeed in a consumer-first nation? Can you look like an average person? Or do you want to stand above the crowd? What are you willing to do to build generational wealth for your family?
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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