Are you living in a big city attempting to fulfill the American Dream? How’s that working out for you?
Even in small remote towns, the American Dream can cost upwards of $5 million. Actually, it’s more than that, just from last year’s inflation.
If you are seriously considering retiring before 50, you must be extreme toward your dream. Perhaps the most significant decision is where you will live.
How to Buy and Track 30-Year Bonds
My background story. My wife and I will retire this year at ages 39 and 42, respectively. I will receive a military pension of roughly $8,000/month.
We will live in Pensacola, Florida, a town of about 100,000 (including the outskirts). I bought two homes in Pensacola, one in 2017 (mortgage $1,300/month) and another in 2020 (mortgage $1,800).
Why are my mortgages important? That’s the key indicator of if you can retire or not. With a pension of $8,000/month and a mortgage of $1,800, we are sitting pretty.
In addition, we do not spend much. We can live comfortably on $5,500/month, including the mortgage.
Saving for a House Down Payment #2: Single Person, Big City
More is better. But why stop at just a military pension? I want to ensure we can still save and invest (dividends). We still need cash flow to cover expenses relating to our three homes (one in Arizona).
We want to ensure we can help our kids and prepare for our grandkids. These dreams require cash flow, so depending solely on our military pension isn’t an option.
In addition to our military pension, we also have roommates (+$2,000/month), dividends (+$1,500), and rental income (+$650). I don’t include my book and website money, as this is just for play.
You Can’t Get Rich By Acting Rich
Life is good, but we didn’t get lucky. My wife and I sacrificed a lot to get here. In 2019, as we started to get out of debt, I received orders to Okinawa, Japan.
My wife and I had just returned from a tour in Mainland Japan, so we made a tough decision. She would stay in Pensacola with the kids, dog, and two properties.
During this tour, we paid off all our debts and began cash flowing every month. We never looked back after recovering financially.
After my third tour in Japan, I returned to San Diego. My wife stayed in Pensacola as I finished up in the Marine Corps. In total, I will have been away for three straight years.
Passive Income Road Trip #5: Road Trip
How bad do you want it? Of course, most people can’t imagine being apart from their family for so long. But how badly do you want to live an extraordinary life?
What if I had moved my family to San Diego? Leading two lives between Pensacola and San Diego helps me see the difference up close.
When people talk about the cost of living, they mainly think about housing, taxes, and gas. However, EVERYTHING is more expensive in a big city, including your time.
That’s right; if you want a short commute to work, you must buy a much more expensive home. Or, you can drive in for two hours from Temecula but have a nicer house. How much is your time worth?
Living Overseas on Passive Income
Start planning your escape today. I am a Master Gunnery Sergeant in the Marine Corps (E-9). My buddies are also retiring soon at the identical rank.
They choose to stay in San Diego and live the “good” life—Lord bless them. They are seeking a job paying $200,000/year.
Jobs that pay this much don’t just give you free money; you’ll have to earn it. How long will it take to get ahead in this big city?
Math never lies. Let’s look at the facts of our life:
- Total monthly income: $12,150
- Type of income: Passive
- Monthly lifestyle costs: $5,500
- Mortgage: $1,800
Let’s assume my buddy makes the same military pension and gets a job paying $200,000. He will live in San Diego, drive nice cars, vacation, and put his kids in private school.
- Total monthly income: $24,700
- Type of income: Active and Passive
- Monthly Lifestyle costs: $20,000
- Mortgage: $4,000
Passive income is the key. Once you have “the information,” you’ll understand that passive income is much more valuable than active income.
Passive Income from Creativity 101: Music
My buddy is still exchanging time for money. He earns $8,000/month passively and another $16,000 actively. How much money would he need in his dividend portfolio to replace the $16,000 per month?
Again, doing quick math ($16,000 x 12 months = $200,000). Then you dividend $200,000 by the dividend yield of 5% ($200,000 / 0.05 = $4 million). He would need to invest $4 million to replace his new salary.
He looks to have $4,000 per month of cash flow that he can invest. That puts him at 83 years to reach his goal, using simple math (not compounding).
Understanding Cash on Cash Return?
Long story short. How long do you want to be in the workforce? What’s so special about your big city that it’s keeping you wanting more?
Before you say I can’t relate, I’ll tell you one thing. I was born and raised in San Diego, California. I have lived here for over 20 years of my life.
It’s a beautiful city, and I would love to live here, but I cannot afford it. If I need $24,000/month to survive an ordinary life, there is a problem.
Don’t Fear Delegation
I want to cash flow at least 50% of my passive income. That way, my money keeps making money while writing books and chilling with my wife. That’s the life I envision.
Conclusion. In your 40s, you are moving into the big leagues. These major league decisions can affect your family (and your time with them) for a long time.
As I talk to buddies who are also retiring, you can see a sadness in them. They are going back into the workforce solely to earn money to survive.
They are not going to save the world again, but to pay expenses. The ones living in expensive cities are even more unsatisfied. They will work until age 75.
Basics of Design 101: Don’t Leave Home Without It
Big cities require big lifestyles. You can’t just live in San Diego; you need to have the entire California lifestyle. You’ll need two expensive cars (an Audi and a Tesla), a big house in a costly town ($2 million in La Jolla), and a private school ($20,000/annually per child).
If you love your job, continue to go down this route. It is only getting worse. Automobile gas prices and home gas prices are skyrocketing. Taxes continue to increase along with home prices.
I absolutely adore my life in Pensacola—mainly because we can afford it. I have a massive house on three acres, fifteen minutes from white sand beaches. Best of all, I have over $5,000/month remaining to keep building our family dream. Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 9 (Free 394-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 9 (Free 394-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 3! (book)(Web Edition)(Art Edition)
- Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
- Read My Books for Free: Free Kindle Books Schedule
- Book Design: Design Tips on YouTube
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: REITs vs. Homeownership (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube: MFI YouTube Channel
Monthly Dividend Tracker Template: Buy on Etsy
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
Leave a Reply