This is going to be a very interesting topic for me. I am from a big city, San Diego, California. However, I learned how to truly build wealth living in a small city. Maybe it is the fact that I have had less worries and more free time in small cities. Whatever the case is, I want to do a comparison of two fictional couples. One couple lives in San Diego and makes $100,000 each (total $200,000). The other couple lives in Mobile, Alabama, and makes $50,000 each (total $100,000). We are going to buy couples similar homes, similar cars, and give them similar jobs. However, the small-town couple has been learning about multiple streams of income. They also know how to navigate between earned income, business income, and investment income. Let’s get started.
Big Mike and Big Jessica are our big city folks. They live in my hometown of San Diego, Ca. Big Mike work as a software engineer in Carlsbad. Because he has to commute to work, they decide to buy a home in Carlsbad. His commute is 30 minutes. Big Jessica is a banking manager and works form home 90% of the time.
Big Mike and Big Jessica have two kids, 12 and 8. They bought their 3,019 sq ft home in Carlsbad for $1,249,000. They were able to put down $400,000 so their payments are $5,000 a month. Child care is $2,000 a month total, including both children.
Big Mike and Big Jessica love their cars. Big Mike drives a Telsa Model S, which costs him $95,000 ($1,500 a month). Big Jessica drives a Cadillac Escalade which costs her $107,000 ($1,700 a month). They also like to go to restaurants, fine dine, shop, and go to sports. Their entertainment budget is $3,000 a month. Let’s take a look at the final numbers.
Now to our small city folks. Small Ron and Small Kelly stated improving their finances about 3 years ago. They paid down debt and consolidated bills. They have been cutting out frivolous things from their life. They stay close to family and ask for assistance when needed. Small Ron commutes to work and Small Kelly is able to work from home.
Small Ron and Small Kelly have two kids, 12 and 8. They bought their 3,120 sq ft home in Mobile, Alabama for $349,000. They were able to put down $88,000 so their payments are $1,700 a month. They bought a larger home because they knew if they rented out rooms with attached bathrooms, they would command more money. They are able to rent both rooms for $1000 a month. Child care is free because Small Mother is able to watch the kids when they return home from school.
Small Ron and Small Jessica like nice, clean, paid off cars. Both of their cars are paid off. Small Ron drives a Ford Focus and Small Kelly drives a Kia Sedona. Since Small Kelly works from home, she is able to make jewelry trinkets during the day. On weeknights, she hosts live showings of jewelry. Since she makes everything herself, she is able to make $500 a month profit. Small Ron has 1/3 of an acre of land. He drives a riding lawnmower. He figures he may as well cut the neighbors yards when he out and about. He cuts extra lawns on the weekend, earning himself $600 a month. Their combined entertainment budget is $500 a month. Let’s run the numbers.
Wow, the small city folk trounced the big city folks. It was pretty uneven. After living in both worlds, I believe I give them both a fair shot. The big city folks are still doing well and have positive cash flow. The small city folks are using all the tools at heir disposal to increase cash flow and invest in business and investment income. I enjoyed doing this, I believe I will make it into a series.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. 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.
Leave a Reply