George Kamel - Is Where You Live Keeping You Broke?

Starting point is 00:00:05 Moving is great. A chance for a fresh start, fun arguments over tie-down straps, and if you happen to have a pickup, you're automatically every mover's best friend. And in 2022, over 28 million people moved, and 46% of those people did so for a financial reason. Which brings me to today's big question. Is where you live keeping you broke? In this video, I'll talk about the three main factors that will help you decide if it's time to hit the old dusty trail so you can build some real wealth. Now, most people don't move for the fun of it, because I don't know if you moved before. but it's not fun.

Starting point is 00:00:37 They move because they want to improve their life and financial situation. And what's their current financial situation? Well, if I had to summarize what America's going through, they're running a million miles an hour trying to stretch every dollar. But every dollar is stretched thin thanks to debt payments, the cost of living, inflation, expenses, lifestyle, emergencies, and they're feeling stretched thin too. So in theory, moving for a higher income or a cheaper cost of living

Starting point is 00:01:04 could help them create some margin to start getting ahead with money. But is it actually enough to make a difference, to make a dent? Well, let's take a look at how the cost of living in income can impact your lifestyle, because those two things can drastically change from location to location. So let's say you're a small town girl living in the lonely world. We'll call it Salina, Kansas. And you take a midnight train going anywhere, but in this case, New York City. Now, the median income in Salina is $57,000. In order to have that same level of lifestyle, you would need to make $154,000 in New York City. And that means a raise to the tune of 170%. Okay. Another example, another example.

Starting point is 00:01:40 example, let's say you're a city boy, born and raised in South Detroit. You also take a midnight train going anywhere, and in this case, also New York City. Now, to match Detroit's average income of $38,000 per year, the equivalent would be $84,000 in New York City. And both of these scenarios are going to require a significantly higher income in order to keep up the same lifestyle. And it's less depressing when you realize that New York is one of the top five highest cost of living states in the country, so don't at me. Now, what if you look at the cheapest states to live in, like West Virginia, Oklahoma, Kansas, Alabama, and Mississippi. Could those places give you some margin?

Starting point is 00:02:13 Side note here, margin is another word for breathing room, a.k.a. you've got some money left over. And with a lower cost of living, it's easier to find that margin. Simple. Now, regardless of where you live, there's two ways to find margin. Spend less and make more. So the caveat with moving to a lower cost of living area is that it comes with lower incomes on average.

Starting point is 00:02:32 So these five cheapest states are also in the bottom half of the country when it comes to median income. So even if you move to West Virginia with the lowest cost of living, if you're not keeping your income high, that lower cost of living may not be life-changing. Sorry, Mountain Mama. These might not be the country roads you're looking for. Country Road, take me home.

Starting point is 00:02:53 West Virginia. Mountain Mama. Take me home. What about housing? Surely if you move for cheaper housing, it would make a huge difference, right? Well, before we get to that, let me tell you about something else that can make a huge difference,

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Starting point is 00:04:08 link in the description. All right, so what about moving for cheaper housing? Can that help you become wealthy? In 2022, housing was the top reason people decided to move, which makes sense because it's likely the biggest monthly expense you have, unless you're a payment princess, and you've got a big old payment on that RAM 3,500 duly with the Lyft kit and the underglow LED light kit. Depending on your budget, what you can afford changes drastically across the country. So let's bring back our favorite New York-bound girlie from Kansas. For the sake of a round number, let's say she's got a budget of $500,000 to buy a house. Good for you, small town girl. She'd be able to get this delightful studio apartment in the heart of New York City. It's quaint,

Starting point is 00:04:44 charming, and since she's eager for a social life, she can host at least four to six friends comfortably in her 500 square foot apartment. On the flip side, if she decided to make the most of the small town life, she'd be looking at something more like this timeless porch paradise in Salina. With over 3,300 square feet, she could probably have the whole town over, and there's bound to be a friend or two in there somewhere. So look, small town girl, you've got to put yourself out there a little more? I believe in you. You got this. So is there any situation in which moving for cheaper housing could make a big difference financially? Yes, I'm glad you asked. If you found yourself with a good chunk of equity in your home and you have the ability to sell

Starting point is 00:05:17 and move to an area with considerably lower housing costs, then you could wind up in a much better situation. So let's get back to our Hallmark movie I've been writing over the course of this episode. Small town girl and city boy have a chance encounter at Rockefeller Center at Christmas time. Proposal on the ice, obviously, so they get married. After saving, up a down payment for a 15-year fixed-rate mortgage, they're able to afford this cute two-bedroom apartment near Central Park for a mere $695,000. With his now successful generic small business and her new marketing career that has taken off, they're able to keep the mortgage to 25% of their income. Wonderful. Fast forward 10 years, and they have a growing family and the true conflict of the

Starting point is 00:05:55 story begins. The small-town girl who once loathes her lonely world in Salina, Kansas, now pines for a peaceful homestead to raise their family. Because they've been paying down their mortgage for the 10 years, they now only owe $250,000 on the mortgage, and their home is worth $760,000. So they could sell the home and get roughly half a million dollars in profit. That's incredible, which means they're able to buy their dream Kansas home in cash. Now, assuming they didn't take on any consumer debt, their net worth has skyrocketed north of at least half a million dollars. And this allowed them to open a small Christmas tree farm called Don't Stop Believing.

Starting point is 00:06:28 And they lived happily ever after. And seen. That is so beautiful. So yes, if you're in one of these situations where you can make a big difference in your finances by cashing in on the equity in your home, great. And it's a big reason why I tell people to buy a home and pay it off early, because when you do, you have options. But ultimately, moving is not your ticket to wealth and happiness. You can have a great life anywhere. Also, you can be miserable anywhere.

Starting point is 00:06:53 It's all about your lifestyle choices, your habits, your goals, and your priorities. Plus, remember, you go with you. Including your bad money habits, your student loans, and your cardboard cut out of Dave Ramsey. It's weird, Graham, Stefan. I just think it's weird to have that in the corner of your kitchen. You're married now. How is your wife okay with this? All of this is true, and I need to take the L for that one, and let's continue.

Starting point is 00:07:15 So if you aren't budgeting and you're spending way more than you make, that's not going to magically change with a move. And if you want to make a move worth your while financially, then you also have to get disciplined and in control of your finances. That way, if and when you do move, the margin you get will help you build wealth faster, which will lead to a better life. If you stuck around to this point, you must have either enjoyed this video or you at least enjoy Hallmark movies.

Starting point is 00:07:36 Maybe both. A lot of audience crossover for some reason. So either way, be sure to hit the like button, hit the subscribe button to show you care, and maybe we can get Hallmark to bring this love story to life. Shut up and take my money! And if you're looking to make a move now or one day, check out this video to avoid making one of the biggest home buying mistakes I encounter.

Starting point is 00:07:53 Or just click the link in the description to watch. Thanks for watching. We'll see you next time.

George Kamel - Is Where You Live Keeping You Broke?

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