My wife and I earn a combined six-figure income, we’re completely debt free, and we have an extra couple thousand dollars that just go straight to savings each month. So given our situation, why on earth do we choose to live in a lower-middle class neighborhood? Many others would buy a big house on a lake or upgrade their car to something that’s faster, shinier, and more expensive. At this point, we have absolutely no interest in moving and we are perfectly happy with our cars that have a combined value of $3,000. Are we crazy? Well, maybe a little, but there’s a reason behind the madness. Actually, there are 7 reasons why we still live in our lower-middle class neighborhood.
1) We Simply Don’t Need Anything More
I bought my house for $75,000 back in 2011. It was pretty ugly at the time, but with a little bit of elbow grease it has really turned into quite the gem over the years, worth somewhere around $125,000 today. While the surrounding neighborhood might be a little questionable, this house is still safe and has plenty of room for the two of us.
There are 3 bedrooms and a full bath upstairs, a living room, kitchen, half-bath, porch, and dining room on the main level, and a laundry room and family area in the basement. At any given time, Liz and I can only occupy two of these eleven rooms, so why in the world do we need a bigger and better house? We don’t, so we’re staying. Plain and simple.
Related Article: 9 Lessons in Wealth Building From the Millionaire Next Door (hint: one of them is staying put in your home for decades at a time!)
2) Gives Us Options for Parenting
Liz and I would love to be parents someday, God willing. If we’re blessed with some little rug-rats in the future, then we’d really like to be the ones responsible for raising them, not the local daycare facility. Since we’re currently mortgage free in this home, staying put will allow one of us the option to quit our job and raise our children the way we want to. If we were loaded up with a mortgage, then we’d probably both have to juggle full-time jobs while finding the cheapest daycare facility possible – not something either of us want to do. We’d much rather stick around in this home that suits us just fine at this time.
So many of our friends naturally house hop. They buy a starter house at first, but then after 2-3 years they decide to upgrade a bit, and then after just a few more years they move to an even bigger home than the last one. From the outside it appears that the house-hopping couple is doing very well, but in actuality the couple just has more debt and still likely owns less than 20% of their home. By jumping into larger and larger houses, they are spending more on closing costs, private mortgage insurance, home owners insurance, property taxes, home repairs, and realtor fees.
For Liz and I, we’d much rather stick around in this house for a while and:
- spend no money on closing costs
- spend no money on private mortgage insurance
- spend only $400 a year on home owners insurance
- spend less than $2,000 a year in property taxes
- spend minimal amounts on home repairs (now that the house is all fixed up)
- and spend absolutely nothing in realtor fees
Doesn’t that sound like a good plan to you?!
4) Allows Us to Invest Heavily
By continuing to live in a lower-middle class neighborhood, we are making it possible to live amazingly wealthy lives later. As Dave Ramsey says, “Live like no one else today so that tomorrow you can live like no one else.” In other words, we are living on a budget and investing our extra money today so that we can produce a massive income in the future. By delaying our dream home for just five years, we could probably increase our passive income by $40,000 and more quickly buy our dream home with cash in the future. It’s amazing what a little delayed gratification can do!
Do you know why TV and Internet advertisements are so effective? It’s because we all naturally want more as human beings, and when something cool is put in front of our face, we simply want to have it. By choosing to live in a lower-middle class neighborhood, Liz and I are reducing the amount of cool stuff that’s put in front of our face. If we lived in a nicer neighborhood, our friends and neighbors would have nicer cars, boats, campers, and perfectly manicured lawns. After a while, we would naturally be inclined to want those same things ourselves – it’s only natural. By staying in this house, we’ll only see mediocre cars and very little luxury. It’s absolutely perfect and it naturally keeps our spending to a minimum.
6) Still More to Improve (and enjoy)
This house is still not all that it could be. The outside still needs painting and the basement could still be finished with padding and carpeting. Rather than putting it up for sale and quickly completing the projects to get a few extra thousand, I say that we complete the projects now so that we can enjoy the house for what it could be. Then, when it’s time to sell, the major projects will already be finished and there will be no need to hurry up and fix everything so that we can sell it.
7) The Proximity to Other Places is Excellent
While this home is near questionable neighborhoods, the block where it sits is actually pretty decent and the house is close to everything. If I want to work out or go for a swim, I walk one block to my west and get my exercise on. If I injure myself and need to get to the hospital, I walk 2 blocks to the south. If I have some kids that want to play in the park, I’ll walk directly across the street and let them tire themselves out for the afternoon. And, if we want to enjoy a stroll downtown, it’s only a mile away. Like I said, this house is close to everything and it’ll be hard to give it up.
Living Below Your Means
If you want to have a bright future, then I suggest that you live in your starter home for as long as possible. Liz and I have 3 bedrooms, so we could really have two kids in this house and everyone would still get their own room. There’s really no reason to have anything bigger at that point. And, by holding off on the next house, we are likely saving ourselves tens of thousands of dollars. If you want to get ahead, put your move on pause and put your money into investments instead.
Would you live in a lower-middle class neighborhood?
AUTHOR Derek Sall
Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.