Greetings from the Income Statement Affluent Capital of America

Posted on August 5th, 2009

I have lived in Georgia for most of my adult life, one of many New York transplants.  I would not want to live anywhere else.  In fact, my success in studying how people become wealthy as well as why so many people with high incomes accumulate little or nothing is related to where I live.  The metro area of Atlanta is a wonderful laboratory-one that features a high concentration of income statement affluent [IA] households, i.e. big income, small net worth.  Or as I often refer to it- "big hat, no cattle." 

One weekday morning [prior to the current economic meltdown], I received a telephone call from the head of strategic market planning for a manufacturer of foreign luxury motor vehicles.   He asked, "What is with Atlanta? If we could clone Atlanta [duplicate its per capita sales rate of our cars in other cities] we would dominate the American luxury car market." I explained why there were so many hyperconsumers in Atlanta.

Most of the high income generators who live in Atlanta are transplants from other areas of the country.  Their move to Atlanta was often associated with a job promotion and increase in compensation.  Plus most found that they were able to trade up to a much bigger and better appointed home than they had had while living in LA, Chicago, etc.  Ah, for many, a fine home in Atlanta led to a myriad of increased expenses including a leased Lexus, a 5 Series BMW or mid-class Mercedes.  But, in spite of this, they still found that it was difficult to distinguish themselves from all those new neighbors who had recently encountered similar good fortune.

More often than not geographic mobility, even coupled with upward income changes, produces results that are just the opposite of what many people expect.  Given these changes, one might assume that an enhanced balance sheet might result.  But too often hyperconsumption becomes a competitive sport, like here in Atlanta.  Consumption outstrips gains in income.  But then what happens when the income of the IAs declines?  Read the Atlanta headlines. "Malaise hitting Atlanta's tony neighborhoods ...pushing hundreds of $1 million-plus homes into the market . . . sellers agreeing to steep discounts," (Atlanta Journal Constitution, August 2, 2009).

I have consistently found over the many years that there is a significant inverse correlation between accumulating wealth and geographic mobility.  All else being equal, the more you move your household around, the more difficult it is to accumulate wealth.  This is one of the reasons that corporate middle managers and sales professionals rank low on the wealth accumulation scale.  Conversely, among those who have significantly higher levels of wealth that would be expected given their age and income are self employed business owners.  They rarely move out of their trade area.  They know that geographic mobility is extremely disruptive to family routines and can be extremely expensive in terms of constantly upgrading, decorating, and convincing your new neighbors that you are indeed superior. 

Category: Income vs. Net Worth
Tags: income, net worth, acting rich, ,