A Beginner’s Guide to Save for a House in 2019

So I’ve mentioned this before but I’m planning to buy a house this winter. I’ve made tons of great progress in the last year or so. With about five more months left till then, I’m definitely on track to feel confident about my purchase. So let me share some tips on how to save for a house! So here goes!

First off, get out of debt

If you’re debt-free, kudos! But if you do have debt, give me just a second here.

Debt is one of those things that seems super normal. It’s almost American. But being realistic about it, you should probably not be thinking of a home just yet. It’s like spinning your tires or walking up the wrong side of an escalator. Being in debt while saving up for a house doesn’t make sense.

Of course there is “good debt” and “bad debt.” There are a lot of opinions on that also. But what I’m talking about is stuff like credit card debt, personal loans, medical bills, and so on. Even student loans. Think about being in debt as an emergency. You literally owe more money than you have and it’s growing. That should take precedence over having a home.

Reduce your spending, increase income, and get out of debt. These next steps, which are supposed to apply for house saving, can apply to chipping away at debt also.

How to save for a house

Spend less than what you make

Honestly this is the simple truth. Live below your means and you’ll end up with a positive balance sheet at the end of each month. How else would you be saving money? This isn’t just for saving for a house, it’s for anything in general.

Get a roommate

Think about your current living situation and decide if you actually need to live in a $1000/mo 1BR apartment. I’ve always found living on your own has been way more expensive since you’re not sharing the communal areas with anyone.

Last year, I lived by myself in a 2BR/2BA apartment. It’s a really long story on why I was living there but it was about $1150 a month. I could afford it and the privacy was nice but it didn’t make sense in a 900 sqft apartment when I didn’t need to. So once that lease ended, I moved to a new place.

I currently live in my girlfriend’s sister’s basement. The rent is way cheaper than what I was paying before. We’re also helping each other out. I’m saving up for a house quicker and she’s able to go out a little bit more with less stress.

It is a little bit of a sacrifice because I live in a basement and have to kinda try to keep out of her hair but it’ll be worth in it in the long run.

Live closer to work

There are tons of benefits to living closer to work. The biggest benefit is that it is way cheaper to live closer to work. On top of that, you get so much of your time back being able to avoid the hassle of driving.

I have a friend who used to commute from DC to Baltimore for work. Without traffic, that’s a one-hour drive. With traffic… it was probably as bad as two or three hours some days.

He also has like an Acura RDX which probably isn’t the most fuel efficient car either. Having this job and this car would make him get gas about two times a week, which he’s guessing was about $300 a month.

Thankfully he’s gotten a job way closer to home and can even bike now. He went from filling up 6-8 times a month to maybe filling up once a month.

So obviously, my friend’s example was an extreme situation (although I don’t think this is uncommon). If you value your time and money, definitely consider moving closer to work or finding a job closer to you.

This is what I did with my self actually. About two years ago, I was commuting from downtown to the west end here. My commute was about 25 minutes each way on a good day. Let’s not even think about highway traffic driving and the nightmare that is. Especially after daylights savings. For some reason, no one can drive anymore after that.

For me, I value my time a lot and I moved. In my last blog post, I also mentioned that I quit my gym. My gas spending during that time was about $140-160 a month. Maybe if I drove up to my parents’ house, it’d be as high as $180 or something.

My $162 gas spendings before I moved | Save for a house
Spending $162.60 on gas while living further away back in April 2018

Now that I live 2 miles from work and just exercise there, I spend much less on gas. Here’s a screenshot of this month so far, with a total of $70.85. In that total was also a trip up to DC for a concert. So my regular gas spending is probably somewhere even under that number also.

My $70 gas spendings this month | Save for a house
Spending $70.85 this month after moving closer to work and quitting my gym

Stop buying random stuff on Amazon

So this tip is just about being realistic. Amazon’s made it way too easy to buy stuff you don’t need. Having a Prime membership makes it feel like you’re entitled to a purchase every month or else it goes to waste.

A $28 hotel aquarium for a beta fish that I had in my wish list for some reason | Save for a house
A $28 hotel aquarium for a beta fish that I had in my wish list for some reason

But what I wanna say is that you will live without a new water bottle or an Instant Pot. You’ve lived without a portable charger for your whole life, why do you need a second one right now?

Making tons of purchases on Amazon really adds up and really takes away from your saving potential.

My work dad, Clay, actually only activates his Prime membership when he needs to buy something. Doing this actually blew my mind but he did it in front of me while ordering coffee beans for our cold brew tower. As a way to “lure” him back in, Amazon even gave him a month of Prime for free.

So for myself, I honestly do occasionally buy things here and there but I’ve cut off most of the random spending I do. I’m a lot more mindful of what’s going into my cart. Also related to my last tip, living in a much smaller space makes it harder to shop since there’s no room to put anything.

Be realistic about your goals

Look for houses in your price range

It’s really easy to get distracted by all the designer houses on Instagram and HGTV. Those houses are super nice. I’d love to live in something like that one day. The thing is that… I don’t necessarily need a 6BR house. Maybe a nice kitchen and a open floor plan would be nice.

I’m 26 and I just have to be realistic with what I can actually afford. I don’t need a master bedroom suite with a gigantic bathtub and double vanity sink. I don’t need an in-law suite or multiple guest bedrooms.

Realistically, I could probably get away with a 1BR/1BA. The only reason I’m looking for a 3BR/2BA is for resale value. Nobody looking for a house is looking to buy a single bedroom house–they would just rent instead probably.

I also have to realize that I will have to choose what is important to me. With less money to work with, I have to prioritize what’s important to me. I want a garage and a really nice kitchen. And my girlfriend wants a really nice kitchen and a basement. We might not be able to find a house that fits all our needs with a price tag we’re looking for though.

I’ve also been lightly browsing Zillow practically weekly. Doing this gives me a real idea of what is actually available. It lets me know that with about $50-60k as a down payment, I can definitely get a decent home with most of the things that I want.

If I get lucky, I might even get a turnkey property that’s undervalued. We’ll see!

Be willing to save for a while

The last point I wanna make is that the process to save for a house takes a really long time.

Let’s take my search for example:

  • $275k – about the max price I’d be looking for in a home
  • $55k – the recommended 20% down payment would be
  • $5.5k – let’s assume that closing costs are about 2%
  • $60k – total cash to close

Now let’s say that on average, you save about $1000/mo. Getting to $60k would take you 60 months! It would take 5 years of planning to get a house with 20% down.

The same could be said for any other big expense in life.

  • If the average wedding is $27k, that probably means that people are either 1) saving for over a year, 2) going into debt for a wedding, or 3) very high earners.
  • Saving for a car should be the same way. If you want a $30k car, you might want to save up for more than just a few pay periods. Or choose a different car.

Okay so I’ve recently read some articles saying that most people don’t even put 20% down anymore–especially first time home buyers. Not all your money should be held up in one place. Homes are especially bad places to do that since it’s not easy to get the money out of it.

Even with that said, I think that it’s still prudent to save as much money as you can. It makes me feel more safe to know that I am not spreading myself too thin by borrowing more money than I should.

To sum it up

At the end of the day, if you wanna save for a house, it just means spending less. I’ve shared my biggest tips here!

If you can’t spend any less, you’re just going to have to earn more. That could mean getting a second job or getting better at your current job. Take your free time and invest in yourself.

Part of me is considering getting more into photography. Or maybe videography. That requires an investment of my own money though which kind of worries me. The hope, though, is that it pays off.

Till next time!

Thanks for reading this post 🙂 If you want to check out more stuff, visit http://hengwith.us. If you want to read about a cold brew tower I made recently, read here!

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