We’ve owned our house for nearly 6 years now, which is pretty unbelievable. It doesn’t sound like an incredibly long time, but over the course of those six years, a lot has happened.
Our daughter was born just a few months before we moved into the house, so it was a pretty crazy time in our lives in general, but over those six years, here’s a sampling of what’s happened.
- Our daughter was born (about six weeks before we made an offer on the house that was accepted)
- My wife stopped working to be a stay-at-home-mom
- I got laid off from my job at the height of the recession
- I started building up some freelance work on the side
- Over the course of two days, I got 3 job offers. Obviously, I could only accept one 🙂
- Our son was born (two days before my daughter’s second birthday)
- We bought a car and paid for it in cash
- My wife started a business
- We refinanced our house
- I quit my job to go full-time on my business
And I’m sure I’m missing out on a few other major milestones, but a lot has happened.
Many of these milestones were made possible by owning our own house. Sure, we could have survived in the apartment we rented before-hand, but as our family grew and our businesses grew, we needed the space to make it all happen.
I telecommuted for work and built my business because I had a dedicated office space; my wife had the space to work on her business projects.
But saving for the down payment on our house was one of the most daunting aspects of the whole process. Unless you get some major windfall, it’s not easy to save tens of thousands of dollars to put down a legit down payment. We didn’t want to do a 3% down payment, and probably couldn’t have, given the lending requirements of 2009.
We aimed to put down 10%, which meant that we would still be paying PMI, but thankfully, we were able to clear that out when we refinanced a few years later. Here’s how we saved enough for the down payment.
We Automated Our Savings
This shouldn’t be a surprise to anyone who’s read the blog. We set up a targeted savings account for our down payment, and automatically saved money in the account each month.
It takes time for that money to build up to a decent amount, but we started early and kept putting money into it. I want to say we put $500 a month into the account, so even after two years, it’s only $12,000 that’s been automatically transferred into the account.
So while this was the right baseline to start with, we needed more.
We Banked Every Bonus
Every bonus I got we stuck right into our down payment account. I probably took 5-10% off the top of the bonus to spend, but the majority of every job-related bonus went into our housing fund.
I remember specifically getting a $5,000 bonus one year, and thinking about all of the things I could spend it on, but I realized none of the things I could buy would feel as good as the huge boost our down payment account would get with this money in it.
So that’s where it went.
We Cut Costs Wherever Possible
When we moved from Boston to Maryland, we were able to cut our living costs: our apartment was cheaper, we didn’t have to pay utilities, and since I was working at home, our car costs were cheaper.
We didn’t actively bank the difference between our Boston and our Maryland living costs, but every surplus that we had at the end of the month went into one of our targeted savings accounts.
When we bought the house, we got a great deal: it was previously on the market for $40,000 more than what we paid, and it was generally in good condition. Since we also bought the house in 2009, we received an $8,000 tax break for first-time homebuyers. That money made a big difference when I was looking for work, and we were a family of three with no full-time jobs.
It Takes Time and Dedication
Like any goal that seems insurmountable, saving for a down payment requires time and dedication. Buying a house is not a short-term investment, so saving for one isn’t, either.
But it’s doable. Stick with it, focus on it and keep at it … and you’ll get there.
Just don’t treat your house as both a home and an investment.
