Buying A Home
rachelrogers2013
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Saving Up For A Down Payment
I don't mean to seem like a naive young woman but I am having a ton of trouble wrapping my brain around how to begin saving for a down payment and I'm wondering if it's just me or if this is normal.
I wouldn't say we're in a huge rush to buy our first home but every time I think about starting saving SPECIFICALLY for a DP (rather than the general saving we do now) my mind gets really overwhelmed and bogged down.
We don't live a frivolous life style and we both are employed by saving thousands of dollars seems like a daunting task when there isn't a huge amount of "extra" money.
Thoughts or tips anyone?
Thanks 
RNR : 4/27/2013 - forever
"You are a novel in a sea of magazines
You make me nervous, You make my heart beat
You are red in a sea of black and white
You are a fire, you are dynamite."
Re: Saving Up For A Down Payment
Sign up for a free account on Mint.com. It's a budgeting tool. Add your income, and your monthly expenditures, like rent, bills, and groceries, and then see how much you have leftover. Open a savings account at your bank, and see if you could each take a few hundred dollars every month and move it into the savings account.
After the first few months, once you are able to see exactly where your money is going, see if there are things that you can cut out. Can you cancel your cable subscription and rely on the internet to watch your favorite shows? Can you cut back on your cell phone bills, or cancel a land line telephone? Can you cut back on your electric bill by unplugging unused items at night? What about going out to dinner one night a week or month instead of four or five times? How about buying generic brand groceries instead of name-brand? Also, use coupons wherever you can. Can you take public transportation or car-pool with someone to save on gas? For date nights, see if there are free concerts that you can go to, or bring some food with you to the park. Check out other free things that won't put you out of contributing that month to your DP account.
Also, if you have a credit card, do you get cash back for spending? If so, start paying your bills via credit card instead of by check or direct withdrawal from your bank account. This will help you get more money back on your credit card. If you don't have a cash back card, you may want to research and apply for one so that you can take advantage of that opportunity.
There will always be ways that you can cut spending. This tool will help you figure it out by laying every penny spent out for you.
Good luck!
DIY & Home Decor Blog
We use mint.com and love it!
It's certainly going to take a few weeks for us to adjust to getting onto a normal financial schedule post wedding (we only got married 3 weeks ago).
Hopefully we'll be able to just take the money we were spending on wedding stuff (plane tickets, programs, cake etc.) and direct it towards specifically saving for a DP.
Luckily our one credit care does have cash back and I am a coupon ninja
Thanks for the tips! It's just such a daunting goal at times...
If you haven't already, setup a savings account with an online bank (like Ally or ING) and have money automatically transfer from your regular bank account to your online savings account. Generally online savings accounts have higher APR yeilds than a traditional bank, so your money does a little bit of work for you. But the biggest advantage is that the money is out of sight, out of mind, and takes a few more days to access. That makes it far less tempting to raid the down payment savings fund for other random stuff.
And be agressive with your savings goals. Allocate a lot right into savings and force yourself to make due with the exact amount you've budgeted for the month. It's less tempting to bust the budget when you know there won't be enough money in the checking account to cover everything. and make a game of watching your dp savings grow. It can feel really good to watch that savings account balance rise.
Ditto what PP's have said. Yes, it seems overwhelming because it is such a large amount of money to save up for the DP, but trust me, once you start saving and seeing that account grow, it will seem less overhwhelming to you.
When we were saving for our DP, we started taking lunch every day. We live in NY, so buying lunch out can easily cost you $10-12, so between the 2 of us taking lunch, we were saving like $400 a month on that alone. Try to go out to eat less often for dinner like others have said.
Check your cell phone bill and see if there are any cuts you can make there - like if you are not using all of the daytime minutes that your plan allows, cut those down and save some $ there. We just did this with our family plan and our bill dropped by $30.
Trying to think about what else we did to save - I guess just buying generic brand stuff in the store vs name brand, or buying stuff we would use regularly in bulk when it would go on sale.
Also, another thing we do, although it's more just an 'in case of emergency and we really need it' type of thing - at the end of each day, if/when we have pocket change, we throw it into a huge 3 liter bottle. Actually, that one is completely full and we now have a huge record flight case that I no longer use that's like half full. We don't even miss the change, and I think there's something like 4-500$ in there (probably more at this point)....I keep saying that one day we'll use it for something, but so far, we just keep chucking the change in there....you guys could do something similar and keep it as your 'house furniture fund' lol
Good luck!
I'm just starting this process too. It's been really helpful for me to know realistic numbers. I use mint and track my spending/earnings there and visualize our accounts all in one place.
I also needed to research house prices in my area that fit the criteria we wanted. I've used things like zillow to do that (I like their filter options). Now that I have a sense of that range I researched estimates for closing costs, property taxes, furnishing, etc. Now I have a good estimate of how much we'll need to actually buy.
Using our potential savings rate and the target savings amount I have a sense of how long this will take. I set up a mint goal to watch our progress toward that target $ value. Right now it looks like we're about 5 years out. OMG. This is quite an undertaking.
As to where to keep all this money, I'm mixing it between CDs and a brokerage account. CDs have fixed interest rates and are completely safe (FDIC insured). But the interest rate is pretty crummy (1% per year). The fund we picked for the brokerage account is a VERY conservative mix focused on income stocks/bonds. We want to do better than 1%, but we don't want to lose a lot of value if the market takes a turn. Yes, it's a risk, but we're on a 5 year timeline so it's reasonable. We do auto deductions from our bank account so the money is out of sight for normal spending.
My BF and I are closing on a house next month. Because of high rents, we live paycheck to paycheck with absolutely no spare money for saving. Long ago we trimmed out all the fat (lowered cell phone, cable and utility bills, created strict budgets for the grocery store, never went out to dinner or even rented a movie, didn't buy new clothes unless absolutely necessary and then only from bargain stores, etc etc). This allowed us to pay down our credit card debt and improve our credit scores, but there wasn't enough to save any money at all month to month.
However, we were able to scrape together about $12k over a few months. It was a combination of high tax returns, a side job we worked on together, and Christmas bonuses. If we didn't have these sources of income, we would have put a bunch of our stuff in storage and moved into the cheapest apartment we could find until we could save up a down payment.
So even if you are truly thrifty and still have no extra money, there are ways to save large amounts of money in a relatively short amount of time. It is a combination of good timing and sacrifice but it can be done.
Pretty much everyone can save for a down payment if it is a priority. I always think it is funny when I hear people say they don't live superfluously; however, they pay for high speed internet, cable television, expensive cell phones, or have nicer cars than need be. I'm not implying this is your situation, I don't know you. Most people have a lot of areas they can save from though.
Basically you have to do 3 things.
1) Reduce your expenses. Call your cable provider and ask about specials. Call your cell phone provider as well. Can you do with only one car? Would you be better off with gas and maintenance on a honda fit than a jeep cherokee? Could you eat healthier and less expensively by cooking at home more often?
We have two vehicles but ride together during the week. I know not everyone can do that though. We do not pay for cable/satelite and have an htpc instead. We have the cheapest plan on tmobile. We also have a rule about eating out only once a week. This helps our bank account but also our waistline!
2) Maximize your income. Most people won't like this option but if you have spare time and aggressive financial goals you should consider getting a second job. Or perhaps you are ready to move up in your field - get going on that job search and make more money.
We didn't get 2nd jobs because we love being home together too much, but we did focus on maximizing income and getting jobs with reliable salary pay and easy commutes.
3) Budget, budget, budget. Every penny has a purpose when you are saving for a goal. That doesn't mean you can't still have fun, indulge in hobbies, etc. but you have to realize that doing so comes at the expense of reaching your goals. This is a big give and take.
You and DH have to be on the same page with all of this. You should also go to a bank while you are still saving and get tips on what you will need to qualify (they can check your credit and tell you about their mortgages). There are 80/10/10 mortgages which are great because you don't pay pmi and only need 10% down. You can also check into FHA mortgages which are designed for first time home buyers to get on the property ladder. Most require 3.5% down and you still get the low interest rates of today.
I know it is overwhelming but you will feel so great when you finally walk into your first home. My husband and I tucked away little by little for several years and first bought last year. I literally cried when we pulled in the driveway of our own house. Some prefer renting and I get that, but for raising a family and settling down owning your own home and not having a landlord or leases has so many perks. It is a goal worth having!
TheCraftyKoala,
That's part of our predicament is that we already live so trim. I have always been the type of person who frowns upon excess. We go out to eat MAYBE 2 times a month and always cook at home. I'm a coupon-ninja and we're gym rats so it makes more sense for us to cook at home anyways.
Budget wise, we use mint.com to organize our finances and have many auto drafted into our savings account. We can't do the 1 car thing seeing as we work in totally different cities but when we're traveling during the weekend together, we always take the more fuel efficient car (although both of ours get at least 32 to the gallon).
Much like you, there is no way we could take 2nd jobs unless it was an absolute emergency. My DH is my best friend and spending out nights and weekends together and being active in our church takes priority.
What I read in your post that was really good to hear was that you "saved for years." I think that puts me a little bit more at peace knowing that it's okay if it takes a while. I'm a saver by nature so hopefully with a few slight tweaks, my normal savings habits will help us acquire our goal.
First and foremost, saving for a house has to be a priority. A priority above the new cars, fancy electronics, etc.
My husband and I just bought a house on Saturday (well the offer was accepted!) and we've been saving for years. The way we did it was we made an excel spreadsheet and listed every bill that we have and which paycheck the money would come out of. We are at the point we know without having to look what and how much comes out when. We also include the money we put into savings as a "BILL".
We have also been able to live off of my husbands salary and almost 100% bank mine. We don't have iphones, our computers are older and need to be replaced soon. We don't go out to dinner, unless we have a gift card or it's a special date. We look in the papers for free and cheap activities to do. We use coupons when we can and set a specific food allowance. Every purchase that's over $50 we ask each other. When we are shopping we ask ourselves, "Do I need it or want it?" If we want it, we don't purchase.
It's a lot of work. It is hard, I'm not going to lie but in the last 5 years that we have been saving we have been able to save enough for our "forever home" and not a starter home. We wouldn't be buying the house we are buying if we hadn't made the sacrifices we made.
Good Luck!