There’s just one problem: A house costs way more than a music festival. How can you stay motivated to save for a down payment when you’re not even sure if you’ll ever be able to afford to buy a house? In my experience, it went something like this:
Year One: There’s No Way This’ll Be Real
When I first put money aside for a down payment, it felt comically unrealistic. I was taking all the “right” steps, like setting up a separate savings account and automating my contributions, but my savings topped out at $100 a month. I still had to eat and pay rent, and since I didn’t want to go ultra-frugal, that’s all I could afford to save.
It was better than nothing, and I was happy taking baby steps towards my goal of home ownership, but it felt like trying to baby-step my way up Mount Everest.
Total saved: about $1000.
Year Two: Maybe This is Possible?
After saving casually for a year, I decided to get serious. If I wanted to buy a house with my partner in two years, what did I really need to be saving?
We were looking at houses that cost about $400,000, so my half of the down payment was $20,000, plus another $5,000 in closing costs. As I sat there, staring at my spreadsheet, I realized I’d need to save about half my take-home income to hit that goal.
Luckily, this was in the realm of possible because my fixed expenses like my car and my rent were low—together, they were under 25% of my income. So I jumped on the frugality train. If lattes were really standing in the way of becoming a home owner, I guess they had to go.
The thing is, there are only so many lattes a person can reasonably drink. So I had to find other ways to cut back like comparison-shopping for groceries, cancelling subscriptions I didn’t use, and searching for lower insurance rates. The biggest surprise of all was the subscriptions: If you’ve never reviewed the payments that come out of your account every month automatically, you should. It scored me $1000 in savings over the year.
Total saved: $4,000
Year Three: Let’s Do This
It turns out, radical frugality wasn’t sustainable for me, and after a few months I had settled into a more reasonable approach of “some lattes.” However, our ideal timeline was still to buy a house in a year, and I only had about $4,000 saved.
Cutting my spending hadn’t gotten me to my goal, so the only other option was to increase my income. I’d been blogging for about a year at halfbanked.com, my personal finance blog, and had a few small freelance jobs under my belt, so I looked at scaling up my blogging side hustle alongside my full-time marketing job. I said yes to just about every inquiry that came my way as clients reached out via my blog, and every single side hustle check that came in went straight to my home down payment savings account.
It was an unsustainable amount of work, especially near the end, when “downtime” consisted of scarfing a meal after work before sitting down to write for another four hours, and I replaced my lunches with Soylent because I needed my meal prep time to work more. But seeing my now-rapid progress toward my goal kept me motivated and on track.
I hit my $20,000 goal a few months ahead of time, which gave me time to save an additional $5,000 towards closing costs. My partner and I used those savings to buy a four-bedroom house in Ottawa in the spring of 2017, and we moved in a few months later.
Total saved: $25,000
How to save money to buy a house
Keep your fixed expenses low. Cutting lattes might save you hundreds, but over three years, much lower rent and no car payments can save you thousands.
Open a separate savings account. This is the easiest and most effective way to make sure that the money you’re saving stays put, and seeing the balance go up will seriously boost your motivation.
Find ways to increase your income. You don’t need to side hustle if that’s not your thing. You could spend time working on training that increases your skills, looking for a different, higher-paying job, or working towards a raise at your full-time gig.
So was it all worth it?
We’ve been in our house for almost a year, and I couldn’t be happier. Decorating and setting up the space, along with knowing that we’ll be there for the long term, has been such a change from renting.
Sure, homeownership isn’t all fun and games, and you’re going to be shocked at how much basic lawn maintenance costs (dirt is not dirt cheap), but it was definitely the right choice for us—and the dog is thrilled with the yard.
And knowing we won’t have to move a full household’s worth of stuff again in a month or two?