July 11, 2013

How to Buy a House in your 20s: Part One



Age is a funny thing, isn't it? At least our perception of age is. No matter what age you actually are, yourself or those around you will think you're either too old or too young for some behavior/action/task/etc. For example, I will be 23 in a couple weeks. I'm old enough to buy alcohol, vote and drive a car. However, I'm still waiting for that golden 25th birthday when my car insurance will go down (despite the fact I've never gotten a ticket of any kind or ever caused an accident - I digress).

Throughout our entire home buying process, those we ran into along the road where impressed/surprised/in disbelief that a couple was buying their first home at 22. Naturally, they were curious as to how we were able to do so.

So, here you have it. The good. The bad. The ugly. And the truth about how we bought our first house in our 20s. Be sure to come back for Part Two! [Click here for Part Two!]

Note: I am not a financial professional in anyway. The advice presented in this article was gleaned from real-life experience and advice from our parents, financial professional and realtors. 

Live poor. 

We adopted this concept from good, ole Dave Ramsey:
"If you live like no one else, later you can live like no one else."
What did this mean for us? Saving money on our living expenses where ever we could. There are several very nice and new apartment complexes in our town, but we didn't live at any of them. Instead, we lived in our tiny 1970s apartment that we lovingly called "The Craphole."

You might think I'm being a little dramatic, but seriously there was a reason we called it that. The police were a reliable staple around our complex - especially on the weekends. Little children ran around outside shirtless and sock-less in December! If a couple broke up, you saw their stuff on the curb the next morning. Not to mention, we were in a constant war with bugs. While I never felt unsafe at any point, it certainly wasn't the classiest place in the world. However, it was a means to an end. We paid $300+ less a month than we would've paid at the new, nice apartments. We lived in that apartment for a year so that's $3600 I stuck away.

Another great way to live poor? Don't get cable! We paid $120 a month for our Internet and cable. At the new house, we've just got internet ($30 a month). Throw in a Netflix and Hulu subscription with our antenna in the attic and we only pay $45.98 for our TV entertainment (a $74.02 savings). We don't miss those channels we never really even watched and certainly don't miss that bill!

Eat poor. 

Also, we lived poor by not eating out. In January, I got serious about our grocery bill. The old saying goes if you want to know what matters most to a person, just look at their checkbook. Well, if you looked at our checkbook in December, you would see that food mattered...a lot. We'd buy a $100 of groceries, but then go out to eat three or four times a week. Eekk!

With the New Year, I vowed not to eat out unless it was budgeted into the groceries for the week. I also made a menu for the week and made sure I only bought the items on my grocery list. (Resist those impulse buys!) I also cooked freezer meals which I blogged about here. Doing all this, I brought our grocery budget down to $60 (without couponing)! That's $40 more dollars a week I stuck back in savings. $160 a month people!

[NOTE: I've gotten a lot of questions about how we manage to only spend $60 a month on groceries. I wrote a follow up post here that will go more in depth.]

Budget for EVERYTHING!

Last January, I purchased a expense tracker book from Target. I am in LOVE with it! It is made by Mead and called Organizher. It helped a lot to see how much money was coming in and going out every month. It also allowed me to keep track of what money I had sitting where for what purpose.

I budgeted everything (and still do). We have a budget for everything from oil changes to Christmas savings. You've got to stay in that budget. If carrying cash helps you budget better, do that. If having it on your debit helps you budget better like me, do that. At the end of the day, it's your money. Find what works best for you.

Hold onto that income tax

I know it's hard, but stick it in savings and forget about it. It was really hard for me not to just hightail it to Disney World for the week with that income tax return, but we were able to buy the appliances and furniture for our house with it. Those things aren't cheap and you need them to make a home! It'll be worth it. I promise!

Hope part one has given you something to think about and maybe even some inspiration. In part two, I'll dive more into the advice we got from our parents, financial advisers and realtors.

Get to budgeting and living poor!
Until next time,
Miranda




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