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




66 comments:

  1. My fiance and i were also lucky enough to be homeowners at 22 :) such a wonderful blessing! and tips to live by!

    ablondeshomebrew.blogspot.com

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  2. My boyfriend and I are trying to buy ours at 21 and it's incredibly nervewracking. I'm so happy a friend of mine pinned this because I feel better about us working hard to save our money for a downpayment.

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    1. I'm so glad it was an encouragement to you! Keep it up and you'll get there. :)

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  3. Thank you very much for your helpful tips! We are 25 years old and looking to purchase a home before we are 30, so we will be using some of these! Getting rid of cable will be hard. I am so hooked into my shows!!!

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    1. You can do it! I thought I'd die without cable too, but the episodes are usually always online the next day. Just hang in there cause it'll be worth it! ;)

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    2. Netflix and HuluPlus are great if you don't have cable!

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    3. If you have the internet, you don't need cable. I don't have Netflix or HuluPlus either. Most networks play their shows on their website, and it still counts toward ratings for most.

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    4. the website cokeandpopcorn.ch allows you to watch most tv series for free :)

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  4. I love this so much! I'm 22 and my hubs is 28. We did Dave Ramsey's FPU and got out of what very small debt we had and really know how to manage our money now. Next step is saving for a home. CONGRATULATIONS! You guys rock!
    Your Daily Mel

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    Replies
    1. Don't you just love that Dave Ramsey? He knows a thing or two. And thank you so much! We are in love with our home. :D

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  5. This is exactly what we do! We just bought our first house (at 26)(wahoo!) and we're living with it as-is for the first 7 years (the first term of our mortgage). We budget everything, and we will have our full mortgage paid off in our first term (therefore not breaking any contracts with the bank). We live cheaply, like this article says, to have more money in the future.

    The only thing that we did spring on is new appliances. The ones that the seller was willing to part with were too old for us to buy from them (as we'd probably end up replacing them soon anyway), and we paid extra for warranty's, so should anything quit on us, we're covered!

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    1. That is AWESOME! I wish we could pay off our mortgage in seven years. Maybe 10 if we're lucky?! But, like you said, budgeting goes a long way!

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  6. Hey Miranda!
    Great post... I am wanting to start saving more and being smarter with my money.
    Question for you...what site did you use to make this blog? I'd love to start my own and yours is cute!!!

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    1. Hi Julie!

      I use Blogger, but I've heard some great things about WordPress too!

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  7. My husband and I are both 25. We are in the process of buying our third house. When we are done with this process we will have two rentals and a beautiful home that we have worked really hard for. Our daughter will have a great neighborhood to grow up in. Its a lot of hard work and dedication but totally worth it!

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    Replies
    1. Uh. How awesome is that?! I'm a little jealous. Great job!

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  8. Love your post! My husband and I are much like you. We bought our first home last year at the age of 23. We read Dave Ramsey's Total Money Make Over and lived by it. My husband is a cop and I am a stay at home mom, so our budget is VERY tight. If we can do it, anyone can. :) Great read!!
    http://triciainglett-frugalmommy.blogspot.com/

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  9. My husband and I are living by this budget already, not to buy a house though! We are saving to build our dream house before we're 30. I am 20 and he is 22. We are slowly working our way up the college ladder. First medical coding and physical therapy assistant degrees then jobs(to help pay for the rest of college), bachelors degrees, and hopefully our doctorates in physical therapy! With each degree were making more money and saving at least 60% of everything we make. Our goal is to have atleast $450,000 in savings by the time we are 26 and 28. Before we are certified doctors of physical therapy we will have saved about $800,000. We crunch the numbers all of the time and we do our best to stick to them. We've budget almost everything that could go wrong or pop up (including those student loans!)It pushes us to finish college. We don't want a mortgage we want to slowly and perfectly create a home. We've got a few years, but we try to remain positive and anxious for what lies ahead! I wont lie, some days it can be really rough, but we make these sacrifices for where we want our future family to be later in life. "Never give up on a dream because of the time it will take to accomplish it, the time will pass anyway. -Earl Nightingale"

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    1. Wow! Great for you two! I really hope it all comes through. That would be phenomenal!

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  10. I'm just going to say this because no one else has. It sounds like you don't have any student loans!! I find this to be a HUGE reason why 20 somethings can't afford a house. I would say most of my friends have an average of $500/month in student loans (and that's IN STATE for many, although our state's school is one of the country's most expensive). For example, we got approved for a loan of $130,000, my cousin (who's only 20, verses our 26) and her husband were approved for $200k...the difference? No student loans on her end...

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    1. Hi Elizabeth!

      I actually address student loans in Part Two of this series which you can find here if you missed it:

      http://mrandmrswinslett.blogspot.com/2013/07/how-to-buy-house-in-your-20s-part-two.html

      I completely agree with you. Students loans where a huge hurdle for us during our home buying process!

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  11. How did you manage to get a good payment rate with no credit? My credit still doesn't show up on credit reports, which seriously surprised me as I owe a lot of money(almost $4k) at 19 as a result of my boyfriend and I trying to rent our own place before we were ready. He worked, I didn't(was at school full-time with ADHD and having never been to a school before as I was homeschooled), and his job was based only on commission; we managed to pay rent but got stuck behind electric and student tuition for me. For the last two months we lived there, we didn't even have hot water because we couldn't afford to fill the gas back up once the tank was empty.

    So, how did you do it? Is there any way I could have you e-mail me or I could e-mail you and you help me figure out a budget or something, or give me tips? I'm having a baby boy in November(due the 17th) and we haven't gotten ANY of our debts paid off, yet, let alone any money set aside for a place of our own(currently living with his parents). We do have some money set aside for my little man(about $125-150) in a baby jar, but there is no way we're tapping into that. We plan to not screw him over late by being able to help him with his tuition, etc. like neither of our parents were able to. As soon as we get $1000 in his baby jar, it's going into a money market account. Does that sound like a good idea, or would there be a quicker/easier way to save him a good amount of money?

    We both have jobs now. I'm working part-time(20-25 hours; $9.50/hr with a .40 cent raise after my 90 days) with the state and he works full-time at a factory($8.00/hr). I would really love an e-mail from you! It's jessicadoor@aol.com.

    I'm sorry this is so long, I'm just really stressed about money and our baby is going to be here in less than three months! I would really love any tips!

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    1. Hi Jessica!

      First, I want to make it very clear that we did have credit - actually very good credit. I talk more about that and how we built it in the second part of this series which you can find here:

      http://mrandmrswinslett.blogspot.com/2013/07/how-to-buy-house-in-your-20s-part-two.html

      Second, congratulations on the little man! How exciting! Props to you on refusing to dip into his money and having a plan on getting a money market account for him. That's a step in the right direction financially.

      Lastly, I would love to help you work out a budget. Feel free to shoot me and email at miranda.sain@gmail.com. I'd love to help any way I could, but just remember I'm not a professional financial expert!

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  12. We bought our first house when I was 19 and my husband was 21. It was over a year ago and got the most amazing interest rate ever with a 30 year fixed. We're in the process of finding a bigger home. Anything is possible if you bust your buns and budget right! :-) thanks for the good tips!

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    1. You are so right! Anything is possible if you budget right. Thanks for stopping by!

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  13. My fiancé and I bought our first home a year ago, when we were both 20. We were able to do it because we bought a house in a nice neighborhood that was an absolute mess. We got it for over 150k less than other houses in the neighborhood and stayed with family while we completely redid the inside and most of the outside. Since hiring someone would have cost us well over a hundred thousand my fiancé did most of the work himself and we used the equity in our house to pay for it. Now we're both 21 and living in an amazing house that was redone down to the studs and floorboards. Money was really tight for a while, but it was absolutely worth it. It's nice to hear about other people our age doing similar things. All my friends still live with their parents!

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    1. How awesome! It's nice to not always do what your friends do, huh? It gets you a house! Thanks for stopping by.

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  14. My husband and I bought our home at 21 years old and two wonderful boys. The relators and closing agents could not believe it. we just do not have credit cards, we only spend what we have and try to budget our pay checks. Clearances, yard sales, thrift shops and sales are great ways to save as well.

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    1. My typical rule of thumb is not never buy anything full price. Sales are the way to go! Thanks for stopping by!

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  15. Frugality : one of the most underrated virtues of modern times. Haha! And more relevant than ever. It's these little gestures that add up to the big ones. Just ensure they add up to the big ones, such as the cost we need to, say, buy a house and make purchase. Sometimes though, we are going to need support, and we shouldn't be shy or hesitant about getting it from where we can.

    Memphis.ChurchillMortgage.com

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  16. A few other things to add to the list:
    1) Live in a city where housing is affordable
    2) Get married (ie, have a two income household and someone around so that you feel like you can safely live in a crappy neighborhood)
    3) Don't go to grad school (unless someone else, like your employer, is paying for it)

    Frugal only goes so far- not having one of these makes it much harder, all three is virtually impossible.

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    1. Living in a place where housing is afforable was a big thing for us too! We live outside of Atlanta. We never would've been able to afford anything on the north side. Instead, we live on the south side in a small southern town I love!

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  17. This is exactly what James and I are doing. We want to be out of debt fast and be able to buy a house or something later. We are just trying to figure out what we want to buy.

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    1. Take your time deciding what you want. No rush! Ya'll can do it though!

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  18. Very nice unique post. I really glad to found you. I recommend this page to my all friends.

    Steven Conville

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    Replies
    1. Thank you so much! I definitely appreciate it.

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  19. Great advice. Most of these sound hard, but once you get used to it, it definitely makes all the difference. And it's such a relief to finally have your own home instead of renting out from place to place, isn't it? Good luck to you two! You two are still young, and I expect you'll get more out of your savings in the future.

    Churchill Mortgage Corporation

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  20. This is very noce. Buying a house is always a difficult and time taking task. I like your blogs about houses. Thanks First home buyer

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  21. in present time it is not typical to purchase because in modern time online system is best one way to purchase house in some moment. but if you are looking home in australia than please contact buying a house toowoomba

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  22. Thanks for this nice and interesting post buying your first home. It is really very useful thanks for sharing with me.

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    ReplyDelete
  24. What was the budgeting book you got from target, I'd like to get one for myself. Great advice!

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  25. My husband (age 27) and I (age 24) are planning on buying a house within the next year and have been very dedicated to our savings. We are hoping to put down at least 25% as to avoid mortgage insurance and such. It's been hard to live in our own little "hole in the ground" for the past 4 years and pay for college all out of pocket, but it is going to be worth it especially with our first baby on the way. Thanks for the great post! I hope to use some of your tips for groceries this next coming year.

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  26. And all that being frugal paid off! What wouldn’t I give to own a house at 22. There are even those who live their lives never owning one. Congratulations to both of you! Hats off to your discipline and budgeting scheme. Carmen @ Houston.ChurchillMortgage.com

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  27. I'm 22...
    I'm curious if there is a way to budget all this with student loans tied into it? Those put a damper on life I feel like.

    I don't plan on buying a house right now. I'm actually moving back in with my dad..but in a few years? What if my boyfriend and I get really really serious and want to buy one before we're thirty?? You never know.

    I'd also like to suggest mint.com as a way to view your budget. It does everything FOR you. They also have an app now!

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  28. Thanks for the tips, I am 23 graduating in May and hope to start my new career sometime within the year 2014. With that said, I need to start planning for my future home.

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  29. This is such a fantastic and great article.Keep posting it..!
    We Buy Any House

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  30. This comment has been removed by a blog administrator.

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  31. This is a great post. My husband and I just recently bought a home in Oregon and we just love it. This was our first home purchase and we didn't really know what to expect. So we decided to check out buy a home portland oregon. It was great, we were able to figure out what we needed to do and now we own our own home. We couldn't be happier.

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  32. Great article! My husband and I are in our mid 20's (hubs 27 and myself 24) with 2 young children (4 and 10 months) we are looking for our first home with one income thanks for all the great advice!

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  33. Wow, I admire your discipline to have lived as frugal as that! We are faced with a lot of modern conveniences these days that it’s hard to imagine a time when people didn’t have cable or cellphones. Of course, these things add up to our expenses. I guess it’s just a matter of priorities and willpower. If you really want to spend for something, you’ll forego unnecessary expenses just to save for it.

    Barry Sutton

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  34. Thanks for informative post! We are buying houses fast for cash.


    cash4columbushomes

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  35. These last few months I have been looking to buy a house. I need something that is spacious for my family. My husband and I have 3 kids. It can get crowded really fast in our home now.

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  36. I think we must be spirit twins. I'm 23, engaged, and also working on buying my first house. I also have and LOOOOVE the Mead Organizher expense tracker from Target. My fiance and I decided to live at home as long as possible to save money - we've paid off over $35,000 (yes, you read that right) in student loan debt already! We also are paying for our wedding and honeymoon (Disney, here we come!) entirely in cash by having a two-year engagement. By having two years to plan (and pay for) the wedding, we can spread out the bigger purchases. And save for the ones that come all at once. When we go grocery shopping, we plan our our meals and check what's in the cupboards first, and often base our meals on that.

    We're crazy budgeters and list-makers. When we get our house, we've always said we will not be paying for cable (who can afford that?!) We need internet for our jobs, so that's a must, but we do not need more than the local channels.

    So we're in the process of purchasing our first home. We're looking for a two-family house so rent can help off-set the mortgage. In our area, and the budget we're looking at, we're only going to have to pay $200-300 a month for mortgage/taxes/homeowners insurance! WAAAAY cheaper than renting!

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  37. Thank you so much for such a great blog.
    homes in hanover pa

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  38. Hey I enjoyed the blog. Im 21 trying to buy my first house with my n ou friend. I just graduated college so I have loans to pay but they are super small. He didnt graduate but he is going back. We just moved to colorado which has a much higer cost of living than what we are used too bit this is what we are doing. 1. We pack our own lunches for work (we are also lucky enough to work together so that saves on gas). 2. Our rent is almost 100$ cheaper than what it was 3. We hardly eat out 4. We dont go to movies or have other expensive outings (go to walmart and buy a 5$ movie, even a new movie is cheaper than the theater. Better yet do something free like hiking or camping). 5. I am on free programs that give you points for surveys or playing games. I do this in my spare time and while you can use this for walmart gc I get amazon cards. Im an amazon student member and I use this to get basically free stuff. The savings in shipping pay for the 40$ membership. 6. Like I said I just graduated so I dont have to pay my loan until december and it isnt earning interest until then. I still take the money out of each check and put up so when the time comes I can pay a significant portion of my loan. 7. Downsize, you can buy mew/nice furniture once you get a house. We currently are using a couch we got for free from a friend and a bed my parents gave us and we sold a lot of things we didnt need. 7. Also dont have pets but if you are like us and cant help it be smart about it. Keep their shots update to save money later on (an ounce of prevention is worth more than a pound of cure) also feed them well a lot of storea have frequent buyer programs for good quality food. Groom them yourself. Why pay 30$+ a month for somebody else to bath your dog. Clipping nails and doing a nasic sanitary groom is easy. One last thing make things yourself such as laundry soap and household cleaners. Repair clothes instead of buying new and recycle. Hope this helps

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  39. I am 24 and my husband is 27. We have already bought our first home and sold it. Now we are building a home that we are very excited about. We have done it all ourselves by working hard and like yourself, budgeting and cutting our unnecessary expenses.

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  40. I never ever read such type of info before this was really incredible.
    Steve Lefave Real Estate

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  41. My husband and I are 19 and 20 and we just bought our first house! A lot of the things you talked about we've been doing too!

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  42. Great article! And so encouraging to see you reach your goal. I am a realtor in Savannah and I'd love to share this on my page- would that be ok?

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  43. life insurance after retirementCongratulations guys, quality information you have given!!!

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  44. We got married and bought a nice, big 2-storey house when we were 20. We're now turning 24 this year and thinking of moving to a large house on an acreage. It's the only debt we have, which is awesome. Both of our cars are paid off and we don't have any student loans to pay off! We have a budget for every month that we really try to stick to. I definitely suggest investing in RRSPs as young as you can to start saving for your future! Just put in as much as you can each month...some months will be small, but eventually you can put more in and every dollar counts.

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