It’s been a while since I posted a personal update even though I try to include some tidbits in many of my posts. I hope to have a goals update post completed and live before the end of this month so I can share where I’m at with making progress on my 2017 goals.
Mainly, this year is all about debt repayment and saving what I can because I have some exciting news to share…WE ARE GOING TO BUY A HOUSE NEXT YEAR!!! My husband and I signed our last annual lease last month so that means we have less than a year to finish getting our finances in order and save up to buy our first house.
Renting has been fine with me for a while but it just feels like the right time especially with my son growing like a weed so we’re excited for this next step in our lives. As a result, you’ll probably see more posts about homeownership on the blog since I’ll definitely be documenting some of our experiences.
That being said, we do have a low budget for our first home since we live in the Western suburbs of Chicago where some housing is super affordable. This is why I wanted to share some tips about affording your dream home when you’re on a low budget.
I watch a lot of shows like Househunter’s and I still believe it’s possible to obtain the home you love when you don’t want to overspend.
Here’s how we’re planning to do this.
Being Honest About What We Can Afford
I think I mentioned this before on the blog a long time ago, but I used to be obsessed with big houses. I used to play The Game of Life with my sister when we were kids and I would cry when I didn’t get the Victorian mansion as my house in the game.
Now, a lot has changed and the thought of having a big home scares me. I want my house to feel like home and be a relaxing oasis, but I don’t want to be house poor. I don’t want to spend all my extra time repairing and maintaining my home. House projects don’t sound super fun to me and I’d rather be out doing something with my friends and family during the weekends instead.
Plus, I have a small family right now and honestly don’t think we’d need a home much bigger than 1,400 square feet. I also don’t want to put all my extra money into a home. I have other goals for my money so my husband and I sat down and decided how much we could comfortably afford to spend on a home regardless what lenders would tell us.
Knowing exactly that you can comfortably afford early on is one of the best ways to avoid any major money problems later down the line.
Cutting Expenses (Ditching Debt!)
It’s important not to underestimate the costs of owning a home. You have to pay the mortgage, taxes, potentially a Homeowner’s Association monthly fee, all the utilities, maintenance and repair expenses, along with insurance costs like building insurance.
Right now we’re renting and while renting has its pros and cons, we don’t have to deal with half as much financial pressure as an average homeowner with a mortgage. In order to prepare our finances, we decided to focus on cutting our expenses and bumping up our savings.
Our expenses are already pretty low but I run through our budget every few months to see where I can poke holes and free up more money. I’m thinking about getting rid of one of my gym memberships in the fall and reigning in our entertainment budget since I know we could be spending less because I always find free or cheap fun things to do.
Just paying off our debt is also helping us free up more money in our monthly budget. Last month my husband paid off his car loan, and I’ve been paying down my student loans like crazy this year and they will be long gone before we buy a home so I know it will be nice to not have that debt and a mortgage.
After that, our remaining debt will be just under $15,000 (husband’s student loans and our shared 0% interest loan) with monthly minimum payments under $200. I’m not sure yet if we want to attack this debt as aggressively as we’ve been with knocking out our other debt because it’s such low interest and our money could be best spent elsewhere but I’m not sure yet.
Bumping Up Savings
Of course, we’re also focusing on our side hustles and stashing away whatever extra money we can generate to save for our down payment and increase our emergency fund.
These are the 3 main things we’re doing to be able to afford a great home that we love while on a low budget. I’m sure we’ll do other things along the road like becoming more energy efficient, negotiating on the closing costs, and learning how to DIY more stuff.
Related: Why You Need a Full Emergency Fund
If you have any advice or tips for me about homeownership or the process in general, I’d love to hear from you in the comments!
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