As you might know (because I’ve talked about it incessantly on the blog this summer), Dave and I purchased our first house in June. It was a huge milestone for us, but that’s not the entire story. The real story starts much earlier, long before we purchased the house, or even before we were saving for a house. Dave and I got engaged in spring 2013. We had just graduated college and neither of us had jobs (or any money), so we knew it would be a long engagement. Fast-forward to that fall, we both had good jobs and began planning and saving for the wedding. May 2015 rolled around, and it was officially the wedding month! We got married Memorial Day Weekend and immediately hopped on a plane for the honeymoon, returning the first week in June. That same month we paid off the remainder of the wedding expenses on the credit card, and we were back at square one.
It wasn’t long after returning from the honeymoon that Dave and I started getting antsy about buying a house. We had just signed the one-year lease for our apartment for the third time, and we decided then and there that we wouldn’t sign it a fourth time. So in July of 2015, we began saving for a house. By January 2016 we had gotten even more impatient, so we went to see a financial expert to get some advice and see how far we were from our goal. It was a bittersweet experience. It was awful because she was brutally honest and told us we had quite a ways to go. But it was also an incredibly positive experience, in that it forced us to go into extreme savings mode. I firmly believe that painful meeting is the reason we were able to save as much as we did! For three months we spent almost no money, saved as much as we could, and put an offer on a home three months later at the end of March. And just two and a half months after that, we wrote that giant check and moved into our first real home.
So how did we do it? Saving for a house in 9 months is no small feat, so I’ll break down some of the most important steps for you.
This is a sponsored conversation written by me on behalf of Discover Financial Services. The opinions and text are all mine.
We Set a Financial Goal
Before Dave and I really got into saving, we set a specific financial savings goal. We did the math and figured out roughly what we could afford each month, and used that to figure out how much house we could buy. You can talk to a mortgage broker or bank about what you can get preapproved for, but I figure no one knows our finances better than we do! We knew we wanted to save enough for the downpayment, other fees/expenses surrounding buying the house and the move, as well as a financial cushion, anticipating we’d have to buy a lot for the new house very early on.
We Sought Financial Advice
Like I mentioned before, about six months into saving for a house, we went to see a financial expert to see if we were on the right track. It was really an eye-opener for us. We were able to get a better idea of what our interest rate would be based on our credit scores and other factors, what we could expect to pay in closing costs and fees. This is the meeting that both depressed the hell out of us and really catapulted us toward meeting our savings goal in time.
We Made a Budget
This is a big one, my friends. I firmly believe that, without creating a monthly budget for ourselves, we would not have saved for a house as quickly as we did. How many times have you said to yourself or your significant other, “We really need to cut back on spending”? I’m guessing it’s happened, but you probably didn’t change anything, in reality. Why? Because there was no specific plan.
Here’s how we set up our budget. We knew the date by which we wanted to purchase a house, so we knew the number of months we had to save and roughly the number of dollars we had to save in that time frame. It’s pretty simple, just do the math and figure out how much per month you’re looking at! I think many people make the mistake of writing down how much they have to spend on fluctuating expenses like groceries, eating out, entertainment, etc., and then plan to save what’s left. Instead, we figured out how much we wanted to put into savings each much, how much we would be left with, and how we would divvy up that remaining money.
Creating our budget was really an eye-opening experience for us because we were able to actually see how much money we were spending in some areas. We were spending over $1,000 on food each month, between groceries and eating out! There is zero reason that two people need to be spending that much on food. Making a budget made all the difference!
We Stopped Wasting Money
I wrote a blog post quite awhile ago about 8 things a lot of us waste money on. While we were in savings mode, there was definitely no more of that! I said goodbye to getting Starbucks, even once per week, and we both said goodbye to ordering Chinese food or subs for delivery 3-4 nights per week. Was it an adjustment? Absolutely. But it seems like a small price to pay for owning your own home.
We Were Conscious of Our Credit Scores
One of the first things we did when we started saving for a home was to check our credit scores. We had been diligent before about checking them at least once per year, but we wanted to go into this whole experience with eyes wide open. When it comes to buying a house, your credit score is going to be a big deal! And when it comes to your interest rate, it’s all based on the lowest credit score in the marriage. So even if one of you has a kick-ass credit score, it hardly matters if the other person has a poor credit score.
This is where Discover comes in! Discover Credit Scorecard is an online service that enables everyone to check their FICO Credit Score® for free. And did I mention that it is available to everyone, including those who aren’t even Discover customers?! Plus it’s a soft pull, so it won’t impact your credit score in any way!
What advice would you offer to anyone saving for a house?
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