Should I save for a house?
With my income at the time, repaying the minimum on the loans each month wasn't a problem. Interest on three types of loans ranged from 4.5% to 6.8%, which, considering inflation and comparing it to credit card interest rates, wasn't all that bad. Even if I only made minimum payments throughout the course of the repayment period, I would lose just over $5,000 to interest. Although I wanted the loans out of my life, I could live with paying that over time if it meant saving tens of thousands of dollars on a home and mortgage while the market was down.
Drawing a plan
Student loan payments accounted for roughly 20% of my income at the time, while rent and utilities accounted for about 40%. After other expenses, I had around 10% leftover – not enough savings to purchase a house by 2015 like I planned. I needed to save nearly five times more! After all, I wanted to make a 20% down payment.
Supplementing my income
In order to save more, I had to make more. In addition to my nine-to-five, I decided to dive further into freelancing work to bring home some extra bacon. This involved writing articles, doing translation work, and teaching English. While jobs seemed to come and go at random when I started seriously pursuing it in the fall of 2012, I managed to drive up my monthly income by 30% within a year. I put two-thirds of that towards the house and one-third towards chopping off more student loan debt.
Compromising on my lifestyle
I knew I could increase savings by spending less. When my lease was up, I moved to a cheaper place outside the city center, saving me $125 per month on rent and utilities. I also found ways to save on groceries and cooked at home more. As impossible as it appeared, I cut my nightlife expenses in half by capitalizing on happy hour and staying at home with friends. Public buses and my bicycle became the only form of transit I recognized. Over time, I noticed that I was spending $210 less per month than I had been previously. Again, I set two-thirds aside for the house and one-third aside for loans.
Being satisfied with less house
At first, I envisioned a house with a nice lot in a private setting. I was dreaming. So I lowered my requirements significantly. This has made it much easier to financially prepare to make a house purchase. As I am beginning to look for a house now, I regular check out cheap foreclosures and houses that need some fixing. Sometimes I am shocked by how inexpensive certain places are.
Sticking to the plan
While the seduction of travel has tripped me up from time to time, I, for the most part, am right on track. Working more, reducing spending, and looking at cheaper properties has been the key. Getting pre-approved for a mortgage is something I hope to have handled shortly. If all goes through, my dream of becoming a homeowner by 2015 will be achieved.
By Nick Callos Copyright 2014 brass Media, Inc.
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