When I started my professional career in 2006, I knew that I wanted to buy a house to live in. However, I live in the San Francisco Bay Area. Prices were ridiculous (they are worse now) but I was determined to save every dollar I earned to own property. Fast forward 5 years into 2011, with a little luck and perseverance I was able to purchase a home in San Francisco and have been living in it ever since.
Here’s my experience:
Significant Other / Partner
When planning to buy a house regardless of it being for family or investment, having a partner that aligns with your goals and is willing to help you act on it is very helpful.
I’m lucky that I’ve been in love with my wife for what seems like forever. Even luckier still, we talked about our goals for owning a house and really discussed the details of why it’s good to own, what we want to look for, what we didn’t mind compromising on.
Having a budget and sticking to it. It’s hard in the beginning, but gets easier over time. It also teaches you to figure out what is most important to you. You don’t have to give up everything you want to do, but if you have a budget you’ll be more selective in finding what you love to do. Think of it as the Marie Kondo method for activities.
There were times where we needed a break from everyday life and needed to go on vacation. Saving is important to us, but so is travel! One thing we ended up doing is setting a budget and we stuck to it.
I remember we did one trip to Rome, Barcelona and Paris. The two highest costs were flights and lodgings. At that time, we were using websites like CheapTickets, CheapOAir and Expedia to constantly search for the best price for a roundtrip ticket. We also googled the phrase, ‘Average Cost Flight to Europe’. We’re not really backpackers, so we needed to figure out how to have the privacy and convenience of a hotel room without the hotel prices. We were very familiar with VRBO at the time and found a few apartments rentals that really worked out well for us. For some meals, we would do something really cheap like finding a bakery and just getting a baguette, some cheese and meat and eating it in our room.
Making some side income is helpful as long as you are still performing well with your primary job. Even if your side income is something simple like decluttering your house and selling things that you don’t use anymore.
There were a few things I did on the side, I found items like furniture or electronics on the street, cleaned them up and resold them on Craigslist or eBay. I did use some of my work skills to help people looking for help on Craigslist. An example, this doctor posted on Craigslist that he wanted to sync his Gmail contacts with his iPhone and Outlook. This was in 2009, when this wasn’t easy to accomplish. So, I documented how to accomplish this with some scripts he could run on his laptop.
Get Out of Debt
I’m extremely fortunate to never have been in any kind of major debt. My parents are hardworking and very frugal which really guided my habits. In addition, I didn’t go to a fancy expensive college. I went to San Jose State University. A school that I feel really gave me the best bang for my buck. Semesters at the time were under $3000 for a full course and San Jose rent was cheap. I definitely had the opportunity to get into debt, but having a part-time gig in the university and summer jobs and summer internships helped me pay for education expenses.
Fun fact, I worked for a debt collection agency in high school where I would call people who owed money to retail department stores. Yes, I was a robocaller and I had become really good and using Alta Vista to find information on how to contact people. The main goal was the get the mark to talk to our closer who would try to consolidate their debt and create a payment plan.
If I had a recommendation for people with multiple sources of debt, I would recommend paying off the account with the smallest debt and negotiating the larger debt into a lower rate.
Want Vs. Need in a house
When looking at houses, you should write down what you love and hate about the properties. The list could include things like storage space, number of bedrooms, side-by-side garage, tankless water heater, etc. Go through the list and start separating what you really want and need. Do you really need a side-by side garage or is tandem ok? If you have a family of 5, is a 2 bedroom going to fit? Will the studio apartment be enough for you and your Saint Bernard? Is living within a block from your in-laws really that important?
Sometimes, the things we want are what bring the prices up. So narrow down what you can be flexible with.