How to Save for a House: Advice from a Real Person (with a House)

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Purchasing a home is major investment (read: cost), but the satisfaction of having a permanent place to call home cannot be understated. My husband and I received a very simple piece of advice from my dad that served us incredibly well and would most people: “If you have two incomes, save one and live off the other.” It is a simple philosophy, but one many people struggle to execute. After all, two salaries make for a lot more fun than one.

So how did my husband and I do it? We took my dad’s advice and not for one day did or have we ever lived as if we were a two income household. The beauty of this approach is we never felt like we were going without. We budgeted off of one income and even made sure we were saving money off of that income. We knew eventually I would stop working and stay at home with kids. We didn’t want to end up having to make a lifestyle adjustment so we could continue adding to a savings account.

There were many conscious decisions that played into our ability to not feeling like we were missing out, but also a small amount of luck. For example, we lived in a small rural town in upstate New York, but had “city jobs.” We both made over $70k annually. Our largest monthly expense was our rented 2 bedroom, 1 bathroom apartment for about $750. For the area, that was an expensive apartment. A low cost of living is definitely something we categorize as luck, but realize that sometimes you might have to move if COL is unreasonable. However, there were many choices/decisions made to keep our cost of living low. We both drove older cars. We switched to Republic Wireless for cell phones ($25/month for each line – talk, text, and data). We grocery shopped almost exclusively at Aldi and limited trips to the grocery store to once a week. We never bought the latest and greatest anything. I started couponing household items. My husband is not one to buy things without first really analyzing the need or severity of want. A big factor to setting us up so we didn’t start out in crippling debt was not living beyond our means in college, and working through college with scholarships. It’s amazing how far an education will go when you have A) a plan to use it, B) financial plans on avoiding huge student debt, and C) a degree at the end of it that makes you hire-able.  But that’s another blog post.

One area we never really successfully cut back on was eating out. We usually ate out 4-5 times a week for lunch with coworkers. It wasn’t usually expensive places, but even $5 that many times a week adds up. We continued eating out for a couple of reasons. One was peer pressure and not wanting to miss out on time with our friends. Another was that the “regular pizza place” was really good and we just wanted to eat there. This was, of course, a conscious decision to spend money we didn’t need to spend, but one with which we both were okay. I imagine we’d probably have at least a couple hundred more dollars to our name had we not eaten out so often, but you live and learn. I give this example to demonstrate that we still had friends and went out and did things while saving. We weren’t friendless hermits trying to pinch every penny, despite what my husband might have reverted to if left to his own devices.

We kept up this routine for almost 2 years. In that time, we had to make some adjustments. For instance, I became pregnant after 5 months of marriage – talk about making some adjustments! I worked until the week of my due date and then took unpaid maternity leave for almost 5 months. In this time, we missed the extra paychecks going into the savings account, but never had panicked moments about being able to afford something. After maternity leave, I went back to work part-time while our baby went to daycare. Unfortunately, daycares don’t let you pay for part-time care. You can leave your child as much or as little as you like, but the charge is the same. Fortunately, about half of my part-time salary covered daycare and the other half went right into the savings account as it had before the baby was born. Again, this boils down to working in a place with a lower cost of living – a choice. You might be thinking that my salary paying for daycare breaks the rule. But here’s why you’re wrong: my job as the primary caregiver was to ensure the baby was cared for. Since I returned to work, I paid for daycare. If I had stopped working, we would also have stopped daycare.

I continued working part-time with the baby in daycare until we decided we’d had enough of New York winters, politics of the jobs, and the state’s politics. About two and a half years after getting married, my husband was offered a new job in Georgia which we accepted. We then moved and bought our first house. Thanks to the advice from my dad and our dedication to following it, we were able to put down 20% on our home and still have some savings leftover. Not only that, but because we purchased a house we could afford (again, not living outside of our means), we are able to contribute every month to dedicated long-term investments and savings.

I’m a stay at home mom now with no official employment, but I always try to find some means of cash flow. We still follow the same rule: anything other than the one salary goes into savings. During the school year, I tutor 1-2 students and we put that income right into savings. I’ve held a couple contracting positions. Again, that income goes to the savings account. We’re no longer saving for a down payment on a house and the money isn’t necessarily earmarked for any intended purpose, but we still don’t want to fall into the trap of needing my income to make ends meet.

To summarize, affording a house isn’t impossible, but it takes hard work and dedication. In general, following these three steps will drastically increase your ability to afford a home:

1. Obtain a marketable college degree with minimal debt or go to trade school
2. Live off of one salary and save 100% of the other
3. Live within your means and go without whenever possible