- Jan 9, 2020
This is a good question.I understand that buying property is better than renting but as a relatively young adult just entering both the job and housing market, where the hell are you gonna get 20-40k for a down payment on a house? That's like, a yearly salary for most starting wages. At this rate of inflation, saving money is gonna be damn near impossible too. Is there something I don't get? Are you supposed to take out a loan or something?
A starter home is around 250k these days (on average).
That will be around a $1500 monthly payment including taxes and insurance.
You can get a 5% down loan pretty much anywhere, so that will be $12,500.
While that is not a small amount of money that is something that most people should be able to save up in a year or two even on an average salary. This is accomplished by living within your means, OR having more hustle--side income, additional hours, etc. This is where discipline and sacrifice early on pay dividends later.
I'm not a huge fan of Dave Ramsey but he has some good advice. He has some "baby steps" that can help, that I will modify a bit because he's a boomer that has no connection to normal people's reality:
1. Invest in yourself. You can't build savings if you are making shit money. You need to train up and find a job that gives you breathing room. This is actually the most high-impact step you can focus on, and helps erase a lot of mistakes you may make along the way. At one point I had like 90k in credit card debt and was in terrible financial shape but I clawed my way back to $0 by working hard on my career.
2. Save up $1000 for a starter emergency fund. This helps insulate you from normal tribulations and lets you focus on growing savings.
3. Pay off debt. Debt is slavery.
4. Save 3-6 months of expenses in an emergency fund.
5. Save your house downpayment, plus a few thousand for moving expenses, incidentals, surprise costs.
6. Buy your house.
None of these are necessarily easy, but if you focus and don't fall prey to temptation, your life will be immeasurably improved in the long run. You will be happier and healthier.
The ladder is getting pulled up faster and faster every single day. There should be a sense of urgency in following these steps because the longer you delay the harder it will be and the bigger the boot will be on your neck holding you down and preventing you from ever seeing social mobility. Fortunately you don't have to outrun the bear, just the fat kid. For as many people as there are pinching pennies and outbidding you on good houses, there are even more folks burning up their credit cards with starbucks and buying the newest iPhone.