Wednesday, August 01, 2007

Saving To Buy a Home

After being away for the weekend, I haven't had time to comment on the story in this past Sunday's New York Times real estate section called Every Penny Counts. But lots of other people have it covered:

Property Grunt
Frugal Zeitgeist
Boston Gal's Open Wallet
Yet Another Blog About Money

It was a nice piece. It's good to remember that there are other people out there like me who do what needs to be done to buy a home in an incredibly challenging real estate market without any handouts from their parents. If they'd interviewed me for the story, here's how I would have said I did it:

The biggest sacrifice I made was to give up short term comfort in favor of being able to afford long term comfort. "Short term" ended up meaning 6 years of living in a 242 square foot studio apartment (that's counting every inch of space, including the one closet, bathtub, etc.). Then I spent a few more months of living out of suitcases in temporary sublet apartments. I liked my little studio, but there were times during those 6 years when I wondered if it would be worth it to move to a bigger rental. I decided I'd rather keep saving my money to buy something, and just got used to squeezing my life into a very tiny amount of space.

Other than that, the longer I lived in that apartment, the more conscious I was of saving money to buy something. I wasn't as aggressive about it as the people in the article-- I still allowed myself to eat out a lot, travel, and buy some clothes, but I kept these things to a budget that allowed me to meet my savings goals. I also continued to prioritize retirement savings, knowing that that would be more important in the long term than what kind of apartment I could buy. I never wanted to put every single egg into the "buy an apartment" basket-- that seemed short-sighted, especially knowing the market was probably at a peak. There is a lot more to life than owning the perfect apartment, and I didn't want to feel like I'd given up every other pleasure for it.

I also was lucky enough to be making a wee bit more money than most of the people profiled in the article-- but still under 6 figures in total compensation, at least as of last year. And that isn't much in NYC terms, especially for a single person who isn't sharing the cost of the apartment with anyone. And now that I've bought a condo, I have to be even more vigilant about my budget than I thought I'd be-- some of the costs are ending up being a bit more than I'd expected, which I'll post more about soon. But all in all, I'm so glad I did it. I love my new place, but I also love the feeling of satisfaction I got just from working toward that goal and achieving it.


Fabulously Broke in the City said...

After we clear our debt, Husband and I are doing the same thing. Living in a dirt cheap apartment, saving as much as we can, still splurging once in a while so we don't go mad... and hopefully get a house before we're 30!

sandyvoice said...

It was great to read the Times article this week, and your story over the past couple of years, and to feel like I'm not alone. I'm a musician, and don't make anything like as much money as you, Madame X, but my process was the same, just very streched out. I lived in a 250 sq. ft. studio apartment for 25 years minus 10 days. It was in a great neighborhood, but it was very cheap because I was there so long. There were some very bad times; a couple of years I made only 15% over the poverty level. But as soon as I got into a halfway stable financial situation, so that I was making even $10 more than I needed to spend, I started saving. If I didn't have anything extra at all, I'd eat Kraft mac and cheese for a few days, or try to walk home from a gig, so I could save $1 that week. (This was before discount metrocards.) Eight years ago, at the age of 47, I finally put a binder down on an apartment 3 1/2 times the size of my old one in an emerging neighborhood I love. I admit I got some help from my parents toward the downpayment, but I'm paying them back, and from then on I've paid every penny myself. It's a fixer-upper, and I figure it'll be fixed-up by the time I retire, but it's MINE. Hard work, but worth it.

SavingDiva said...

sandyvoice, that's a great story! It's fantastic that your parents were able to help you with your down payment. I know that my family will not be able to help, and I don't think I would be comfortable asking. I'm trying to purchase something in about 5 years. I'm hoping to increase my savings, but it's turning out to be a lot harder to stick to a budget than I had imagined.

Rad said...

This was a grear article that I really enjoyed reading. Iw as going to print it out and just keep it in my bag for motivation. Although, like oyu, I don;t put all my eggs in a "buy a house" fund, I do put a little away towards a house/apartment and I would like to leave the rut of renting sooner rather than later. I don't want to rush anything because I already know there is much more than just a mortgage payment when it comes to owning property, I want to make sure that we are ready.

Anonymous said...

i was looking forward to your comments on this article, madame x, so thanks for posting. i printed the article as a reminder of what smart money decisions and careful financial behavior can mean -- hopefully, being able to afford graduate school!

Anonymous said...

Bronx Chica...yeah I printed it from Boston girl's site. It is a wonderful article. It great to save up and have that feeling of achievement and happiness.

Chief Family Officer said...

I love success stories and I didn't know your whole story, so thanks for posting that!

Sistah Ant said...

I live in a small apartment now, myself. It's about 350 sq. ft. I chose it on purpose because I knew living there wouldn't let me get so comfortable that I'd stop being vigilant about paying down my debt and getting a down payment together. My small space and low rent give me more money to save and less space to accumulate junk (which costs money).