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  • Writer's pictureNathan Zarcaro

My Wife and I Saved For a House While Renting: 3 Things We'd Redo


Before we bought a house, my wife and I spent two years living in a small one-bedroom apartment in her hometown. It was a great place, complete with affordable rent, included utilities, and convenient location.


While there, we started to plan out our future, including homeownership. And soon enough, we were ready!


After saving for a house as an apartment renter, here are three things that we'd redo about the experience.



How we saved for a house while renting


Saving for a home involves preparing for two different sets of expenses:


  1. A down payment

  2. Closing costs and incidentals


I'll cover these sections separately.



How we saved for a down payment


The hardest part about transitioning from a renter to a homeowner is saving enough money for an ample down payment. It took some maneuvering and changing of our money habits, but overall, it was a navigable process made easier by following these four steps:


  1. We lived below our means.

  2. We stuck to a budget.

  3. We took higher paying jobs.

  4. We got lucky.



1. We lived below our means.


Oftentimes, landlords won't rent apartments to tenants unless they earn three times their monthly rent. This is oftentimes known as the "three times monthly rent rule."


Though my wife and I both had full-time jobs, we opted for a modest apartment well below our means. In fact, we paid less than 10% of our income in rent while there. In return, the other 20% of our income that we could have used for rent became funds that we saved for our down payment, month after month, for two whole years.



2. We stuck to our budget.


With the first 30% of our take-home pay locked up between our rent and down payment savings, we decided to create a budget to maximize the remainder of our monthly cash flow.


It was important to us that we were also able to meet all of our monthly bills, fund retirement accounts, and have some money left over to enjoy and live life in the present.



3. We took higher paying jobs.


It is simple enough to figure out how much you need to save each week or month to make your home buying dream a reality. But we were still a little discouraged when we saw how long it would take to get there.

And while there is a maximum amount of money that you can save in a given time, luckily, such limitations do not exist for your income. So, we both started looking for new roles with our companies, and within a couple of months, both of us had secured new jobs paying 20% more than we made previously.


The majority of this 20% then went towards saving for our home.



4. We got lucky.


No matter how well planned out your home buying strategy is, sometimes you still need a little bit of luck. You don't need the heavens to open up, but there are things outside of your control that can make the home buying process more affordable for you, such as:


  • Low interest (financing) rates

  • Being in a buyer's market

  • Other economic conditions


And even if these variables don't lean in your favor, things can change quickly!



How we saved for closing costs while renting


Even after we had done our best to save the down payment that we'd soon use on our home, there were still closing costs to think about. That's right, more housing expenses to save for, all while renting.


As time went on, my wife and I found these tips helpful as we prepared to pay our closing costs.



1. We opened a dedicated savings account.


It can be hard to monitor your progress towards financial goals in an account where you're also paying bills and saving for other priorities.


With this in mind, we opened a joint savings account, accessible by both of us, in order to make contributions and track our progress in real time. This way, we both knew exactly where we were in terms of meeting our savings goals.



2. We rewarded ourselves for meeting savings goals.


When you're saving for a house as a renter, it is important to reward yourself as you make progress.


Otherwise, the process may be far too cumbersome. So, don't be afraid to go out for a nice dinner or plan a fun weekend day each time you hit a savings milestone.



3 things we'd change about saving for a home


While we were successful in saving for our home in seemingly no time at all, that doesn't mean that there aren't things about the process that we'd change with a do-over.


In fact, there are three things we'd change:


  1. The stress we put ourselves through

  2. Not enjoying the journey more

  3. Not being realistic about how much money we'd need



1. Unnecessary stress


We put ourselves through a lot of (unneeded) stress pursuing home ownership as a renter.


This may seem counterintuitive, especially as a financial blog, but as long as you're able to stick to your budget and stay on track in saving for your home, there is no need to put any unneeded stress on yourself.


I'll always remember how my wife and I used to contemplate whether or not to get takeout or go out to dinner, even when we were comfortably ahead in our savings goals.


Follow our advice and learn to embrace the time you'll spend as a renter!



2. Not enjoying the journey more


Along with the unnecessary stress we put ourselves under, we both wish that we had enjoyed the home buying journey a little bit more. Not because saving for a house is fun, but because renting comes with certain benefits that homeownership doesn't.


For instance, anything that went wrong with our apartment, big or small, could be repaired or replaced by placing a call to the landlord.


But when you're a homeowner, finding these solutions will require both your time and money to address.


Also, apartment or home rentals typically carry an upfront one-year commitment before you're able to rent on a month-to-month basis. Contrast this to owning a home, where you'll most likely take a thirty-year mortgage.


Don't get me wrong. I love being a homeowner, but I also wished that I enjoyed the flexibility I had as a renter.



3. Not being realistic about money


Though we were very fortunate to be able to save for our house in the time that we were able to, there were also times that we weren't completely realistic about exactly how much money we'd need.


There were instances when we wanted to jump before we were truly ready. We didn't, thankfully, as we wouldn't have had a full down payment and would have been left with higher mortgage payments and ongoing monthly expenses.


But in those moments, it can be really easy to talk yourself into taking an action that you'll regret.


Some experts say that you should begin looking at houses before you're ready to buy, so that you have knowledge of the real estate market in your area. But I recommend you only do so if you know you can hold off until you can truly afford to make your purchase.


Otherwise, you risk falling in love with a house that you're not ready to buy yet.



Conclusion


Saving to buy a home as a renter is no small task. But with enough diligent saving and hard work, it is absolutely possible to do.


Are you currently a renter and pursuing home ownership? Tell me about how it's going in the comments below!



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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