12 May The Bibel Team: How To Save For A House While Renting
Today we’re going to be talking about how to save for buying a house while renting an apartment.
Hey everyone, Eric Bible with the Bible team at Neo Home Loans. Common question that we’re getting on a day by day basis. Hey Eric, that’s great. We want to buy a house, but how can we save money while we’re renting?
It’s a common scenario that one is placed in. I looked back at when my wife and I first purchased our first home. We were renting, newly married, same scenarios. How can we save with rent constantly going up each month, as well as monthly expenditures? So really, starting ground, setting a budget. Yes, we all know. Everybody’s said, set a budget, set a budget. Well, what does that really mean?
So, what my wife and I did was, we truly sat down and looked at one another and said, what are our must haves? What are the things that we are due every single month? No questions asked, these have to be paid. There is no way around it. And that becomes your housing expense, utilities, your insurance, food, gas. So really listing out those each and every month, what’s due. Then simultaneously, how much are we bringing in each month? Start going through that and you look at what are my necessities. Here’s what’s coming in. My wife and I then just basically identified what we have left over once all those components are met. Then we started getting even more granular and talking about, well, we liked to go out to dinner. We like to get our Starbucks fix. We like to go and do fun things, not just sit and stare at one another. Even though that’s a lot of fun, it can get pretty boring.
So then we made a separate column. Understanding, here is going out to dinner. Here is movie night, date night, taking the kids out. Whatever that looks like, have that column. We then identified, here are the must haves. Here are the things we like to do. Here is what’s left over after each and every month. And we started just kind of toying around with the have-nots, that kind of discretionary spending, and really identified that there’s a lot of leftover funds here that we could be putting to better use. So we created a secondary account, and each month we auto-deposited a predetermined amount into that account. So that is setting up the budget piece.
But simultaneously, we were discussing, after we got married, we want to purchase a home. So we met with a mortgage professional talked through our hopes, wants and dreams. This is what we’re looking for. And the mortgage professional went through our pre-approval and said, this is what you can purchase. This is what that monthly payment would look like. So in our example, we were currently paying $1,850 for rent, but wanted to buy a home that was $500,000 and commanded a payment around $2,600. So what my wife and I decided at that point was, we’re going to take the difference between the $1,850 and the $2,600, and we’re going to now make that our new housing expense. So each month we had basically mentally prepared ourself that $2,600 now was our new housing expense. And we took that $750 difference and moved that automatically into that new account that we set up to now mentally prepare ourselves for, one, this new housing payment that was coming. But more importantly, setting it to where now we can save the additional funds automatically. So, no thought into it. It just automatically debits each month when the rent was due.
So now, not only were we preparing ourselves for that payment, but more importantly, we were saving money each and every month over and above what we were already earmarked from the exercise that we did earlier. And then we really got specific around our goals and decided that added eat-out during the week, we’re going to make food at home. We stopped buying lunch during the day, we started packing our own lunch. We stopped going to Starbucks. You know, those little things that everybody talks about. But really, when you start getting granular through those different items that you’re not thinking about, you swipe your card and move on to the next, well, all those things really add up. And before you knew it, after a few short months, my wife and I were put into a position where we were now able to go and purchase that home that we had always wanted. And fast forward, that home has now transformed into ours–the home that we’re currently in. And it was all based on us getting very, very disciplined around saving while we were renting.
I know it’s not easy. It’s not something that, with a flick of the wrist it’s done. It definitely takes some input, some thought, buy-in from the people around you, and guidance. And this is where my team and I really take a ton of pride. We love working with first time home buyers. And really, home buyers of any stature, but anyone that is really wanting to carve out a plan to put them in a position where they can become homeowners. That is what we thrive on. And with that, we would absolutely love the opportunity to point you in that direction. Please reach out to my team and me today. And if you like what you’re seeing here, please like, subscribe, and comment.