After we married, husband and I decided to start saving for our first home – our first house together that we could tweak as we liked. As we began saving we also began looking at houses (heck, I am pretty sure we looked at houses before we were married!), which is something I strongly encourage. We had grand ideas of what we thought we could afford, what our dream house would have, and of course all the things we would not settle for in a home! Cue the reality check!
Here are a few things I suggest, starting with that dreaded “B” word:
- BUDGET – Learn how to budget now or you will always find your money escaping into never-never land. Husband and I love good food (who doesn’t?) and we love dining out so we had to come to terms with where our money was going (rather quickly, I might add) and what we were willing to sacrifice to keep more of it in savings.
- RESEARCH – Research different budgeting techniques. Everyone is different and not all techniques are applicable. I researched for weeks, asked close friends, etc. about different techniques and even invested in Dave Ramsey’s Total Money Makeover. Yes, it is mostly common sense but if you’ve been an active participant in society, sometimes common sense is lacking even in the most educated! For much of the book, I read Dave’s techniques and thought, “DUH! I already knew that!” So, in short, make an investment by doing some early research on how to effectively budget and know that you will have to tweak the system to your situation. Real Life Example: Dave recommends using the “Envelope System” to monitor spending habits but there’s no way I’ll ever carry cash so I modified the technique since I’m more of a spreadsheet kind of gal. Money stays in the bank and I can monitor everything on my spreadsheet daily to see exactly where every penny goes. Easy, right?
- HOUSE HUNT for YOUR DREAM HOME – Then, get real. Not only is house hunting for your dream a home a great relationship builder (keep an open mind ladies and gents as your significant other shares their likes and dislikes with you!) If wood paneling is a deal breaker, at least you know now how bad their taste really is (kidding, of course! Wood paneling is never out of style…) All joking aside, sharing the time building on this dream is very important for your relationship as you are further investing in a future together. BUT, as husband and I quickly discovered, our dream house was not within our budget nor would it be anytime soon. Looking for our dream home allowed us to build a list of “must-have’s” and “must-go’s,” which put the real estate market into perspective. We had to face the reality that we were not going to find the “perfect” home with everything we were looking for in our favorite area. By knowing what our “dream home” meant to both of us allowed us to “Get Real” and face reality that most likely we would buy a house that we could live with to further tweak into a home that we loved.
- MEET AN AGENT – Talk to someone in the business who knows the business and isn’t trying to just sell you shelter from the rain. Find an agent who is honest about the market and about what you can be doing now to live comfortably later. I spoke with a series of horrible agents who sent me to properties covered in graffiti and weeds knee-high to taking the bull-dog approach and trying to force-sell a house without even looking at the property. Be cautious. Don’t be afraid to say “No.” I admit that I hung up on the bulldog because she simply wasn’t listening and wouldn’t take “No” for an answer.
- CUT BACK – Cut any expenses that you don’t deem necessary. This comes into play when you truly sit down and look at your budget together. Husband and I were tired of paying $700 in rent and utilities in our apartment so we have been blessed enough to find another living arrangement for much cheaper so that the money we were paying could go directly into savings. I realize that not everyone has this luxury, but there are many ways to cut back, which we have also implemented:
- Subscriptions – Do you read the magazines that come monthly and are automatically drafted from your account?
- Insurance – Check into Good Driving discounts for your car insurance
- Round Up Savings – Does your bank offer an option where they round-up to the nearest dollar on your transactions and put the difference into your savings account? (Trust me, this adds up fast!)
- Coupons – Get a discount card from your local grocery store – Walgreens (just scanning the card at the register knocks dollars off your total), Kroger (you can load coupons onto your card from the website!), Groupon, etc.
- Carpool – Husband and I drive to work together. Yes, it is a hassle at times with our different schedules but it saves on gas and we only have one car payment. Also, it teaches you patience and the beauty of compromise. I absolutely love it!
- Set Limits – Happy Hour specials tend to make your dinner bill double, even triple, because of “cheap” drinks. If you set a limit before you arrive at your destination, you’ll be more apt to say “No” to that second or third margarita or reconsider that new pair of designer shoes.
The most important thing that I can stress is – COMMUNICATE. Be honest with one another and listen. You aren’t going to agree on everything but that’s where the true test comes – can you communicate, compromise, and show compassion? I’m not an expert on anything, but I do know that you won’t get very far if you aren’t honest with one another.
Do you have any tips for first time home-buyers or best practices on budgeting? Please share them!