Damn, how do you buy one of those houses? (Asking for a generation)
[Off topic. Hopefully Dan lets it go.]
Grue's guide to saving up a down payment (The mortgage and taxes are often less than rent for equivalent places.)
TL;DR Eliminate most, if not all excess, from your budget. I find it amazing what people consider a necessity these days.
Suppose you cut $50/wk from your budget. Over a year, that is $2600. A nice starter house in CU runs 150-200k. So the down payment is 30-40k. 2.6k of that isn't chump change. Do that in a few places and ... hey a down payment.
Areas where you might find savings:
Rent:
- Spending 3-4 years in a 1-bdrm in a not so great (rundown yet safe) neighborhood vs. the 2 bedroom in a bit nicer neighborhood may go a long way toward that down payment. $200/month over 4 years is ~10k.
- Roomates (ugh) are another path.
- Living at home (sorry parents) for a few years can get you there very quickly, so long as you actually save the money. You can ask your parents if they would rather you contribute to food/utilities or get out sooner.
Cell Phones (huge):
- Cell phone service. Do you need that data plan vs. checking stuff when internet is available? (Most places these days). You can get unlimited text/talk and 1G of data/month for $10-15/month these days. (T-mobile and 3rd party carriers.)
- Only upgrade your cell phone when you must (i.e. it broke). I find ones that are 5+ years old are cheap (often free) and work fine.
- Do your kids really need cell phones? We somehow survived with a single house line.
At the extreme, have a single home cell line for $10/month (talk/txt only). Most of us grew up without cell phones and "always accessible". It was fine.
Entertainment
- Entertainment subscriptions - movies, cable, fancy internet, sports packages, etc. The Champaign and Urbana Libraries have fantastic movie sections. The books are not bad either. Youtube tv isn't cheap. It seems to be good value for the price.
- Going out: Look at home much you spend on movies (terrible $/time investment), bars, dining, etc. Absolutely no coffee shop coffee.
I'm not saying never do any of these. I'm saying take a hard look at them. This is often the 2nd easiest place (after phones) to save money.
Cars:
- Used cars are often much cheaper, even with the extra maintenance (esp insurance).
- Do you need 1 car per adult?
- Do you need a car? Depending on where you live, the train (chi), or a bicycle (CU) with occasional Lyft usage may be significantly cheaper.
- If you don't drive much, contact your insurer about a mileage based plan. (Cuts my rate in half.)
Shopping:
- Shop Aldi's vs. the more expensive stores. (Careful on some of their meat.)
- Watch for sales, and buy in bulk when there are sales. If it will last, buy enough that you can wait for the next sale. That may be 3-6 months worth.
- Junk food (esp soda) is really expensive. Most people it eat and then their regular meals.
- Only buy new clothes/shoes when you need them. I find that t-shirts and jeans never go out of style.
- Christmas gifts should be limited and mostly practical gifts (e.g. clothes).
If you have automatic payments, look at your bank statements very carefully.
Harder to hear: Don't get a low financial value college degree. See the latest studies on the long term *net* value of the different degrees from different places. These newer studies take into account the cost of the years spent and the loans. Things like UofI eng, and business rock. Most BA degrees never pay back financially. If your desired job requires a degree, and that Parkland degree works ...
The other side: Do you really need / want a house, or is it something society has said you should want? It is a major restriction on your job choices and general mobility. You should expect to be in a house 10yrs to make it worth buying (Some say 7). Those with houses right now can't easily move because doing so would move them into a much higher mortgage rate.
