When the house-buying lightning bolt struck me, Mrs DebtMan wasn’t ready.
“No! You can’t buy a home until WE can buy a home,” she said.
We weren’t married. We were living together, playing house. Where I had savings, she had none. And where she had credit card debt, I had none.
I gave her one year (and I bought an investment property in the meantime) to get her butt into gear. She smashed it. Here’s how – and it’s the same way most people will.
The three keys are to save, sacrifice and strategise.
Save: There is no point having savings, if you also have credit card debt. Why? It is stupid to earn 3 per cent on your savings, if you’re paying 18 per cent on your credit card. Pay the damn card off!
Sacrifice: The biggest savings can be made here. Sacrifice means not spending money now. Stay in an extra night or two a month. Don’t eat out as often. Make your own lunch. Bank the savings.
The best sacrifice can generally be made by driving more modest cars. You can save an extra $10-15,000 a year by not upgrading your car as often.
Strategise: Start on your property strategy ASAP. Where can you afford to buy? How much of a deposit will I need? Speak to a mortgage broker about your borrowing potential.
You need a good deposit. Generally, a minimum of 10 per cent, plus the cost of stamp duty (though first home buyers get discounts or grants in most states).
Buying a home is about how bad you want it.