I Saved Enough for a Downpayment While Making Practically Nothing

I did it you guys; I saved enough for a deposit for a house on a really shitty wage. Not enough for a fancy house -- no subway tiles or gold fixtures -- but something small and modest, slightly out of the city, that maybe needs a bit of work, which does the trick just fine (An apartment. Okay, it's going to be an apartment). I saved the money while paying my own rent and bills too.

I was raised by Greek immigrant parents, and if there's one repetitive war cry all children of migrants will roll their eyes at, it's "Rent money is dead money!" I grew up with my parents espousing the abject horror of spending money on such a thing as rent ("You might as well just burn your money!"), about how I could live at home for as long as it took me to become a property owner ("Even if you're 40 and married with kids!"), and how property ownership is akin to reaching spiritual Nirvana ("You can have your own veggie patch, here's a cutting from my lemon tree to get your started!").

As much as my stock reply of "Yeah, yeah mum", portrayed apathy, the seed was planted -- much like the tomatoes I hope to grow one day --and I evolved to become a person who, just like my parents, believes that property ownership is my sole purpose in life (Procreation, sure, but buying houses? That's why we're really here!).

However, at 25 I decided to spend what savings I already had moving to New York, and becoming a struggling, underfed writer. Everything about it was romantic, from eating lentil soup every day for weeks on end to watching grown men pull down their pants and poop on the subway. The only thing that could curl my toes was that monthly rent check I had to write (paying off someone else's mortgage for them? The shame!), so when I finally got regular work, writing and editing during the day and hostessing at a restaurant at night, I promptly opened up a savings account and started squirreling away.

Eventually, my career evolved and I started getting paid a little better. Not six figures better (not even vaguely in the ballpark), but enough that I could roast a chicken once a week and afford avocados. By the time I left New York, nearly six years later, I had enough money in the bank to take out a home loan. Like I said, it wasn't going to be a fancy home, but it was going to be a home that was mine.

In my early thirties now, and actively browsing the housing market for a bargain fixer-upper, I've heard it said more times than I care to count that my generation will never grow up to be home owners. For those currently in their twenties: nigh impossible. But I don't think that's true. If I can raise the money, you probably can too -- it just means making some sacrifices.

Obviously, there are some addendums to that: You have to have the privilege of a job where there's something left over at the end of the month after paying for rent, bills and food (it doesn't have to be a lot, you'll see below). Also, it helps if no one else, like a child, is dependent on you (although again, if there's something left over at the end of the month, that's enough to save) and if you don't have student loans (I went to University in Australia). While I wasn't earning a lot of money in the time that I saved, I'm aware that certain privileges or freedoms in my life allowed me to be able to save what was little left after paying for essentials.

Here's exactly how I did it

Say, for argument's sake, you're taking home $40,000 after taxes (some years I earned much less, some slightly more). Say you spend $10,500 on rent per year (I lived in places ranging from $500 for a room, bills inclusive, to $850 for a room, bills not inclusive, over the course of five years). Maybe you spend $3,480 on your phone ($60 a month), internet ($30 a month, split with a roommate), gas and electricity ($100 per month, split), and public transport ($100 per month), and around $4,800 on groceries (that's $400 a month), annually. Then say you spend $12,000 on sundries, like eating out, clothes, and other life stuff ($1,000 a month, and I think I'm being generous).

$40,000

  • $10,500
  • $3,480
  • $4,800
  • $12,000

= $9,220

Over 5 years, you can save $46,100 on that budget. That's not including interest earned from the bank either, any tax you get back, or pay raises. You can even make adjustments to suit your lifestyle. For instance, for two of those years I worked almost exclusively from home, so paid less for public transport which I only used a few times a week rather than every day. Those adjustments go directly to savings, do not pass go, do not spend $200.

Here’s my advice based on my personal experience

1. Stop aspirationally spending

I never lived alone -- I could have shelled out more for rent to have a nice studio of my own, but that wouldn't have left me with much, if anything, for savings. I found I could live with one other person, a roommate and eventually my partner, for a reasonable rent, a 20 minute train ride from the city (which is still close!). I never bought designer clothes, and tried to shop as ethically as possible on a high street budget. Let go of your credit card. Only shop within your means and always stick to your budget. You're not Coco Chanel.

2. Learn to cook, but like, really cook

If you add up how much money you spend buying lunch when you're at work, eating out with friends after work, and ordering delivery when you're tired, you might really terrify yourself. I could cook before I started saving, but when I decided I wanted that deposit, I learned how to really cook. I baked my own bread, packed my own lunches, cooked delicious dinners, and even had a stash of frozen meals I'd made myself for those "too tired" days. It will amaze you how many delicious things you can make that are both easy and cheap. Plus, when you want to treat yourself with some fancier ingredients (I'm talking farmer's market level raw honey fancy), it will still be cheaper than eating out.

3. ALWAYS split your essentials money from your play money

Every payday I would immediately split my money into three categories: savings, rent, and everything else. Savings and rent would go into a separate account that was out of bounds. The money left in my debit account would go to bills and groceries first, fun second. The day before the following pay day, I'd see how much of that fun money was left, and generally throw whatever was there -- even if it was only $20 -- into my savings as well.

4. When you have enough, open a high interest earning savings account or term deposit

I learned this lesson too late, only opening my high interest account a year ago, but you can let my mistake be your good fortune. Find out from your bank how much you need to open a high interest earning account or term deposit (note that with these accounts you generally have to make regular deposits, can't make regular withdrawals, and if you do, you won't earn interest for that month), and the second you have enough, do it. I've been earning, on average, around $89 per month in interest since I opened my term deposit. That's an extra $1,068 a year in savings!

5. It's okay to indulge yourself sometimes

I would have more in my savings account if I hadn't have taken a trip to New Orleans when the flights were on sale. Or if I hadn't have gone out to that expensive restaurant for my friend's birthday and just met for drinks after instead. Saving is a lot like dieting: If you deprive yourself, you're going to be miserable. As wonderful as owning a house is, it won't be much fun if you're a total sad sack. That doesn't mean you should spend lavishly (see point 1), but it's also okay to make some trade-offs. When I indulge in one area, I set myself boundaries in other areas to level out the spending. For instance, a fancy night out with friends is offset by only eating home cooked meals for the next week. Alternately, if you're looking for a new dress or a weekend getaway, watch for sales like a hawk, and only buy when the price is right (don't settle for less than 30% off!). You don't always have to give up doing that really fun and awesome thing that's going to enrich your life -- it's what will keep you sane in the weeks when you're ultra frugal -- you just have to find more creative ways to wiggle your finances around so you can do it.