Give Me Back My Five Bucks

How we saved a 6-figure down payment

Most of you know that I live in Vancouver, and housing in Vancouver is bananas. Like, it’s legitimately insane. The average price for a detached house sold in Greater Vancouver was $1,830,956 in May (!!!), and the average price for a condo? $656,919 – up 15.1% from 2015.

When RD and I bought our condo a few months ago, we managed to combine our savings for a 6-figure down payment. $125,000 to be exact. Neither of us got help from our parents. We didn’t receive any sort of inheritance, and while we both have good full-time jobs, we still live in the middle-class.

So how did we do it? For me personally as a natural spender, it was a lot of hard work balancing needs vs. wants, but also making savings a priority for the better part of the last decade. The bulk of our savings was done individually before we met each other, so when we did eventually move in together and our housing expenses decreased, we just kept the savings train moving along.

Here are a few main reasons why we were able to save up a 6-figure down payment:

Eliminated all debt

Long-time readers of GMBMFB will know that this blog was born because I was on a quest to get out of debt. My main goal after graduating college was to get out of debt as fast as possible. I knew that debt would hold me back from every major goal I wanted for myself – to move out of my hometown, to take chances when it came to my career, to travel, and to buy a home – and I didn’t want to regret missing out on opportunities because I couldn’t afford to take risks.

Related: It’s not how much you make, it’s how much you save

RD has always been good with his money – even when he didn’t have much. His parents were (and always have been) good role models when it came to frugality, and he left University with zero debt because he worked hard tree planting every summer. 10 years later, he’s extremely debt-adverse and while he definitely has things that he splurges on, he is way, way more frugal than me.

Avoided lifestyle inflation

I’ve worked hard at trying to curb lifestyle inflation, but of course my budget has increased in the past 10 years. So the way I keep my overall costs down is by prioritizing my purchases and stopping myself from spending money on stuff that doesn’t bring value to my life.  For example, I don’t really put value on make-up or beauty products, and I also don’t care for nice cars, jewelry, alcohol, or going to fancy restaurants – so I spend very little money on those things. Instead, I focus my spending on what I love to do. I’d rather put my money towards traveling, the occasional splurge on concerts or event tickets, and buying quality ingredients when I cook.

But I have a serious weakness for Anthropologie and anything at MEC, and sometimes I get lazy with cooking, so it’s all a work in progress. :)

Banked all extra money and windfalls

I’ve never had a big salary from my full-time job, but I’ve always had multiple streams of income. At the beginning, it was to get myself out of debt as fast as possible, but then it was to save money for a future down payment, as well as for my retirement. I’ve done a lot of crappy jobs over the years to earn money, but it helped me set up a good financial foundation for myself. Almost all of my freelance income goes towards some form of savings, and whenever I get a raise, I make sure to increase my savings rate accordingly.

Related: Here’s how I saved 50% of my income in 2016

There was that time I worked two full-time jobs at the same time … I also took on freelance graphic design contracts, started freelance writing, sold stuff on eBay, worked minimum wage part-time jobs for YEARS, and of course started this blog (not with the intention of making money, but has ended up being a decent source of income). I may not have always enjoyed hustling so much in the short-term, but it helped me achieve some pretty big goals in the long-term, and it got me to a better place in life. So it was worth it for me, and I look back on those years with gratitude that I had enough foresight to work as hard as I did.

A “Savings First” lifestyle

I used to save my money at the end of every month, if I had anything leftover after paying my bills. But the problem was, I almost never had anything leftover. So I decided to switch up my strategy and build my budget backwards – with savings as a line-item that was just as important as my rent. If I found I wasn’t able to put away that amount into savings and balance the rest of my budget for the month, I looked at ways I could cut expenses or earn more money. This strategy meant I was almost always hitting my savings goals – whether it was for retirement or shorter-term purchases.

Understanding that saving for a down payment is a long-term effort

Buying a home is a long-term decision, so saving up for one should be as well.

I get it, saving for a down payment can seem really intimidating. Especially when you’re faced with crazy real estate prices. But if you keep your home expectations reasonable, and realize that saving up that kind of money is a long-term process, it can be done. It took me 5 years to get out of debt and save for the down payment on my first place. But it’s not just about being able to save the down payment – it’s also having a strong emergency fund should anything happen in the future, and also being responsible enough to understand that buying a home is a huge responsibility and not one that should be taken lightly. I don’t think I would have been mature enough to take on home ownership when I graduated college at 23 – or even a few years afterwards. And honestly looking back, I’m glad I spent the rest of my twenties renting and saving money. Because even at age 28 when I bought my first place, I still wasn’t fully settled.

Related: My biggest home buying regret – not considering the future

It was never my intention to use my savings for a down payment this year (I thought I’d be renting for the next 10 years+ of my life). But when the opportunity presented itself, and RD and I were in the right place in life and in our relationship, I felt extremely grateful and lucky that we were able to go through the home buying process without any real financial strain. And that was because of the “savings first” lifestyle we have both been living for the past 10 years.

Are you currently saving for a down payment?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


Comments

  1. Lesley says:

    Thanks for the insight Krystal. It would also be interesting to know what the impact was of your initial foray into the real estate market – i.e. how much did you make from your first purchase and subsequent sale? If you didn’t use that profit for your down payment, why not?

    • Krystal Yee says:

      Hi Lesley – I basically came out just a few thousand dollars ahead from the sale of my first place. I sold just a little before real estate went crazy so I didn’t cash in big like some people did. :) I never saw my place as an investment though, just a place to live for the 5 years I was there.

  2. SP says:

    One of my weird obsessions is reading blogs/reddit posts/Quora posts where people do the math and prove that normal people can’t accumulate the large down payments in high cost of living areas. And actually, it is pretty true – an “average” person usually can’t. It is really hard, and even with two people making OK salaries, you need to make sacrifices and avoid lifestyle inflation.

    When T finished grad school, his income increased a lot all at once, and his job came with a large windfall of cash (sort of like a signing bonus). This allowed us to buy relatively quickly after moving. We would have eventually been able to save a downpayment, but that accelerated things. Parental help or inheritances were not options for us, but seem to be a common way people accelerate their savings.

    • Krystal Yee says:

      Yes I do the same thing! I’m weirdly obsessed with reading blog posts/articles of people who live in large cities and cannot mathematically afford a down payment. Admittedly it was easier for us to save because when we moved in together, we chose a small affordable rental, plus we don’t have kids and we do make decent salaries. And you’re right, the key is to avoid lifestyle inflation and make saving for a down payment a priority above most other goals.

      I have no doubt you guys would have been able to save for a down payment quicker than most because you guys are good with your money, but such a bonus that T got that bonus to accelerate your plans. :)

  3. Thanks for your great tips, Krystal! I also don’t put a lot of value on makeup, jewelry and the like. But I have a serious weakness for Calvin Klein dresses. They are not top of the line, but they look so elegant and beautiful!

  4. My husband and I live in NYC and for us, the down payment isn’t the problem. A 2-bedroom here costs $750-800k in our neighborhood. Doing the math, we’d have to pay at least $1,000 more a month just for the pleasure of owning. I think the math of owning really does vary per city! That, and of course, there will always be other people beating you out in bidding wars because they have additional windfalls.

    And yes, we could choose to live in a barren neighborhood, but that’s not the right choice for us. So for now, we rent.

    • Krystal Yee says:

      Totally agree! Renting works a lot of the time in big cities when you actually do the math. If we had stayed in the neighbourhood we were renting in, a similar 2-bedroom condo to the one we bought would have cost $800K-$1M. We clearly couldn’t afford that! But we were able to buy outside of the city core in a beautiful neighbourhood I used to live in for half the price (and the commute to work only increased by 10 min). It made sense for us only because the community was great, otherwise we would have been just as happy renting for years.

  5. lyn says:

    Thanks Krystal, it’s always a reminder when someone says avoid lifestyle inflation, something that I am afraid, will win me over if I am not careful.

    • laineyjayne says:

      Having gone through bankruptcy, I believe debt is an ‘early on-set’ condition.

      Credit is thrown at us before we even understand what it’s all about. At 18… 19, we’re ‘perfect prey’ for the credit vampires of the world with barely the life experience to understand the ramifications of what can happen the second we allow ourselves the entranced luxury of depending on credit (that we can’t pay back).

      As I found my experience through bankruptcy somewhat less challenging than I’d expected (thankfully) I felt a renewed sense of energy — enough to pick up a laptop and actually write about my experience (including overcoming the low self-worth attached to the moral side : Owing an extreme amount of money but walking away from it all).

      What motivated me the most was remembering how desperate I felt in my search for answers, realizing that the personal stories & emotional support I really needed to help me decide what to do didn’t exist.

      As I now believe that sharing my story is something I was meant to do, I feel compelled to serve as that ‘support system’ I never had… to share the knowledge I’ve gained with anyone who may be facing the same shame and hopelessness I once felt.

      And for those so inclined, an offering of email support is also extended, where answers specific to one’s situation are addressed with realistic options suggested.

      Regardless of the path you take, Cheers to anyone out there who’s giving it all they’ve got to “always try, just one more time.” Thomas Edison

  6. what the hell says:

    your a natural spender – your a tightwad
    you didn’t get any help from parents – so you didn’t get any financial assistance from your parents when you bought you first place? and when you sold it this money wasn’t used to buy your new property?

    your blog is becoming more and more pathetic. your not even getting many views. #truth

    • Justin says:

      I always read comments because I value what others have to say, as each of us are entitled to our own opinion. With that said, your comments are a little rude and disrespectful. Her material is invaluable, and she has worked very hard to make a name for herself. I am blown away by your ungratefulness. Blogs such as Krystal’s are designed to encourage and support others. She is sharing her knowledge with all of us and doing her best to educate others while receiving nothing in return. I hope that you are doing something today that is making a difference, because Krystal certainly is, and you are not in a position to judge her especially when you cannot back your words with any actions.

      And if you’ve ever owned a house before, you’d be the first to know that you do not need your parent’s help to fund your property. First time homebuyers receive tons of funding from the government. Besides, what she does with the income from the sale of her first home is none of your business. And when you call someone pathetic, it’s usually a reflection of the person you see when you look in the mirror. #truth

    • Krystal Yee says:

      No I actually didn’t get any financial assistance from my parents when I bought my first place. The money I saved, I did it on my own. It took me a long time to do it, but it is possible to save a decent chunk of money, even if you don’t make a large income. What really helped was utilizing the government HBP – where I put most of my down payment money into my RRSPs in order to get a tax refund, then I reinvested that money back into my RRSPs so that I could save faster.

      Also, when I sold that place, I didn’t make much money on it – I was about a year too late in hopping on the real estate train we’re on right now. :)

    • Mina says:

      It’s “you’re.” Sheesh.

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