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.
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.
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.
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?
Usually when you think about moving outside of the city, you think about being more reliant on your car. But one of the best things that has come out of our new neighbourhood is the ability to move down to a one-car household.
Since I switched to our downtown office back in January, I haven’t actually been driving my car. 95% of the time, my car has just sat there unused. And since RD’s work has a very good carpool program, most of the time he wasn’t driving his car either. The only time we actually use our cars is when we’re together on the weekends.
Being within a 5-10 minute walk of a SkyTrain station was a requirement when we started looking for condos, and luckily we now live approximately 10 seconds away from one. So in the next couple of weeks, we’ll be selling RD’s car and putting that money into our joint account (which likely end up as an additional payment towards the mortgage – but that’s another post for another time).
Our transportation expenses will end up going way down because now we’ll be sharing the cost of insurance and maintenance on just one car. We’re still figuring out how we will share gas expenses, as RD will be doing most of the driving with his commute to work.
But of course there’s a downside to not having two cars, and it’s that we don’t have two cars. If it’s RD’s turn to drive the carpool or if he’s working a longer day than normal, that means I don’t have access to a vehicle if I need to go somewhere that isn’t practical by public transportation (for example my doctor is in Port Coquitlam!). So I’ve been contemplating joining a car share program for a while now.
In New Westminster, I had three options to choose from – Modo, ZipCar, or Evo.
- $10 one-time registration fee
- $8 monthly fee
- $8 per hour (max $64 per 24 hours, $24 max between 7pm-9am)
- $25 one-time registration fee
- $70 annual fee
- $7.75 to $9 per hour ($73-89 per day)
- $35 one-time registration fee (waived for BCAA members)
- $2 annual fee (donated to charity)
- $0.41 per minute, $14.99 per hour ($89.99 per day)
I ended up going with Evo because even though the hourly rates were better with Modo and ZipCar I don’t think I’ll need to use a car enough to justify Modo’s monthly fee or ZipCar’s annual fee. Plus, I was at an event last night where I got the $35 one-time registration fee waived and 45 minutes of free driving time. :)
A huge bonus of being part of a car sharing program is the ability to drive to the airport without spending a million years taking transit downtown and then back out to the airport, or spending the money for a taxi. And conveniently, there’s an Evo parking lot just outside of our building. I’m really looking forward to seeing how car sharing fits into my lifestyle, and how often I actually end up using it.
Does anyone else use a car sharing program? Any experience using Evo?
For the past few years, I’ve been on auto pilot with my finances. My retirement savings are automatically withdrawn every pay day, and at the end of the month whatever is left over, I put into a general savings account. It’s what I’ve always wanted for myself – to be savvy enough to create a budget and (for the most part) stick to it every month, and to have enough income coming in that I could afford to do the things that I want to do, without financial struggle.
Because my finances are automated for the most part (I still manually pay all my bills), I haven’t had to put in effort to save for anything … and this realization actually made me feel pretty bad about myself. That’s in part because, aside from my long-term goal of early retirement or the occasional big trip somewhere, I haven’t had an actual financial goal in years. I’m talking about a big financial goal that would require me to create a plan and actually work hard to achieve it.
Since RD and I have made it our goal to one day buy a home (probably, maybe sometime this year), all of a sudden my new goal is to save for a down payment, because the amount we put down on our future home is riding on how much I personally can save.
Right now I have $53,000 earmarked specifically for a future down payment (this lives outside of my general savings and my emergency fund accounts). RD has much more than that – so much more that it would actually be impossible for me to match his savings even if I tried my hardest this year. And since we are planning to go 50-50 on the down payment, the amount we will have saved really depends on how much more I can squirrel away.
It seems weird to even talk about saving for a down payment, when I was so sure we would be renters for years. But now that we both understand we’ll be here long-term, it actually does make sense to buy if we can find a place that costs about the same to own as to rent. The only problem is, those places are very rare, and we’re willing to wait until we find a home that we can love for 10+ years – and until the Vancouver real estate market settles down … which is why we have no idea when we’ll end up buying.
Related: How I saved for my down payment
My dream is that we’d have $150,000 combined for a down payment and closing costs, which means I’d have to save $22,000 more to come up with my half. Admittedly, this is a somewhat unrealistic goal considering our travel itinerary this year and the fact that I refuse to lower my retirement contributions, but there’s an outside chance I can get there. Of course, it depends on when we actually decide to buy, but I will still try to come up with some sort of plan to get me as close to my goal as possible. Stay tuned!