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?
Our first night in our new condo should have been a cause for celebration. We grabbed take-out, unpacked boxes, and went to bed exhausted after moving furniture around all day. But instead of a peaceful night’s sleep, we got a frantic knock at our door at 10pm. It was the building caretakers – there was water leaking in the suite directly below us!
Together with the caretaker, we looked over our bathrooms and found no water on the floor, or anything that would suggest a leak. So he left and said he would follow up in the morning. We were horrified! Talk about bad luck – the first showers we took on the first day of homeownership, and there was some sort of leak originating from our suite.
The next morning, strata called and informed us to coordinate with the owners downstairs and hire a plumber. It was a Thursday and were just going into the Canada Day long weekend, so we weren’t able to book anyone until the Tuesday. It was a pretty stressful long weekend to say the least.
But no matter how worked up we got, we realized that the most this issue would cost us was $1,000 because we have home insurance. Now, $1,000 is still a lot of money, but we already had more than that amount sitting in our joint account, and it was considerably less than the potential tens of thousands of dollars it might cost to repair whatever was wrong and fix the water damage!
I’ve had home insurance of varying coverage since I bought my first place, but I didn’t always have renters insurance when I was younger. Even if you are renting and don’t own the place where you’re living, you could still be liable for any damage you cause to the building, or unintentional harm caused to others who live (or visit) the property. Plus think of how much it would cost to replace all of your stuff! Most of the time a landlord will require you to have insurance as a rental condition. However I’ve definitely not had it before, and looking back that was pretty stupid of me. But for some reason the thought of paying $20/month for something invisible that I likely would never use seemed like too much to handle when I was already on a tight budget.
Here are a few things I’ve had to consider when buying home or tenant insurance:
There are different levels of insurance
Basic insurance is cheap but it doesn’t protect the contents of your home and the deductible is generally high. Standard insurance covers you for some perils, but not everything. Comprehensive insurance covers you for most things of varying maximums (except for earthquakes and floods, etc), but all insurance is different, so you’ll really want to ask a lot of questions or do your research online instead of assuming that you’re covered for something.
Bundle your insurance for a better rate
I used to get my tenant insurance with an insurer that also provided comprehensive auto insurance. By bundling these two together, I was able to save a few hundred dollars a year.
Make an inventory of your belongings
Usually a comprehensive policy includes contents insurance – which covers the cost of replacing your belongings. I found most are set at $25,000 but you can pay more if you want more coverage. When I first got tenant insurance, I thought all I needed was the $25,000 coverage, but when I actually took the time to create a complete list of the replacement cost of the items in my home, I realized my stuff more than exceeded the $25,000 coverage. Furniture, kitchen appliances, cookware, antiques, electronics, and all of the other items in your home can add up quickly! So I adjusted the policy amount to cover what I needed. You’re also able to insure stuff like artwork, jewelry, bikes, outdoor gear, etc. up to a certain maximum, but often times those require an additional endorsement to cover those items.
Be realistic with your deductible amount
Usually you can get your deductible amount down to $500, but in exchange your monthly rate will be higher. We chose to go with $1,000, but I’ve seen deductibles as high as $2,500.
If there is a potential problem in your home where you might need to use your home insurance, it’s best to call them as soon as possible to let them know what’s going on. That way they can tell you exactly what they need for the insurance process to go smoothly, because the last thing you want in an insurance claim situation is to feel unorganized.
Anyway, after finally getting a plumber in to check out our unit, the problem ended up originating from our bathtub faucet in the master bathroom (the shower diverter was pushing water into the wall). The plumber only cost $200 to come in and fix the problem, and there was very minimal damage to the unit below us – so we came in way under our insurance deductible. But the fear and panic was real, and I can’t imagine how someone would feel if they weren’t covered!
This is not a sponsored post, but for those interested, I used Square One Insurance – which offers insurance on both condo and tenant insurance. I used to be with CDI but switched over to Square One because the price was much better, the reviews online were better, and the user interface was really really nice to use.
Have you ever had to claim anything on your home/tenant insurance?