The New York Times hs a great article about the lengths young people are taking in order to save money to buy a condo in Manhattan.
The Agueros married five years ago. They dreamed of owning an condo in Manhattan; however, the $445,000 price tag for a two bedroom condo made that dream seem impossible to reach.They both had student loans and credit card debt, and their combined income is a little more than $100,000. On top of that, they welcomed a new baby into their life. While their salaries qualified them for the mortgage, it was going to be a challenge to come up with a down payment.
But the Aguerros made it happen. How’d they do it? Let’s take a look.
Have the right mindset. If owning your home or paying off your student loans is your goal, you have to make that your top priority. As Mr. Aguerro says, “If you want to own a place, you have to do everything to own a place and everything else comes second.”
Quit your vices. The Aguerros quit smoking and stopped going out with friends to drink. By quitting they not only saved a lot of money, they also received the side benefit of a healthier life.
Cook at home instead of going out. Instead of going out with friends, the Aguerros started having meals at their home. Eating out may be convenient, but costs can add up quickly.
Save your tax return. Most people look at tax returns as free money they can use to splurge. Instead of buying stuff you may not need, sock that money towards your goal. The Aguerros were able to put a couple of thousand dollars towards their goal by saving their tax returns.
Quit impulse shopping. Mrs. Aguerro had a weakness for $300 Prada shoes; however, after they made it a goal to buy a condo, frivolous purchases stopped. By watching what they bought, the Aguerros saved over $15,000 in a year. If you feel the temptation to make an impulse purchase, remember to practice tantric shopping.
Get a second job. Mr. Aguerro did freelance work, but was scarce. So he got a job at a bank. The couple lived off just Mrs. Aguerro’s salary and socked Mr. Aguerro’s pay into savings. One possible side job is to become a consultant of some kind.
Amy Wegaenarr is single and 31 years old. She had a dream of owning her own place after she started to find paying rent in the Lower East Side difficult. How did Ms. Wegenaar make her dream come true? Let’s see.
Set aside a certain amount each month. Ms. Wegenaar started putting aside $400 from each pay check toward her downpayment. Make savings automatic by setting up an automatic deposit into a high yield savings account. The less you have to think about saving, the easier it is.
Save all your bonuses and raises. Instead of splurging, Ms. Wegenaar saved her bonuses and raises. Whenever you get a raise, act like you never got it and put the money into your savings.
Shop with a grocery list. Shopping with a grocery list is the best way to cut back on food costs. When you know what you’re going to get at the store, you’re less likely to make impulse purchases. Also, look for other ways to cut your food bill. It’s possibly the easiest thing to reduce in your budget.
Make your own clothes. Ms. Wegenaar sewed her own dresses from discount fabric she bought in the Lower East Side. Do it yourself is always a great money saver. If you don’t know how to sew, at least buy your clothes at thrift or discount stores.
Mr. Onyejekwe really impressed me. He had been saving in a 401(k) since his first job at J.C. Penny. After college, he saved over half his salary from his first job. When he decided he wanted to become a homeowner in Manhattan, he had over $50,000 saved. The only problem was he became a big spender. Luckily, Mr. Onyejekwe turned it around. Here’s how he did it.
Surround yourself with people who have similar goals. Part of Mr. Onyejekwe ’s spending problem was that his friends liked to spend money. As a result, he spent money. When Mr. Onyejekwe finally decided to get serious about saving money for the condo, he surrounded himself with people who were as obsessed as he was about owning a condo. If you want to save money, avoid hanging out with big spenders. Additionally, friends with similar goals are a great resource for encouragement and ideas on how to make your goals happen.
Carina Katigbak and Michael Lenton
Carina and Michael were engaged to be wed. They had the goal of purchasing a $300,000 apartment on their combined annual income of $100,000. Their biggest obstacle was paying for a wedding. How could they do that and still afford owning a condo? Here’s how they did it.
Set priorities. Carina and Michael made owning a condo a priority. When they considered the cost of a fancy wedding they would ask themselves, “Do you want to have a fancy wedding, or do you want a place to live in?” I like this exercise. My wife and I have started doing it as well when we’re tempted to buy some frivolous thing.