Disclaimer: This post is sponsored by Better Mortgage. All opinions and thoughts are my own.
I’m currently a renter, and that’s fine for right now, but I do not want to rent forever. I want to build my wealth. I want to have a home for my future family. But here’s the problem – housing prices in Miami are INSANE. It seems impossible to save for a home!
The median price of a home in Miami is over $400,000. The average salary is around $52,000. That’s not even enough to LIVE in a city where you need at least $70,000 to live comfortably. The truth is there is a massive housing crisis we’re dealing with.
Now, someone might say, just move out of Miami, but that’s not currently an option for me. I want to stay in Miami because a) I love the city and b) most of my family is here. My parents are also getting older and I know they’ll need my help sooner rather than later. As a Latina, family is THE most important thing and I don’t want to be too far from them.
My History of Dealing with High Housing Costs:
It took me years to move out of my parents’ house after college. Because of a down economy and rising housing costs, I thought I would never be able to afford rent, let alone a home.
Even though I had a job, I wasn’t making nearly enough money to afford rent in such an expensive city. In fact, nearly my entire salary for that job would have gone to rent.
The only solution I saw was to start making more money on my own. I took up freelance writing gigs, started consulting and was doing everything possible to learn about negotiating, marketing and sales.
While it took me a while, I now earn 4x what I was earning at that last job and can afford living in the apartment I’m currently live in in a trendy part of town. But I know that’s not the case for everyone. It wasn’t that long ago when I couldn’t afford rent.
Now, I find myself wanting to eventually buy. In fact, I’ve given myself a goal of buying a property within five years. I have to learn how to save for a home while simultaneously paying high rents. Not to mention, I’m self-employed so I need to show up to the negotiation table with a lot of cash and profits.
I know I can pull this off, but it doesn’t mean I’m onlivious to what’s going on out there. After all, it wasn’t that long ago that I couldn’t afford my rent. Most people are in a situation where they are dealing with deficient funds. Between student loans, stagnant wages and high housing costs, it seems as if we have everything working against us. I get it because I’ve been there. But if I was able to figure it out for rent, then I can figure it out for owning property too – even if the cards are stacked up against me.
Here’s how I plan on making it happen.
Increase my income…again.
There’s no amount of daily lattes you can cut out that would help you save for a home. We’re living in a time when lack of income is the problem, not overspending.
Just like I had to increase my income to be able to afford rent, I plan on doing the same thing to save for a home. In my case, that looks like getting bigger contracts, creating new offerings and increasing sales.
For you, the easiest thing may be asking for a raise or promotion. Or maybe you make a move and find a new job where you negotiate a higher salary. The latter is actually something my brother did with a lot of success. In fact, he probably has more take-home pay than I do thanks to that one move he made.
On top of that, there are plenty of ways to make extra money – from freelancing and consulting to becoming a driver for a ride-sharing company. At this rate, it’s up to us to proactively find ways to increase our incomes. In doing so, we can put more money away for a downpayment on a property.
Make sure I save enough of a downpayment where I’m not paying extra every month
A downpayment only covers a portion of the housing costs. If you don’t show up with enough, you’ll have to get mortgage insurance which only increases your monthly cost.
I, for one, don’t like having to pay extra money when I don’t have to so my plan is to actually exceed the 20 percent downpayment when I save for a home. First, I don’t want to pay for mortgage insurance. Second, I’m self-employed – since I don’t have W2s or pay stubs I know I have to show up with more cash anyway.
Keep my credit on point
I have excellent credit thanks to my responsible use of credit cards over the years. This will come in handy because it will keep my interest payments lower.
That being said, I have to make sure my credit stays excellent. That means continuing to use and pay my credit card balances in full each month. I haven’t failed at doing this yet, so I suspect if I stay disciplined I’ll be able to keep this going.
If you’re not there yet, consider starting to fix your credit. The easiest way to do this is to pay down your debts. However, you’ll also want to keep an eye on your credit report to make sure everything is correct. The last thing you want is a mistake on your credit report keeping you from buying a house.
If you have no credit, that’s the same as having bad credit. Consider starting with a secured credit card and then upgrading to unsecured once you feel comfortable enough using credit responsibly. (Again, my brother actually did this and it worked well for him)
Consider house hacking
House hacking is when you hack a portion of your mortgage payment by renting out parts of the property. I was recently at an event where I heard Shark Tank’s Daymond John talk about how he rented out every room in his house and lived in the basement while he was building Fubu.
I also know several other people who buy properties and rent out rooms (or units depending on the type of property) to help with the costs. This is definitely not something I would be opposed to.
That means in the next five years I would need to research the right properties I can actually do this with. That way, by the time I’m ready to purchase, I have an idea of what I’m looking for according to my goals. This helps me save for a home because I’m clear on what kind of property I would need and want.
Write my goal down every day
Saving for a home is a BIG commitment, especially when housing costs are so high. You can easily burn out or lose motivation on your journey. It may even seem impossible at times.
That’s why I have a notebook I keep by my bed where I write down my goals each morning when I wake up and each night before I go to bed. I also write the goal in past or present tense as if it’s already happened.
This may seem trivial, but reminding ourselves of our goals makes a huge difference. It keeps the fire burning so we can show up, do the work, make the money and save for a home. It’s a technque I’ve used to build the business I have to day and I’m sure it will work as I save for a home.
Do we have a serious affordable housing problem? Yes, we absolutely do. It’s something I’ve witnessed for years and struggled with personally. That’s why I teamed up with Better Mortgage to spread the word so we can finally fix this issue.
You can help by sharing the following video on all of your social media channels and using the hashtag #SpentonRent. Even though we’re all trying our best to save for a home, the reality is there is an issue that needs to be dealt with. Let’s do our part to make sure it gets fixed.
For more about Better Mortgage and their study on affordable housing visit http://www.better.com/spentonrent