I was thinking in the shower this morning, as I do, about all of the people who feel that they will never be able to buy their first home. It’s just too expensive.
House prices are the highest they have ever been. It just seems impossible.
I remember saving up for our wedding and even though it wasn’t expensive as weddings go, it took us a long, long time to save up the money for the venue, the caterers, the alcohol and the subsequent honeymoon.
I was sitting in the bar at the Bowling Club (that was the venue we could afford) and waiting for a meeting with the caterers.
An older (being politically correct) guy came up to me, introduced himself. He said that he heard I was getting married and asked if he could have a chat with me.
He said he wanted to share a bit of advice and I could take it or leave it, but he knew my future father-in-law and wanted to be helpful. This is what he told me.
He said, “The most important thing you are ever going to do is buy a house. It will go up in value and be an asset that no one can take away from you.”
Yes, I wanted a house, but I had no idea how to make that happen. Saving for the wedding was hard enough!
He said “I paid the deposit for a house for each of my three children and they are now well set up for the future.”
Then he asked if we were planning to have children and I responded that I hoped to. “You need to buy a house and get some security for your future family.”
Well my heart sank and the beer curdled in as my stomach tied up in a knot because I didn’t know if I could do that. In fact if I’m honest I was jealous of his kids.
I could see his point but I didn’t get how I could make it happen. Neither of our parents owned homes. It wasn’t easy for them back in the day either. They said the same thing you are probably saying today. It’s just too hard.
Anyway, we got married, had our honeymoon and came back to our rental house, with a rented TV and I think the stereo might have been a rental as well. Buying a house seemed hopeless.
When we looked at the cheapest properties in Auckland, they were still around 20 times my guaranteed income and when children arrived we were going to have to pay a mortgage on my income alone.
So back to the shower this morning. Here’s what went through my mind, and what we actually did.
We didn’t have to find the cost of the house. All we needed to do was get a deposit.
If we could get a foot in the door, any door in the city within reason, instead of paying rent, we would be paying money towards our own home.
I don’t remember what the deposit was. It took about 2 years of frugal living where every cent we could save went into what they called a Home Ownership Account. I mean EVERY cent we could save from two incomes.
No holidays, no weekends away, no ski trips (I loved skiing). We found our entertainment by visiting friends and them visiting us and we worked hard. Very hard.
You see, OFTEN THE REPAYMENTS FOR YOUR HOME ARE PRETTY SIMILAR TO THE MONEY YOU PAY IN RENT.
The difference is that when you are paying rent, all you are paying for is another two weeks or a month of a roof over your head and someone else is getting a capital gain as the property increases in value.
So after a couple of years, we got enough of a deposit together to buy a house in a cheap suburb in West Auckland.
What it came down to was two things.
1. We scrimped and saved everything we could.
2. We focused on the deposit and proving to the bank that we could pay the mortgage.
You can too.
We are now in our fourth home and it is very different from the 2 1/2 bedroom, 1 bathroom, no garage house that we started with. But we would never have got there, if we had focused on the price of the house instead of how to get a deposit.
I would be very scared to raise a family today paying the hugely EXPENSIVE RENT that landlords charge today, knowing that there was no guarantee that next month or next year I might not be able to afford the rent. Then what would happen?
As I said. It’s a choice.I believe, relatively speaking, that it was as hard then as it is now.
Do you really want the LIFESTYLE of overseas travel, the $7,000 big screen TV, the flash car that is worth less than you paid for it the minute you hand over the money?
Or can you wait a little while and focus on that deposit. The repayments will get easier and you can still have those things later if you focus on that deposit now.
WE DIDN’T THINK WE COULD DO IT, but we wanted it enough to focus on it. You can too.
Just as a footnote. I don’t sell real estate. I’m not in finance or any industry related to buying or selling houses. I just hate to see people who think that the opportunity isn’t there for them.
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