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When I moved to Manhattan in the early 2000s after graduating from college, my financial plans were basic: to pay off my student loans as well as my credit card debt. My entry-level salary at a photo production company was about $40,000, which doesn’t go very far in New York. I struggled to make it work, sharing a two-bedroom apartment in the East Village with a roommate.
After a few years, my salary was up to $65,000. I was meeting my goals, and the paycheck bump also allowed me to start putting a little money away for retirement and into an emergency fund.
With my finances in a better place, I began dreaming of the future, which included a home of my own. I wasn’t in a place to purchase anything just yet. But I realized that to make it happen someday, I had to start planning.
Forging a Plan
In 2007 I launched my own media production company, putting all of my energy into building the business. At first I paid myself $90,000 as a yearly salary, and that paid my remaining balance of $20,000 in credit card debt.
I was finally debt-free, which felt great. Yet the more I thought about my goal to be a homeowner (a place to live and a long-term investment), I had to save aggressively.
I scaled my salary down to $60,000 a year, enough to cover my minimal cost of living, and I put the bonus I would have paid myself into a basic savings plan. After I hit $50,000 in savings in 2009, I researched other investment vehicles that would make my money grow faster, with more competitive interest rates. I settled on a mutual fund.
Scrimping and Saving
I spent my 30s living like someone in their 20s. I still bought groceries instead of going out to eat all the time. I didn’t blow money on expensive clothes.
I saved in other ways too. After my roommate left in 2008, I paid the $2,800 monthly rent by myself for five months. Then I decided to take a one-bedroom apartment for $2,200. It was in the same building, so I saved $1,000 on movers.
I also got smarter about planning vacations. I traveled a lot for work, so I’d build in a vacation at the end of a job. When I went to London for a gig, I stayed with my best friend, who lives there. The first time I worked in Argentina, I tacked on a four-day trip to Brazil. Traveling to Brazil from New York can cost $700 — but a flight from Rio de Janeiro to Buenos Aires was only $200.
Starting the House Search
Seven years later, in late 2014, I had saved $150,000 — enough for a down payment on a place in the $750K range. I went to my bank and was preapproved for a mortgage on a home costing up to $1.2 million. Though I had debt in my 20s, I always made the minimum payments to build my credit rating, which seemed to have paid off.
Now I was ready to finally look at real estate. I scrolled Zillow like it was Tinder, swiping left and right.
I realized that, everywhere in New York City, apartment prices had skyrocketed.
So I adjusted my wish list. Now my plan was to buy a place just outside the city, which would be significantly less expensive. I'd never considered leaving New York before, but by now I was in a serious relationship. Settling down in a home became a much more exciting vision.
Making an Offer
After looking at taxes and how quickly home values increased in different areas, I decided that Westchester County, just north of New York City, would give me the space I craved, the property value I wanted and proximity to the city for work.
I found a home I loved for $850K on Zillow, a midcentury modern with four bedrooms on two and a half acres. The house and property have a rural feel and border a water reserve.
The only thing was, the house cost a little more than what I’d budgeted for, but I was able to get the price down to $830K. With no more negotiating room, I had to really look at my finances and see if I could afford it. I dipped into my emergency fund to come up with the extra $16K I needed for a down payment. At first I was reluctant, but I was confident I would build it back up quickly. The closing costs added another $10K to the total.
I moved into my new home in September 2015. My boyfriend and I didn't purchase the house together; when we met he already owned his apartment, and he didn’t want two mortgages to worry about. He soon sold his place and moved in with me, and he and I split the mortgage 50-50. We both contribute to upkeep costs and home improvement projects.
For the first time in years, I’m no longer saving for a home. I’m enjoying spending some of the money I would have put in the bank on furniture and upgrades. Of course, there are unforeseen expenses. I’m leasing a car, which I didn't need in the city. And maintaining the house's ancient plumbing and electricity systems adds up.
Still, I'm in the habit of saving, and have put 10% to 20% of my income toward a retirement and emergency fund. I’m still very conscious about spending, which is what allowed me to save and become a homeowner in the first place.
I also can't emphasize enough how glad I was that I was responsible with credit, didn't live beyond my means and made the minimum payments every month. Without good credit I'm sure I would never have been able to build my business ... or buy my home.
* Name has been changed.