How I did it: I have saved up $100,000 and am using it toward the downpayment of a house. It took four long years full of hard work and determination, but I did it. I was forced to completely re-learn everything I had known about finances and budgeting. I went about two years without a single dollar spent on vanity (shopping for clothes, make up, shoes, etc.) and would only buy clothes like socks and undergarments when necessary. No fancy haircuts. I had my boyfriend cut my hair. I worked long hours. One day I actually worked twenty-one hours straight. Now I can rest somewhat easy. I'll be able to work a maximum of four days per week now (hopefully even just three days a week) because I plan on renovating the garage of the house I will buy into an apartment to rent out. I'm excited for the next adventure and the next goal I can tackle!
Lessons & tips:
- PAY YOURSELF FIRST (that's right. FIRST. that means before your rent, utilities, shopping, auto insurance, FOOD, gas, etc.) and once it's in your savings account it stops existing. NO WITHDRAWALS FOR ANY REASON. I don't care if your house just cracked in half. Once it's in, it's GONE until you can afford what you're saving for. Treat your savings like a bill - the most important one that you have to pay first. At first it will be hard not to withdraw money, but after a while once you see the money start piling up, it gets super easy and FUN.
- Be realistic. If you make $3,000 per month don't try to force yourself to save $2,500 per month. A good place to start would be 10-20% of your net income (after tax income). If that is easy for you, then you can increase your savings until you find a level that will get you there in time, and won't put you through stress that you may not want to handle. (I worked like a dog for four years and saved and saved and saved, and if that's something you feel comfortable doing, then go get that money!)
- BE DISCIPLINED
- Ask yourself: "Would I rather have this (insert pair of jeans, new bluray movie, musical instrument, night of clubbing, etc.) or would I rather have THIS (insert home, nice car, retirement, college tuition, etc.)?" I would rather have a new house than a huge pile of CRAP that I never really needed throughout the years and ended up donating most of it to goodwill anyway. That's money you'll never see again.
- Be willing to go without. You would be surprised at how all of the little things add up. Don't fill your life with a bunch of STUFF that you're just going to end up throwing away in a year.
- Have fun doing FREE things, like walking along the beach, or a park, going for a hike, reading a book (from the library or a friend), etc. and try to eat at restaurants only once a month at the most - and tip your server at least 20%! You want to be frugal, not CHEAP.
- Rich Dad, Poor Dad
- Microsoft Excel (great for laying out budgets)
- Microsoft Powerpoint (good visual representations of where you are at with your savings, and setting smaller goals to achieve a larger goal with line charts)
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