How Long Have You Been Saving For Your Down Payment?

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<p>I dont have a savings account and my checking account has about $500. I give myself a limit to spend each month, and thats what I pay myself. The rest of the money stays within the business generating more money. When the time comes, I'll take a draw, business loan, LOC, or my vendors to pay for the down payment :)</p>
 
BiscuitNinja has already shared the "secret" of his success with the forum. He has mentioned several times that he is an engineer and lives below his means. He uses his money on things that will make him money.





Really, if you analyze the stories of people profiled in "The Millionaire Next Door", his story is quite common among people who accumulate wealth.





Though I assume that he makes an above average income because of his occupation, the true secret is the "leaving below his means" part. Personally, I could take an 80% pay cut tomorrow and the only impact it would have is on the rate I save and invest at.
 
<p>I'm not a trust fund baby. My parents were/are teachers, you don't get paid very much being a teaching and you can imagine how much allowence 3 sons of teachers got....</p>

<p>As to my saving, remember I used to buy houses, rent them, and then sell them. Well I used 99% of that money to get more property. I would shave a little off here and there and that's what this account is. Now I have apartments and they are doing well, the tiny profit I make goes into this fund also. Again, its not a magic and its taken quite a lot of work and building to get up to these amounts. </p>

<p>To village: What I want to do is outright BUY the property (at a discount if I can) and then use the residual 500ish-k interest to pay for taxes, fees, etc. I could do what you said and use the 40-50k a year in interest pay for the house, but I would get taxed more on a large amount of money like that....</p>

<p>I only make slighly above the average pay for the Irvine area, but I do try to save alot. It has changed dramatically since I converted a GF to a wife! </p>

<p>Teacher: Money? Well its only money if you spend it? What would you spend your money on really? Sit down and be honest with yourself.... What do you REALLY want? Happiness? A shiney bobble? Experiences? Safety? Once you make "The List" then figure out a way to complete it. I did this many years ago and have been working steadily towards it. Its not easy though....</p>

<p>goood luck</p>

<p>-bix</p>
 
"I only make slighly above the average pay for the Irvine area, but I do try to save alot."



Uhm, making enough money to where you can *save* 200k a year is a lot more then the average pay for irvine. Congrats on your real estate empire.





One question to you is why would you buy a house outright if you can get a good mortgage rate. Why not take a mortgage and invest the rest, I imagine you could make better then 5.5% on your money through some other means?
 
We live in middle Tennessee. East of Nashville a little bit. The current owner of the place that found religion is Freddie Mac. We make better than average for where we live. If we lived in Irvine, though, we'd make about average household. We're trying to be prudent in our finances and we've had enough of living in a clunky single-wide.



"One question to you is why would you buy a house outright if you can get a good mortgage rate. Why not take a mortgage and invest the rest, I imagine you could make better then 5.5% on your money through some other means?"



I don't know who you're asking, but I'll add my two cents' worth. Personal finance is not all about the numbers. We can't finance our lives like corporations. Personal finance is a lot about behavior. Besides, when you live in a paid-for place, it just feels better. You're slave to nobody. Paying down your mortgage gives you a guaranteed rate of return on what you're paying. To earn more than that on your investment, you have to take on risk AND take into account the tax hit.



Imagine this: You own your home outright. Would you borrow against your *HOME* to invest in something? Still not as bad as consolidating debt by HELOC...taking unsecured debt and securing it with your *HOME*...ouch.
 
BiscuitNinja sounds just like that "Rich Dad, Poor Dad" guy. Parents who were teachers and didn't leave him a trust fund. Yup! Could he be Robert Kiyosaki in disguise?








I was taught that there are 2 paths to financial success.





The first is to spend less and save more.





The second is to make more money, and just make more money.





Most people can do 1 out of 2 well, but not both.
 
<p>Because not only do I get taxed on an EXTRA 50+k a year (which,combined with other things, will push me into a MUCH higher tax bracket).</p>

<p>When you get down to the pennies of taking a tax break from interest deduction vs just outright paying a home, you do see a difference. Essentially you see something like a 15% cost for actually buying a home over time (year to year is actually a little bit more). This way I pay for it once (yes, its a BIG expendature). Yes, i can't get a big deduction when I itemize, but I won't need it if I manage my writes-offs for the business correctly (which is almost as much as a mortgage anyways). </p>

<p>In the end, you need to find the receipe that best fits you. </p>

<p> Since getting these apartments, its quite a burden to manage them correctly, be watchful over the expendatures/expenses you have. Do this and then balance what profits you do take with how much you actually owe the govt.</p>

<p>And I didn't save 200k a year, I only manage to save something like 20-50k a year. The other money was made with the real estate stuff. Plus owning a home is a hard asset. Not a portion of a home.... I just prefer it this way.</p>

<p>But I definitely see how keeping the cash in your bank account would be a great thing.</p>

<p>-bix</p>

<p> </p>
 
I have been saving since I started working which is about 7 years ago. I don't have a 'savings plan', i just watch what I spend. if i spend too much this month, then the next couple of months i try to watch it. I lived in NYC, so the rent was a big burden, i didn't really have any savings until i have been working for about 2 years. now i try to follow the 60/40 rule as well. Although, being in OC, and having a 150k mileage used car that breaks down on me, car expense is SCARY. So, sadly, after 7 years i only save up about 30k :( Saving was very hard, my own family thinks i'm "cheap".... but at least i don't have any debts other than student loans which I can pay off if i want...



I think i may be priced out of buying a house in OC even after the bubble deflates.... although not enough money to buy a house, it is a emergency account if i got lay off due to the impending economic hardship....
 
<p>I have been saving for about 4 years. No problem making a down payment. I'm currently renting a house which we might buy. Market price is around $650k now. It was $839 at the peak. I'm expecting it to go well below $500k next year. I might buy it just before it goes below the current owner's loan value ($400k). If so, I'll get to avoid commissions and moving expenses. </p>

<p>My savings plan was pretty simple. I moved to a new job making more money. I also got married. I only buy things that I really like, and then shop around. I don't have a ton of stuff. I pay off my credit cards in full every month. If it wasn't for the "punish nonborrowers" strategy of credit ratings, I wouldn't even use credit cards. As you can see at <a href="http://www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf">http://www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf</a> , a typical family has 18% of their income going to various forms of debt service. </p>
 
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