There has been a lot in the news about millenials and the housing market pushing them out. A millennial is defined as anyone born between 1977 and 1994 so that is anyone between 22 and 39 years old.
The millennial generation is also the generation saddled with the most debt because of student loans.
I would strongly encourage millenials to do the following in order to prepare to buy and save for a home.
1. Live at home with your parents. It’s not an ideal situation but it beats paying market rent. You may be able to live at home for free or pay a minimum sum to your parents. This helps you save.
2. Move to your own place but get roommates and lots of them. I know that it’s not ideal to live in a dorm like situation when you are an “adult” but you could kill two birds with one stone by renting a place and dividing the share of living expenses between multiple people.
3. Focus on paying off some of your debt. If you have credit card debt and student loans I would STRONGLY encourage you to pay the credit card debt off and practice living a life without credit cards before buying your home.
4. Determine how long it will take you to get a down payment. Figure in also closing costs, moving costs, utility and furniture expenses. A first time home buyer program would have you putting down maybe 0% or you could get an FHA loan for 3.5%, but don’t set these low percentages as your goal. I would go for 5% to 10%.
5. Get a part-time job and use the money from the part-time job as money for your house purchase expenses.
6. Go over your expenses and look at what is eating up your budget. Is it Uber? Is it eating out? When I was 35 or so I moved to a new city. I was with my daughter. I calculated I spent $600 a month eating out. Restaurant food is expensive! That’s $7,200 annually I spent not on groceries but food (coffee, breakfast everyday, lunch and take out on the weekends).
7. Get a group of friends together and do a savings challenge. How much can each person save over three years? It’s easier to stay motivated when you have accountability partners.
8. DON’T GIVE UP! If you have your mind set on homeownership it can be done. You just have to put your mind and money to the goal.
