However, we had a couple of issues. The economic recession had left our finances in a state of turmoil. We didn’t have a lot of money saved up, our debt-to-income ratios were too high, and our credit scores needed a boost if we wanted to qualify for good loan terms.
Yesy and I really wanted to be able to raise our baby girl in a house instead of an apartment, but after checking into several mortgage lenders our fears were realized. We were told our debt to income ratio was indeed too high and we could not get a loan. We had to cut down the debt!
Not only that, but we would also need a decent amount of money for a down payment for the house. With Yesy’s due date only about 5 months away, we were running out of time! So here is what we did.
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Sell What You Don’t Need For Extra Money
The first thing we did was sit down and take a hard look at where our money was going every month. We made a list of all of our expenditures and figured out what items were necessary and what items we could do without.
At that time, Yesy and I both had motorcycles in addition to our cars. So selling the bikes was kind of a no brainer. We hated to sell them because we both enjoyed going for a ride. It was kind of our stress relief. But with a baby on the way, we knew the chance of us being able to ride together was slim to none.
Luckily the bikes sold pretty quickly, so we were able to take the money that usually went towards the bike payments and put it towards some of our other debts.
If you have things that you are not using, there are numerous online shops that will allow you to list items for sale. For example, you can create an eBay account and let people place bids for them, or settle on a “buy now” price. You could also list your items for sale on Amazon.
Other sites like Facebook marketplace and Craigslist are also popular ways to sell previously used items. However, if you do decide to use one of these platforms, please use caution and always make sure that you meet potential buyers in public places and take someone with you for safety.
If you don’t have anything else to sell, but have some free time, you can make some extra money online. There are survey companies that want to pay you for your opinions by answering online surveys and testing their products. Best of all, they are FREE to join. Some of my favorite survey companies are PineCone Reasearch, Harris Poll Online, MySurvey, Inbox Dollars, and American Consumer Opinion.
These companies will send you surveys based upon your answers to screening questions. The screening questions help the companies determine which surveys would be a good fit for you. With this in mind, you may not be selected for one of their surveys everyday. That’s why it’s a good idea to sign up for several survey companies so you have a greater opportunity to make money to put towards your debt.
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We Stopped Going Out To Eat
The next thing we did was to look for ways to cut back on other expenses.
One of the bigger expenses we had per month was going out to eat. Even though we only went out maybe once a week it still was additional money we didn’t need to be spending. So we determined we could cut back on that.
You may not realize how quickly a restaurant bill can add up between the appetizers, drinks, main course, and desserts. But it adds up fast.
When you eliminate the option of going out, I know it can get boring and frustrating trying to figure out what do to for dinner every night, when going out is not an option. That’s one reason I think $5 Meal Plan is so helpful. They send you breakfast, lunch and dinner recipes for the week, so you don’t have to figure it out. They also give you tips and strategies that can reduce your cooking time and save you money at the grocery store. Every little bit helps.
Shop at Places That Offer Discounts
Since we were looking for every possible way to save money, Yesy started watching the local adds for the best deal on some of our grocery items. She would particularly pay attention to advertisements for buy-one-get-one (BOGO) deals. These were usually great finds because the items were often priced about $3 to $5 apiece.
So after finding several of these great deals, the savings really started to add up. Even just finding 3 BOGO deals per week on average saved us about $60 a month.
You can also look for places that offer cash back deals. Ebates is an online marketplace that works with stores offering women and men’s clothing, health and beauty products, electronics, office supplies and much, much more. You can get up to 40% cash back at over 2,500 different stores! If you do decide to join Ebates, you’ll automatically get a $10 bonus.
Lastly, look for places that offer special discounts if you meet certain criteria such as military or student discounts. You might be surprised how many places offer some kind of discount but just don’t really advertise it. So don’t be afraid to ask.
Plan Your Trips and Save Gas
Our fuel expense for the cars was another one of our bigger expenses. Unfortunately, we were not able to car pool everyday because our jobs were in different directions. So this was one expense that was not easy to reduce.
However, every time we thought about going somewhere, other than work, we began to decide if it was a place we really needed to go. Also was there any other destination nearby that we also needed to visit. We tried to maximize our trips as much as possible to reduce the amount of gas that we used.
If you can plan your trips and take care of several things while you’re out, that can help stretch your fuel budget a little further.
Pay Down Credit Card Debt
Now that we were starting to save some extra money we had to decide what to do with it. Since we knew we had to improve our debt to income ratio, rather than directly saving the additional money, we put it towards paying down credit cards.
After one credit card was paid down, or paid off, we put the money that previously went towards that credit card and added it to the payment on a different card. This allowed us to pay well above the required minimum payments and reduced the debt faster.
By using this method, we accomplished several things:
- We reduced the amount of debt we owed and improved our debt to income ratio
- A better debt to income ratio improved our credit scores
- We saved more money in the long run because less money went towards interest payments
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We Bought A House, But It Wasn’t Our Dream House
Completing the steps above put us much closer to our goal of moving into our dream house. We were lowering our debt, our credit scores were increasing, we saved up a good amount of money, and were finally able to get pre-approved for a loan.
But our ideal dream house was still going to be out of our budget and we were running out of time.
Our daughter was due to be born in about a month and we still could not afford the type and size of house we really wanted. So we developed another strategy.
We found a house that came close to meeting our most basic needs. It was in a nice neighborhood, zoned for good schools, and our commutes were about the same distance for both Yesy and myself. It was not as big as we wanted and still needed some repairs. There were also a lot of things that we wanted to change, but it would certainly work for now.
We signed the papers, moved in, and gradually made some improvements and repairs to the house.
Some of the upgrades we made included:
- New kitchen floor
- Interior and exterior paint
- Completely new water lines
- New stove
- Removed popcorn ceiling
- New privacy fence
- Repairs to the irrigation system
- New bath and lighting fixtures
There were many more small items, but those were some of the major ones. We saved a lot of money because Yesy and I were able to make most of the repairs ourselves.
We only hired a contractor to install the privacy fence. Even though that was fairly expensive, I think it was a good decision and really improved the look of the home.
We Flipped Our House
After about 2 years of improvements, our “starter” home was beginning to feel small. The desire to find and move into our dream house was increasing.
We started looking online to see what houses were on the market, but didn’t find anything we wanted or could afford. Needless to say, we were stuck again. So after careful consideration we decided to do something somewhat drastic.
The housing market was starting to go up and likewise the value of our house increased as well. We tossed around the idea of selling our house and finally decided to go for it.
Our house was officially on the market and within 2 days it was under contract. We couldn’t believe it! So now what…?
In Between Homes
When our house went under contract we still did not have enough money to afford our dream house. My parents were kind enough to let us stay with them while we saved up some more money and continued to look for our dream house.
Even though we had to put most of our belongings in paid storage, we were still saving a lot of money by not having to pay a mortgage every month. We also continued to save as much as we could by only buying things we really needed.
It was cramped living for a little while, but the sacrifices of saving for our dream house were about to pay off.
Finding Our Dream House
I remember one morning, as we were getting ready for the day, Yesy did her usual check online for any new houses that came on the market. One in particular caught her eye. She showed it to me and I could see were we both on the same page.
It was a beautiful 4 bedroom, 2 bathroom house in the exact location we were looking for. And as luck would have it, there was an open house for it that afternoon.
We thought it might be a long shot, but decided to go and check it out anyway. After driving for an hour we pulled up to the house and walked inside. We fell in love with it instantly. It just felt like home.
There were a lot of people at the open house, and Yesy and I both knew that it would not be on the market for long. We called our realtor and put in an offer that day. Later we found out we were not the only ones with an offer on the table, so the brutal waiting game had begun.
After a sleepless night, we finally got the good news that the seller had accepted our offer. We were getting our dream house!
Looking Back At Our Dream House Story
When I look back on everything that happened over that 3-year period, I can’t believe how much we accomplished.
After taking the actions mentioned above Yesy and I were able to pay off nearly $21,000 worth of debt in about 5 months. We were also able to increase our credit scores, buy a starter home, flip the starter home for a profit, and purchase our dream house all in less than 3 years.
Was it easy? Not always, but it was definitely worth it. We love our home and can’t imagine living anywhere else.
If owning your dream house is one of your goals, I know you can do it too! Make a plan, stay focused, and remain dedicated to achieving your dream and it can become a reality!