The American Dream, For You and Me

Dear Advice Girl,

I’m hopelessly searching for my piece of the American dream. To clarify I want to be homeowner (here in DC) in the near future (before 30). However currently, it seems I’m usually strapped for cash after making the normal ends meet after paying student loans, DC rent, and normal financial obligations. With my current single salary vs. my debt obligations it seems as if I will never be able to save enough for a down payment to be able to turn my dream into reality. Do you have any creative ways to save for my down payment, financial advice, or words of wisdom to convert my dream into a reality?

Thanks
Young, Fabulous & Broke

Dear Young & Fabulous,
You too can live the dream! Yes, indeed, that dream where your new best friend, the bank, owns most of your place and lets you live there. Short of selling a kidney, though, let’s look at where you can scrape together this cash. For this, Advice Girl is going to borrow heavily from the wisdom of her latest favorite financial advisor, Michelle Singletary of the Washington Post (see Color of Money over there on the left).

First up, budget budget budget. Don’t have one? They’re easy to get AND you don’t even have to pay for it! The Post has some templates ready for you, so Advice Girl won’t get into the specifics, but trust her, this is crucial. As part of the budgeting exercise, try tracking all your expenses (yep, every single one – even the 11am Coca-Cola). Do this for a month if you can, but a week will still make the point. You may be surprised where some of your cash is going.

Cut expenses. Like the “diet” part of weight loss, this isn’t fun, but it is rewarding when you start to see the results. Advice Girl won’t give you the ol’ try-bringing-your-lunch line, but think about the “extras” in your life. Do you really need internet on your phone? Can you downsize from the 3-at-a-time Netflix plan? Do you really need Netflix at all now that you have cable? Also look at things like insurance premiums – can you get a lower monthly payment in return for a higher deductible? What about roommates, would you take a group house if it meant you were saving an extra $200 a month? How about selling the car? Things like that.

Bring in extra income. This is like the “exercise” when you’re losing weight. All right, all right. Advice Girl knows, you don’t have time for a second job. But there are little bits of extras all around you – the tax refund, the tax refund from last year, the money you get back from your Flex plan receipts, the per diem from working abroad – you were doing just fine without that as part of your monthly budget, so stash it in a high interest online savings account instead.

Finally, you can start doing some of the non-saving-like-mad legwork now, too. Pay your bills on time and check your credit reports so there’s nothing unnecessary dragging your credit rating down when it comes time to apply for a loan. Check out open houses (Spring is the perfect time for this) so you start getting an idea of the neighborhoods you like and the prices the places you like are going for. There are a number of websites that’ll let you play around with sale numbers, too. (Advice Girl needs to do a little research on the exact sites she’s thinking of – zillow.com is one, but she doesn’t believe their figures are entirely accurate.) Even if you’re a few years from actually plunking down the money, it doesn’t hurt to know what your target savings goal should be.

Phew. Bet you’re sorry you got Advice Girl started on this now! At any rate, just having established this as a goal and made it a priority for yourself has already put you way ahead of a lot of others. Devote a couple more years to saving up (the cash) and paying down (the debt) and your American dream will be here before you know it. Good luck!