Buying a House on a Teacher’s Pay

My name is Christine, and I’m going to buy a house this year. I’ve been saving for six months, but unplanned expenses have sucked away a lot of my extra cash. I want to close on my house when my lease is up in December, so I need to get serious about saving.

While I’m only 26 and don’t have a huge salary—I work as a special education and geometry teacher—I’d rather buy a big house than rent a small apartment. I live in Phoenix and plan to stay here for at least five years. I’ve done the math and I know I can afford a mortgage payment, taxes and insurance. I’ve long dreamed of buying a house, and now prices are so low that I can actually do it.

My boyfriend and I live together, and while he’ll be helping with the mortgage payments, I’m buying the house on my own. I love my guy and don’t foresee anything happening, but I want to be smart and make sure I could make the payments alone if I had to.

I’ve saved $5,000 for my down payment and closing costs. I need another $3,000 to $4,000 in order to buy—which means I need to save $500 to $1,000 a month. It sounds steep, but I have a plan (and no more excuses) thanks to J.D. Roth’s advice:

Save FIRST. Instead of saving “leftover” money, J.D. advised me to set up automatic transfers so 10% of each paycheck goes into savings right away. This is already helping me to live on a smaller chunk of my income—and not waste cash on superfluous stuff.

Keep multiple savings accounts. One account is my emergency fund, one is for my future home, and one is for gifts and vacations. J.D. suggested accounts at a bank separate from my regular bank so my money will be harder to access (i.e., spend). I used one of J.D.’s guides and chose Sallie Mae for the high compound interest rate and rewards program.

Track my spending. I’d been tracking my spending with an Excel spreadsheet, but J.D. suggested I use or Quicken. That way I’ll get a clearer picture of where my money goes and can set spending targets more easily. He also suggested I use the Balanced Money Formula: spend 50% or less on needs, save more than 20% (including debt repayment), and spend 30% on wants. I joined Mint because it’s so much easier than my spreadsheet. The 50-20-30 formula might take some getting used to, though.

Take a second job. I already have a second job helping a family with a cognitively disabled son. I also tutor kids and have an Etsy store. I’d always looked at that income as extra spending money—but now I need to see it as my primary source of savings. All that money now goes into my separate savings account.

Reconsider my car. I like the idea of selling my car, paying off the loan, and walking, biking, carpooling, or using public transportation for a while. But it’s just not very feasible in Phoenix, which has few bike lanes and an unreliable bus system. I plan to pay off my car and keep it until it dies, but I’m going to try carpooling with my boyfriend or teachers who live nearby.

Move in. How else can Christine save money, and buy her home this year?