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Achieving Financial Balance – How to Navigate Repaying Student Loans and Saving for a House

| November 19, 2019
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For many people, buying a house is one of their top priorities within the first few years post-graduation, but doing so is no easy task.  With the amount of student loan debt many graduates have, it can often feel like an uphill battle.

Just look at the numbers...

  • For a full-time pharmacist, you may take home about $5,500 per month after taxes, insurance, retirement contributions, etc.
  • Rent around Atlanta can be anywhere from $800-$1,800 per month depending on where you live.
  • Student loan payments can be anywhere from $300 per month for the first year to $3,000 per month.
    • There are some unique and creative ways to structure your repayment strategies.
  • Outside of utilities like internet, streaming services, gas, water, electric, phone bill, etc., these are all the lifestyle expenditures. This is what can make or break your budget.

Looking at those two big expenses, assuming that is approximately $2,500 per month, that leaves $3,000 for everything else.  You will also have essentials, food, and doing fun stuff too.  So how much should be saved for a down payment?

Let’s dive in.  For this example, we will assume a house purchase price is $250,000.

Many articles you read talk about putting 20% down.  That’d be nice, but is that realistic within a year or two of graduation?  Not really, unless you live at home and really minimize expenses.  So, let’s say you put down 5% with a conventional loan which is $12,500. 

Now, don’t forget your closing costs, which can be another 3-6% of the transaction, so at 4% that’s another $10,000.  Maybe you get lucky, and the seller covers some of that, but as my grandparents have said, “Plan for the worst and hope for the best.”

So, you go from living with little to no expenses, to now having a 3-bedroom house.  Don’t forget the costs of furnishing a house!  This could be a few thousand dollars easily.

Now, I’ll speak from experience for a moment…

My wife and I just bought a house.  We have had disaster after disaster since we moved in.  And I mean worst case scenario stuff – mold, rodents, electrical, plumbing, bad insulation, etc. – stuff the inspector should have caught, and the sellers tried to hide, but now it’s our problem. When all is said and done, that will be another $10,000 of expenses, most of which was not planned (but was prepared for).

This is the reality of buying a house.  These things will happen, and if you stick your head in the sand and try to get by because you rush a decision, it could end up being one of the worst decisions you ever make.

If your goal is to buy a house in the next 12 months, your second goal should be (if you are starting from zero or very little) to begin saving about $2,000 per month ($24,000 for the year).  Using the numbers from above, that should be enough to cover the down payment ($12,500), the full amount of closing costs (assuming around $10,000), and some extras for additional expenses and furniture.  The more you save now, the better of a position you will be in down the road.

One thing that makes this process so much easier – having an automated system to save money.

Would it be helpful to learn a system to save more money than you ever thought possible, without seriously compromising your lifestyle?

If yes, then let’s set up a time to talk.  Send me an email at blakemiller@ashfordadvisors.net or check out my website at www.mblakemiller.com and send me a note of when you can get together in the next month.  We will make it happen!

Thank you for reading! I hope it was helpful, and let’s figure out how you can better balance saving, spending, and attacking debt to get where you want to go as quickly, and efficiently, as possible!

 

 

 

 

 

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