Buying a house when you have little-to-no money seems like a near impossible scenario. Six months after moving into my house and the realities of being a homeowner on a limited budget couldn’t be stronger. Yet it’s something that has secured my confidence in my ability to achieve anything I set my mind on, regardless of whatever obstacles may get in my way.
When I first started saving for a house I stashed £1,000 in an ISA whilst doing shift work on a paltry wage, supplemented with an evening job at a hotel a couple of nights a week. 3 months later and that job came to an end. I signed on for JSA whilst searching for another job. Thankfully, my stint on JSA was short-lived as I found a new job, which I started a month later.
Whilst working that job, I continued saving to buy a house. Honestly, I had probably been saving for at least a year before solidifying my decision that the money I was saving would go towards buying a house and not for some grand adventure traveling solo. It was a tough decision but I knew getting a house was the right thing for me to do in that moment. My dreams of seeing the world aren’t completely behind me. I strongly believe that I can and will still travel – just maybe in smaller bite-sized chunks.
During my 3 years of saving, I attempted to put away at least £200 a month, whilst still paying for bills, food, driving lessons and all the other monthly outgoings that add up. Some months I saved more than my planned £200 and other months, I didn’t even save a penny. My annual salary wasn’t anything to write home about. When I put down a deposit on my house, I was earning around £16,500 a year. I didn’t have much money left at the end of my month once all my outgoings and savings had gone out. I simply learned to make sacrifices where I could in order to make buying a house a realistic goal.
The last few months before securing and moving into my first home were the hardest. But I was driven by sheer determination. In the final 8 or so months leading up to moving into my house, I was living in a cold, neglected house that had holes in the floor and a broken, unusable shower amongst many other issues. For the final 4 months, I was pretty much living alone in a house that felt like it was deteriorating around me.
Alas, it wasn’t my name on the mortgage so there was nothing I could do to solve things. No matter how hard I tried. It wasn’t a home and it emotionally took it’s toll on me. That emotion manifested as a determination to take control and get out of that situation.
I knew money would be tight. Unlike some people when buying their first home, I was completely alone. I didn’t have a partner to split the cost with nor did I have family to help me out financially. But those things didn’t bother me. I’ve always been independent and unwilling to rely on others so I was happy to support myself. Simply put, I was a 23 year old girl with a burning desire to take control of a shit situation and put a positive spin on things.
One of my biggest fears is being financially unstable and because of that fear, I always do my best to make sensible financial decisions. Obviously life will occasionally throw you a curve ball and chances are, there will be times when you’re struggling to make ends meet. But there are some things that you can do to help out in those times, you just need to remember to weigh up all your options and make the most sensible choice.
Here are some things I’ve considered when in need of a helping-hand financially:
HELP TO BUY ISA
When buying my house, I popped my money into an ISA. I weighed up the pros and cons of getting a Help To Buy ISA but ultimately settled on not getting one. Knowing that some months I would want to save more than I was allowed to with a Help-To-Buy ISA, I decided it wasn’t something that would benefit me greatly. With that said, I think the help-to-buy ISAs are an indispensable Government scheme that can help many people get on the property ladder. Plus, towards the end of my home-buying journey, I discovered that some banks will let you open a second ISA alongside your Help To Buy ISA. Had I known that earlier, I probably would have taken one out…it certainly would have come in handy when I found myself having to magic another £2,500 out of thin air in a matter of two months to be able to secure the house I was gunning for.
As well as the help to buy ISA, there are many other Goverment schemes that can help you when buying a house. Once you’re in your house, it’s also worthwhile looking at any benefits, discounts or even grants that you could be entitled to.
SHORT TERM LOANS
I’m still in the early days of my home-owning journey and yet at several points during buying and owning a house, I’ve found myself considering getting a loan. Loans, especially short term loans are something that terrify a lot of people.
Personally, I believe quick loan providers are an acceptable way to financially support yourself as long as you pay them back on time. There are many short term loan companies out there which can help you in those moments where you may need a small amount of cash in a short amount of time.
Of course, you have to be willing to pay back the money you borrowed at a highly inflated rate. Short term loans often have an APR in the hundreds, so ideally you should look at other avenues before deciding to use a short term loan. For that reason, I only recommend taking out a short term loan if you are a) able to repay it in the allocated time frame and b) are happy with paying back much more than you initially borrowed. Short term loans aren’t for everyone and I cannot stress the importance of only taking one out if you’re confident than you can pay it back on time. But if you’re happy with those two scenarios and it gets you out of an unexpected sticky situation where you need money pronto, then a short term loan could be a good thing for you.
DO IT YOURSELF
There’s going to be points in your home-owning journey where you may need the help of a builder, plumber or any other kind of Handy Man. All those little jobs requiring the help of a Tradesman can add up and when you’re buying a house with next-to-no money, it’s often a cost you can’t afford. I’m six months into living in my first home and nowhere near having any of the rooms completed to the standard I’d like them to be. Turning your house into a home is all part of the charm of buying your first home. Admittedly, it would be much more charming to move into a new house and redecorate the entire place in a matter of weeks but for most people that’s not a possibility.
If you want to progress with getting work done on your house but don’t have all of the funds to make it happen you’ve got to be willing to get stuck in. By doing some of the work yourself, you’ll be able to cut back on some of the costs. Even if it’s the smallest of tasks like stripping the wallpaper prior to hiring a plasterer to save them from having to do it, thus saving you from having to pay them to do it. Put your skills to the test and do whatever work you can. You might be surprised at your own skills and can save that money towards other house-jobs, bills or maybe a treat for yourself!
Although I have a credit card, it’s something that I tend to avoid using. Mainly because I don’t want ‘just sticking it on my credit card’ to become the norm. Now, I’m not saying that would happen but it puts my mind at ease knowing that I don’t use my credit card for frivolous spending.
However, having a credit card can be helpful if you know how to manage them. Don’t treat a credit card as a way to splurge money you don’t have. Instead, look at it as an investment tool.
Essentially, a credit card is just like a loan but if you pay it off in full before your repayment period ends, you won’t have to pay back any interest on top of what you borrowed. Similar to short term loans, if you are confident that you can pay your credit card back on time, it’s well worth using one to complete those extra jobs that you can’t quite afford on your own right now.
There’s a whole host of different credit cards out there. So do your research and find one that works for you. For example, if you always pay your credit card back in full each month, it may be worthwhile looking to get a rewards credit card. On the flipside, if you’re planning to make a large purchase that you’ll need to split over a few months then a 0% interest credit card would be ideal for you. When it comes to anything related to money and houses, I’ve found MoneySuperMarket to be the holy grail. Their credit card compare tool may be useful if you’re not sure what type of card best suits your needs.
Above all else, whether you’re saving for, own or rent a house, it’s important to always make wise decisions when it comes to money. If you are planning to borrow money, whether from a bank, loans company or family and friends, then do so sensibly. Never borrow more than you can afford to repay.
Similarly, if you ever find that you are struggling financially, do not ignore the bills. Don’t stuff them in a drawer or let them pile up. Instead, face the issue, contact the company and work together to find a repayment solution that works out for both of you.
When it comes to living on a budget, try not to stretch yourself too thin. There are always going to be unexpected costs and one-off expenses that appear out of nowhere. By having some emergency funds saved to one side or by always keeping on top of your incomings/outgoings, you can ensure you’re as prepared as possible for those unexpected moments.
Most importantly, don’t forget to try and save some money for the non-essentials in life. No matter how many cut backs you make, always try to keep something for you. Even if it’s just treating yourself to a fancy coffee once a fortnight, factoring in those ‘non-essential’ expenses when managing your budget can be more important than you may think.