This is how I can afford to own a home in L.A. (San Francisco: bank owned, appointed)

[fatmancomics]

I constantly read threads on how unaffordable L.A. is and think to myself, "What the hell are these people talking about? I own a 4 bedroom house with a pool and I'm essentially a blue collar worker." so I thought I'd start a thread where we share how we do it. Here's a short list of some of the things my wife and do to afford it:

1. My wife and I both work. I won't give you our exact salaries but I will tell you that together we make less than 75K a year.

2. We don't have any credit cards, therefore no credit card debt. If we can't pay for something all at once then we either save up for it or we dont' buy it.

3. We pay our bills on time. This gives us and maintains good credit scores.

4. I take care of the maintenance of the yards and pool. Gardening is tough but it's good excersice and keeping a pool clean is much simpler than a pool guy will lead you to believe. It's all about keeping a schedule. The filter only needs to be cleaned about twice a year.

5. We don't have anything unecessary on our cel phones that you have to pay for like internet service or any special aps. We also NEVER buy phones. When it's time to get a new cel phone we get whatever the plan includes.

6. We go to estate sales. Pretty much all of our sitting and sleeping furniture was bought new but little things like end tables, magazine racks, nick nacks and books can be found in GREAT condition at estate sales and they're much more organized than your average yard or garage sale. We do this to get the shopping bug out of our system without breaking the bank. Check your penny saver.

7. We save money in a bank account that cannot be touched. We have a regular savings account and 401k accounts at our jobs but we've had to dip into those in the past so we set up an account at a seperate bank that we put $50 out of every paycheck into and we cannot remove any of that money without physicaly going to the bank.

8. We have open and frank discussions about money. My wife and I made an agreement that ANY purchase over $100 must be discussed and agreed upon. We've both had to say "no" to each other but it's never been on a necessity.

9. We make and stick to budgets when we have get-togethers or when it comes to gifts. This is especially important during the holidays. I came up with an idea years ago to only give gifts to the children in our families and we told this to our relatives. Children are easy and cheap to shop for when they are not your own and Toys 'R Us usually has good deals on board games. Our usual budget is $10 for each child. Once they're teenagers, we just give them the cash.

10. We make and stick to budgets for entertainment. Vacations are especially important when it comes to this. Use the internet to find good deals and find out as much as possible about wherever you are going so you don't get overcharged, end up in a hotel in a bad part of town or visit during the wrong time of year. We went to San Francisco in the fall and a lot of tourist spots were closed.

[BRinSM]

great thread. my wife and i also have been able to save up for a home which we will hopefully be purchasing in 2011 with similar tactics. we do go out on the weekends, but we rarerly spend more than $50 for a meal for the two of us. we also like to find places without corkage so we can bring our own <$10 bottle of wine rather than paying $20+. we also like to travel, but we limit our trips and do significant research to make sure we get the most bang for the buck. other than that, i bring my lunch to work most days and until recently didn't even own a car which was a huge money saver. although more dangerous than driving a car, a motorcycle or scooter costs significantly less on every front compared to a car: purchase price, gas, insurance, parking, time, etc...

anyways, now we've got a pretty good chunk of change in the bank that we've earned completely on our own and will be able to put down 10%-15% on a home in the next few months. we won't even need to ask our parents if they will be able to help out. i think one of the biggest factors that helps us pull this off is the seperate bank account as fatmancomics mentioned. we put a good chunk of our salary into an online account that can't be accessed by ATM and we never touch it. it also can't be used for emergencies because it takes 3 days for funds to be transfered to our regular accounts. because of this, the banks can offer higher rates, so i stongly recommend that everyone try this out.

[EscapeCalifornia]

So how long have you owned and what did you pay?

[disgruntled la native]

I think the single most important thing about you is not your frugality, careful budgeting, etc but the fact that you do not have kids! If you are childless getting by in LA with a middle class income is very doable.

[BRinSM]

FYI, my wife and i also plan on having our first kid in the next couple of years and should able to afford both house and child even if my wife has to take off a significant amount of time from work. this will be even easier if the the mortgage interested tax breaks stay in place. uncle sam is considerably nicer to those who own a home (for now) and have kids.

[fatmancomics]

Originally Posted by EscapeCalifornia

So how long have you owned and what did you pay?

Three years and 370K for a bank owned home that was on the market over a year. The original asking price was 540K and then the bubble burst. I'm not going to lie and say that we weren't lucky in the timing of our purchase but we also had to spend 20K to make the place liveable. I also made sure to get a 30 year fixed loan instead of an adjustable one like my realtor wanted to do.

It's also in the SFV and, though it's not the best neighborhood in the area, it's not even close to being the worst either. The street I live on is very diverse ethnically (and, yes, that means there are white people on it too) and everyone is very nice and neighborly for the most part. The worst thing that has happened is that I had to cuss out our local, self appointed, yard nazi but I've posted about that before.

Originally Posted by disgruntled la native

I think the single most important thing about you is not your frugality, careful budgeting, etc but the fact that you do not have kids! If you are childless getting by in LA with a middle class income is very doable.

You're right but it's also very doable if you do have kids. The trick is learning to say "no" to a kid and teaching them to be frugal as well. I know, I know, easier said than done since I don't have them but my wife and I also have been putting money away for a child and we're starting to "work" on it. Our bedrooms are already all furnished and we're not too proud to take hand-me-downs (as the bed and furniture in one of our bedrooms shows) so bring on the used onesies.

[Daisy32673]

Originally Posted by fatmancomics

Three years and 370K for a bank owned home that was on the market over a year. The original asking price was 540K and then the bubble burst. I'm not going to lie and say that we weren't lucky in the timing of our purchase but we also had to spend 20K to make the place liveable. I also made sure to get a 30 year fixed loan instead of an adjustable one like my realtor wanted to do.

It's also in the SFV and, though it's not the best neighborhood in the area, it's not even close to being the worst either. The street I live on is very diverse ethnically (and, yes, that means there are white people on it too) and everyone is very nice and neighborly for the most part. The worst thing that has happened is that I had to cuss out our local, self appointed, yard nazi but I've posted about that before.



You're right but it's also very doable if you do have kids. The trick is learning to say "no" to a kid and teaching them to be frugal as well. I know, I know, easier said than done since I don't have them but my wife and I also have been putting money away for a child and we're starting to "work" on it. Our bedrooms are already all furnished and we're not too proud to take hand-me-downs (as the bed and furniture in one of our bedrooms shows) so bring on the used onesies.

I agree to a point. What costs the most are expenses like diapers, formula/food and other necessitites. Then there is childcare unless one parent stays home to raise the children and you can afford to be on one income. Otherwise I have seen childcare (NOT a nanny) range from $1200 - $2400 a month

[stan4]

Originally Posted by disgruntled la native

I think the single most important thing about you is not your frugality, careful budgeting, etc but the fact that you do not have kids! If you are childless getting by in LA with a middle class income is very doable.

If you can't afford them, don't have them.

Do go having kids AND THEN whining about how they cost too much.

[EscapeCalifornia]

Originally Posted by fatmancomics

Three years and 370K for a bank owned home that was on the market over a year.

Even that's still over 5x your income. Not exactly what I'd call affordable housing. Maybe by LA standards I guess.

[JohnG72]

Originally Posted by EscapeCalifornia

Even that's still over 5x your income. Not exactly what I'd call affordable housing. Maybe by LA standards I guess.

Well OP not exactly living.

They are paying more than 50% of their take-home on the mortgage, or were one of the very last liar loans or exotic mortgages. All to live in a subpar part of the valley that is getting worse AND declining in value.

Awesome purchasing decision IMO.