How Do You Save Money to Buy a House?
Background: To give you a little background about me, I’m 24 years old, currently an OFW in Singapore working for an advertising firm. [Update: Back in the Philippines now]
Just like every Filipino, I’ve always wanted to have our own house. My father used to be an OFW in Saudi Arabia and worked as a welder. However, I grew up as someone with NPA (no permanent address). We would rent from one place to another and even stayed with relatives even if it means a tiring commute daily just so I could go to school.
“From small and simple things, great savings can come to pass”
At the age of 15, my father died. Being the only child, I promised to take for myself all the responsibilities of providing for my mom and myself. I also promised my late father that I will be the one who will make our dream a reality – to buy our own house.
At the age of 17, I was already working as a senior cashier at a fast food store in my hometown. It wasn’t easy working at night and studying during the day. There were times when I had to open my almost empty notes on my way to school just to catch up for my exams. There even came to the point when my one of my teachers told me he would give me a Failed rating if I kept being late in my classes. Undaunted, I still kept working and studying at the same time and doubled my strides. I was paid Php 24/hour then. I’d be lucky if I get over Php 3,000 per month as a salary (it means some classes were skipped just to be able to get high work hours and salary).
Looking back, I definitely do not recommend skipping classes but I am so grateful I had to work hard because it taught me the value of self reliance that I couldn’t have learned in any other ways.
For over a year, I worked in the same fast food chain till I graduated. A week after our graduation, I immediately took advantage of STI College Kalibo’s Enrollment to Employment system. I joined the Job Fair and was so fortunate to have been hired by a BPO (Business Process Outsourcing) company called Callbox Inc (now Parallel Processing Corporation). I’ve worked with Callbox for over 4 years handling various accounts from Merchants, IT Products and Services, APAC and Marketing. Looking back, I’ve learned so much about blogging, internet marketing, digital marketing and advertising through the networks that I have built during the time I’ve worked there.
You’re probably wondering by now how did I end up saving at least one million pesos when I was only paid Php 11,500 per month (incentives not included) and how my experiences were related to saving money to buy a house. Simple – I’ve gone through so much hardships in life that collectively, they’ve motivated and fueled me to really work hard for my goal which was to save money and pay for a rent-to-own-townhouse.
Below are some of the steps I’ve taken that have helped me towards my goal of saving for our first ever town house:
1. Choose the rent-to-own scheme
Rent-to-own, also known as rental-purchase, is a type of legally documented transaction under which tangible property, in this case a house, is leased in exchange for a weekly or monthly payment, with the option to purchase at some point during the agreement. I chose this type of scheme as I didn’t have large amount of money then, yet I had a burning desire to get ourselves a house. Choosing this type of scheme, I had ample of time to actually save up for the down payment and the monthly mortgage.
Also, who wants to pay monthly on house rent when you can buy one that will eventually become yours?
2. Buy at pre-selling
Properties are being sold at much cheaper price when you’re going to buy them during the pre-selling period. The townhouse’s total contract price during the pre-selling period was around Php 970,000. Now the current selling price is Php 1,025,000. Since we chose the unit that doesn’t share its backyard with other tenants, we had to pay additional Php 30,000 making it to value around 1 million pesos. We’ve paid the initial down payment which was around Php 235,000 and the rest I’ve tried to save up before the unit was fully finished and before we moved in.
The time we’ve spent waiting for the townhouse to be completed allowed me to actually save up monthly to pay for the remaining balance before we moved in so I didn’t have to pay for interest. We decided to get their in-house financing but I used that opportunity to raise the money needed. Every month, I would save up around Php 15,000 or even more, if my salary permits.
When looking for a house to purchase, make sure that you look at various options. Try to search online, ask your real estate agent, ask for referrals from friends and even consult the newspaper ads to make sure that you’ve seen various options before committing into buying.
3. Get a job. Several jobs, even
When I was saving for the house, my meager Php 11,500 per month salary with the company I used to work with wasn’t enough. I had to take on another job and other freelancing jobs in order to make both ends meet. I had to raise at least Php 15,000 a month in order for me to pay for the remaining balance. My goal was to raise enough money which was around Php 750,000. I took a virtual assistant job. I would write articles, learn SEO, teach Koreans English.
In short, I tried to be a superwoman.
There was even a time when I only had a couple of hours of sleep in a day. I didn’t care, I had to make and save enough money.
4. Open a savings account in a thrift bank
After 6 months that I’ve been working with my previous company, I opened a savings account with City Savings Bank (an Aboitiz company). During that time they only required Php 100 as an opening balance so with firm goal to save money, I gradually placed my hard-earned money there. Every month I would put in Php 4,500, sometimes Php 500. There were even months when I could only save Php 2,000. It didn’t stop me from saving, I just kept going. When my salary gradually increases, I started putting in more money I can.
It doesn’t really matter how much money you’re making, it’s about how much you’re saving.
I chose a thrift bank because their system is so simple. You put in some money, you get interest monthly and there’s not much pressure to keep a high maintaining balance when compared to larger commercial banks. Saving was so easy I had more time to focus on making money.
5. Learn how to invest
Then I learned about how to invest in the stock market. I’ve put in Php 25,000. I bought some shares of Jollibee Foods Corporation (JFC) at around Php 78.00 (before the news of them acquiring Mang Inasal was announced) and they skyrocketed to around Php 90+. I sold it at that around range for a profit.
I’m not telling you to simply invest in the stock market. What might work for me may not work for others. You may try to invest in other financial instruments such as time deposit (for starters), real estate, bonds, etc. Learn how they work and find out which one may be more suitable for your income, lifestyle and knowledge. Don’t rush.
6. Prioritize the needs, eliminate the wants
I had a meager salary but I managed to save at least 60% of it because we would only purchase the things we really needed to. Instead of buying new clothes I would save up the money to invest in the stock market.
I’d like to think there was a magical formula for me to save money but there isn’t, really. You just need to have this really strong desire to save up. List down the item(s) you want to purchase and if possible, print it up, frame it so it can serve as your constant motivation to keep working towards finally achieving it. Luckily, I have my mom who always reminds me of my goal. You may also want to share your goals with someone you trust so that you would be constantly reminded and become closer towards achieving it.
7. Give back to the community
Even if I was trying to save up, I didn’t forget to participate in activities that help our local community. Together with our fellow church members, we would volunteer our time to help those who needed some aid (whether it is financial or emotional support). By helping those who are in need, it made me become clearer and focused with my goals. It has helped me realize that I’m so blessed to be able to work and able to save up for what I want to have. Such experiences helped me to become much more driven to keep working towards achieving my goal.
We’ve moved to our rent-to-own townhouse last November 2012. It’s not a fancy house. It’s a 2-storey, 3-bedroom house and got all the things we needed. I probably couldn’t ask for more. The journey towards earning and saving the money to get to pay it within 2-3 years wasn’t easy…but as I look at it every day, I can say – it’s all worth it.
UPDATE: Prices of properties in the Philippines may vary. I happen to be in the Visayas area of the Philippines where properties are much cheaper when compared in Manila so Php 1Million was enough. I am not admonishing everyone to try just to invest in the stock market. You may also want to explore other financial instruments and discover which ones work best for you.
I just hope that it may inspire many others to save up. If you want something, you’ve got to be ready to take the baby steps. Just like most Filipinos, I dreamed a dream..but I didn’t stop at dreaming. I worked so hard to make my dreams a reality, hope you can too! Feel free to share your story in the comments below!
Let’s inspire one another.