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building a home on a modest income


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Today we’re diving into a topic that I get a sense might be on people’s minds but most folks are usually too afraid/polite to ask….


How can you afford to build a house?!?


The real question behind the question, though..."can I afford to build a house?!"


We are in the process of building a home, and if you would have asked me 6 months ago if this would have been possible for us, I would have said and emphatic NO. Running a small business means that we are essentially a single-income household. Surely we can’t do this?! We aren’t millionaires! Maybe one day when we’re older or empty nesters, but not now, right?! But as it turns out, it was possible.


I think most of us go through our adult lives handling money in whatever way we saw our parents do it, bootstrapping and figuring it out as we go along. And other than the extremely wealthy and extremely financially careless (we all know a few), we assume that everyone is basically doing the same thing as we are. We come to believe, consciously or subconsciously, that our way is “normal”, when truly we all handle money in such different ways!


And such is our story. We’ve been married for 15 years. Getting married young means that you learn to handle money together when you basically have none. For some people this is a huge disaster, but for us it’s actually been very beneficial. Today I want to walk you through a topic that most people don't share much about. I'll tell you our story and give you a peek behind the curtains as to how we handle our money, how we budget, the smart things we’ve done along the way (and maybe a few mistakes!). My guess is none of this advice will be earth shattering. Just like diet and exercise are the best way to be healthy and lose weight, our financial methods might sound a bit basic and un-sexy. But we’re cool with that because they’ve gotten us to where we always wanted to be.


Maybe building or renovating your dream home is a goal for you, or maybe you have another big goal like taking a year off from work, traveling the world, your dream wedding, or buying some super expensive car (I’m out of my depth here). No matter what the end-goal is, these Five Strategies could prove helpful for you as well.





1. LIVE ON HALF OF WHAT YOU MAKE AND SAVE THE REST. Do I have your attention?! Coming in hot with the big guns. It’s true - we only spend about half of what we make. It didn’t happen instantaneously; we’ve been working towards that for a long long time. You see, having what you really want in life requires sacrifice and discipline (see how sexy this post is!??!). I KNOW THIS SOUNDS IMPOSSIBLE YOU GUYS. But let me back up and show you what this actually looks like in practice by sharing our money journey. And if you are a short-blog post person (yeah, not me) just scroll on down to tips #2-5.


When we got married I was interning at an architecture firm and Steven worked part-time in the university library while we finished college (yes we were that young). Our total monthly income was probably something stupid like $750. We had to SCRIMP. We only bought ground beef once every other week on payday and ate mostly pasta and Rice-a-Roni. Our apartment was cheap and run down. But we were so dang happy. Then after graduation Steven went off to law school and my entry-level Interior Designer salary was all we had for the next 3 years. While we were able to upgrade our lives a bit to meat more than twice a month, we didn’t go crazy. And we saved, saved, saved. Which means that we were the 20-somethings that didn’t go out to eat every day or to the bars every weekend. We enjoyed time with each other, I learned to cook, and we had cheaper meals at home. I like to call these, The Lean Years.


After Law School for one blissful year we were a dual income couple and bought a house, but we made sure we could afford it on only 1 salary. Which was handy because in 2009 (oh yeah, remember that recession) Steven lost his job and was out of work for 18 months. I call these The Leaner Years. My salary covered our monthly expenses and that was about it. There was very little saving during this time, but we still managed to save a bit. Oh, and also we had a baby in that time. By this point we had built up an emergency fund that we thought could last us 6 months. As it turned out we didn’t have to really dip into I, which was a HUGE RELIEF. It’s amazing to know that even when your future seems uncertain you know you have a financial net there to catch you.


Then we got Steven re-employed and decided to sell our house to, wait for it, buy a LESS EXPENSIVE HOUSE to reduce our monthly expenses. You almost never hear of someone trading-down for a house. But we moved further out of the city and got a much larger house for much less per month. The goal here was to reduce our expenses enough to allow me to be a stay at home mom when we had our second baby, which we did 7 months later. So instead of undergoing massive renovations and furniture spends to make our house our own, we made smaller changes to the house to make it more beautiful and work better for us (paint and hardware can go a long way, people). Max was born and I left my full-time job, cutting our salary by 60%. Yeah, that’s six-zero. We like to call these The Leanest Years. During this 2-year period nearly every unexpected expense had to come out of our emergency fund, but the fund was there. I vividly remember once having 2 unexpected dinner guests show up, having to go to the store to buy more food, and crying because we didn’t have the money in our budget. Now, hear me, we had the money, I just had allocated it for other things (emergency savings and future goals). But we made sure emergencies were things like a water heater breaking and hospitality to our friends and family, and not things like I really love these shooooooeeesssss! I would be remiss not to point out here that our families really came around us during this time and helped us out. Zoo memberships, clothes for the kids, the occasional $20 bill left on our countertop (yep, I saw that, mom!) helped us through.


And now we enter the Small Business Ownership phase of this story. I began building this biz during The Leanest Years with the simple goal of not wanting to live off coupons and to be able to take the kids to Chick-fil-A without having to check our bank account first. And over the course of 5 years we grew to the point that Steven could leave his full time job and join me (whoa, risky), and add more designers to our team. As we began earning more, we began saving more. And also we spent more, because while saving money is great you also have to live your life. And living a frugal life doesn’t mean depravation, it means conscious spending. But the trick here is that we started spending a little more, but we saved a lot more. We had a lot of practice living on less, after all. Which brings us to the best phase...


The We are Doing Okay Years. When the opportunity popped up this summer to build our dream house, we were ready. We had enough in the bank to qualify for the new house WITHOUT having to sell our old house first. What the WHAT?! Yeah, that surprised us too. But we did sell our old house first, because we are risk-averse people who didn’t want the threat or pressure of carrying two mortgages should the stars not align when selling our home. Which gets us to where we are today, sitting happily in a rental, mortgage-free, money in the bank, and waiting for our new house to be finished.


If at this point you’re thinking “well this is all well and great for YOU, but I haven’t spent the last 15 years saving all this extra money!” Don’t worry, friend, I got you. There’s still 4 more strategies to go because it’s never too late to start making changes and creating better habits for your finances.

2. GET LOTS OF ADVICE. Two weeks after Steven was laid off back in 2009, the Lord sent us a miracle in the form of a free financial advisor. A team of two financial planners came to my place of work and hosted a seminar, and they had sign-ups for anyone who had specific money questions. Since our financial life had just changed drastically with our income being cut in half, I signed up immediately. I had expected to get advice on how to cut our spending, but their advice was the opposite – INVEST. $500 a month, every month. This seemed shocking and impossible at the time since we were down thousands a month with that lost income, but their reasoning was solid. We’ve added more experts as our finances have grown in amount and complexity. We have accountants that advise us in our business finances and sought out a real estate financial expert when we were exploring building a house. And even when we had financial strains and lean years, we never stopped investing, because it was AUTOMATED.





3. AUTOMATE AS MUCH AS POSSIBLE. Let’s be honest, will-power isn’t most people’s strong suit. We all tend spend the money that is available to us in our checking account without really realizing it. And we mean to get better about saving but never really get around to it. The trick to saving more is to HIDE THE MONEY FROM YOURSELF. Keep the amount in your checking low and move everything else out so you don’t fritter it away on Amazon and takeout. It’s wise to keep a buffer amount that’s always in your checking that you don’t spend ($1000 is a nice easy round number to work with, but choose a number that works for you). Thankfully online banking makes this a relatively easy thing to do. You can usually set this up in just a couple of hours and then it runs in the background for you until you say stop. Here are a few things we do:


· Emergency Fund Automation - Every time a deposit goes into our checking account, 10% automatically goes to our emergency fund. The goal here is to have at least 3 months’ worth of expenses saved, then build to 6. Then maybe to 12. You decide what your comfort level is.


· Savings Goals Automation - Once a month we take money from our emergency fund and move it into a high interest online savings account (we use Ally). That money gets divvied up within that account towards our specific financial goals – home improvement, general savings, and a massive month-long trip to Europe we’re planning for our 40th birthdays.


· Retirement Automation - If you work for a company with a 401K you may already be doing this, and if you aren’t, START! Once a month a percentage of our income is automatically transferred out of checking and into our retirement accounts.


4. DON’T SPEND ON THINGS YOU DON’T CARE ABOUT. This sounds simple, but it isn’t always easy. We don’t have gym memberships because we know that we aren’t the people that go to a gym; we’d rather just take a walk around the neighborhood. We like to take the occasional trip, but aren’t “wanderlust” types that feel the urge to visit new places, so we don’t spend a ton on travel. We aren’t big on fancy cars, so we have 2 reliable KIAs that get us where we need to go. And while we like looking put-together, fancy clothes or skincare products or massages or facials aren’t our things, so we rarely spend there. I learned how to cut all the boys’ hair so we don’t have to spend $80/month on 4 haircuts. We both have iPhones, but they are older version 7s and not the 11 or whatever else they are up to now. Our TV is 10 years old and working fine, so we’ve never replaced it for something bigger or better. What we have gets the job done, so we don’t spend on the latest tech. You get the idea.


By identifying the categories of spending that you don’t care a ton about and reducing (or eliminating) spending, you then increase the amount that you can either save or spend on things you DO care about. We are ruthless about this, and it pays off BIG TIME.

5. SPEND GUILT-FREE(ISH) ON THE THINGS YOU DO CARE ABOUT. This is the fun part, but also where we’ve had to do some major mindset work. We’ve operated for so long with a scarcity money complex that it took a bit of adjusting to start to let the purse strings go a bit. Building a home is something we’ve always wanted to do, and we realized that all of the saving we’d been doing for 15+ years has made that a reality. Shifting our mindset from a Budget to a Spending Plan allowed us the freedom to allocate those saved dollars towards something that would make our family happy and serve us over the long haul. For us it’s a home, for you it might be something else, but the important thing is figuring out what IT is for you and making a plan to make it happen.

There you have it! The 5 strategies we’ve used over the years to get us to a major life-goal. This is really the tip of the iceberg. If you want to dive deeper into these tactics, I highly recommend you check out the following resources:


  • I Will Teach You To Be Rich by Ramit Sethi

  • The Crissty Wright Show – a great podcast from one of the Dave Ramsay folks. She talks about financial strategies and lots of other great life advice.

  • Work Optional: Retire Early the Non-Penny Pinching Way by Tanja Hester. It's just like what the title describes. Whether you'd like to retire early, take breaks from work, or something in between, there are a lot of great strategies in here to make your money work harder for you.

  • YNAB (aka You Need a Budget) - I haven't used this tool personally for budgeting (I'm a spreadsheet girl) but I know so many people who RAVE about it that I had to share it. It's an online budgeting software that works more like a Spending Plan and less like a restrictive budget. It syncs with your accounts, gives every dollar a job, and shows you where your money is going. They often run free trials so do a little web search for promos if you decide to sign up!


PHEW. There you have it. The 5 strategies we've used to save for building our dream home. I'd love to hear if you guys use any of these same tactics, or if you have others to share!


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