For many years, buying a home was both the cornerstone of the American Dream and pretty much guaranteed to improve your financial circumstances. Unfortunately, this is no longer the case — many Americans have been priced out of the housing market thanks to wages not keeping pace with home prices. You need to think long and hard (and do a lot of math) before signing on the dotted line with a mortgage lender.
I had a pretty terrible experience the first time I bought a home 14 years ago, thanks to being emotionally and financially unprepared, so it took a lot of soul-searching to decide to buy again. After I made my decision, I spent two years paying off debt and saving money (and boosting my credit score in the process), and in spring 2024, I became a homeowner again.
Here are three ways my second chance at homeownership has already improved my finances.
1. More storage space means it’s easier to buy in bulk
We’re big fans of Costco here at The Ascent, and thanks to buying a house with a basement and decent closets, I have finally joined the Costco bandwagon. Admittedly, my local warehouse is about an hour away, so I won’t be able to visit every week (and likely not every month, either).
But if I shop online and make a big shopping trip a few times a year to stock up on nonperishable food and paper goods, I can save myself money compared to buying these items in smaller quantities at the grocery store. I could even use my Costco membership to save on a new refrigerator for my basement so I can extend my bulk shopping habits to perishable food items, too.
2. A better home office means greater productivity
I’m a full-time freelancer, and since my work is based on a computer, I can do my job from anywhere. In practice, that means that 99% of the time I work from home.
I spent several hundred dollars on paint, furnishings, and electrical upgrades to make one of the bedrooms in my apartment into a home office right before I started freelancing. Doing the same in a house was a priority for me, especially now that I’ve almost doubled my housing costs — I’ve got to keep up with those mortgage payments!
Thankfully, the house I bought has a perfect little nook right off the living room, and so far, it’s been a great place to work. I’m just a few feet away from the modem and router, giving me a strong wifi connection for minimal work disruptions. I’m close to the kitchen and the first floor bathroom. And I have quiet neighbors, so the cats and I can even enjoy the breeze from open windows on days with nice weather.
3. A garage means having a place to keep an old, paid-off car
One of the smartest financial decisions I’ve ever made was buying a reliable and inexpensive new car in 2009, paying it off, and continuing to drive it to this day. I enjoy cheap car insurance coverage, and not having a car payment for the last decade has freed up more cash in my budget.
But nothing lasts forever, and over the last handful of years, I’ve had to put money into repairs needed because of my car’s advanced age. I live in a place with severe winter weather, and the last few winters, I was parking my car on the street in front of my apartment, where it was susceptible to snow, ice, and road salt. That means rust — which will eat a car alive.
Buying a home with a garage was a priority for me. My elderly car will no longer have to sit on the street in the winter — it’ll be safe and covered. I’m hoping this will mean I can get even more years out of it — with the average new car payment sitting at $734 per month as of Q1 2024, that’s not an expense I’m eager to take on anytime soon.
Will buying a home improve your finances?
Becoming a homeowner is not an automatic slam dunk for your budget and your life — especially with our new reality of mortgage rates over 6%. Rates are slowly declining, and they’ll probably fall further now that the Federal Reserve has begun lowering the federal funds rate. But you certainly can’t expect a 3% mortgage rate like you might have gotten in 2020 or 2021.
That said, if you can afford the upfront and ongoing costs, buying a house could do wonders for you, too. If you end up with more space at home for bulk purchases, a nicer environment to work from home, and a covered space to keep a vehicle you’re hoping to preserve, the extra cost of a mortgage and all other related homeownership expenses could be worth it.