Skipping Starbucks = Down Payment?

Skipping Starbucks

I recently saw a post about how if you skipped your Starbucks order you still wouldn’t have enough money for a downpayment so order away. I find this to be incredibly horrible advice. It's like saying, “If you cannot save for the most expensive purchase of your entire life by cutting out a single aspect of your spending, then don’t try at all”. It is so short sighted and overly simplistic. But maybe Eric Hoke is being sarcastic, who knows.     

 

Looking at the numbers, 5% downpayment on a $400,000 house would be $20,000. Using this example and ignoring investment gains (which would greatly speed up the saving process) you would be over halfway to a downpayment in 10 years just by removing One Single Habit. Now imagine you removed another habit like eating out, or going to the movies or reduced your vacation budget. You would have a downpayment in less than 5 years all while not earning any additional money. You literally don’t have to do anything, just reframe from some spending. If you started at age 20, there is no way you would make it to 30 without a downpayment. No additional work needed. If you read Mindset Shifts for Financial Saving post, there are many additional ways to cut back to speed up saving for a down payment like lowering your phone bill, insurance, rent etc.

I believe Eric is well intentioned, but his tweet could wrongly influence others to enjoy their overpriced drinks while being completely oblivious to their earning potential. It is wrong and narrow-minded.

Believe it or not, but money adds up and multiplied by years it can equate to a lot of money. Enough money to pay for a house. Simply saying, it's too hard to save, is lazy and shortsighted.      

If you found this helpful and would like help budgeting or investing please email me at TaylorMckeeCoaching@gmail.com