Ive been saving to buy a house for years, but COVID showed me a better use for my money

  • I started saving for a down payment a few years ago and had about $25,000 set aside.
  • But when I saw COVID wipe out jobs and incomes, I realized I needed to fill my emergency savings.
  • There’s no point trying to buy a house in LA before I have enough savings and investments.
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A few years ago, I started to seriously consider the possibility of homeownership. Through freelance writing, my income had ramped up, and it seemed like the financially sensible thing to do. I even went through the process of getting pre-approved for a mortgage. 

I started to save some money toward a down payment for a house. And as a methodical saver who put my savings goals on autopilot, I was making some progress. Last year, after saving for several years, I had about $25,000 for a down payment. 

But the pandemic shook things up for me and, for now, I’ve abandoned the idea of buying a house for a few reasons.

I’m more focused on saving for a rainy day 

When COVID-19 hit and people were suffering job losses en masse, it showed me just how quickly a person’s financial situation can change. I took another hard look at my savings goals and realized how important it was to have a robust emergency fund. When the pandemic hit, I decided to focus on saving for a rainy day.

Pre-pandemic, I had been diligently socking away money into a house fund in my Capital One 360 account in the hopes of potentially saving enough for a down payment. I moved the money to a few CDs and laddered them so that the maturity date for each account would be staggered. When all my CDs matured, I let that money sit in my house-savings fund. But I later decided to move that money into an emergency fund. The funds in my house fund alone would cover about five months of my basic living expenses.

I focused on bolstering my emergency fund by auto-saving

Because so many people were suffering from loss of income, I wanted to have a little more in my savings. So each month, I put a little aside into my emergency fund. This was money that I would’ve otherwise put toward my Solo 401(k) account.

I saved a little each month until I had about nine months of basic living expenses covered. It was what I needed to be comfortable in case work started to slow down or I was hit with a financial emergency and needed to tap into those funds.

I set up an emergency fund for my business 

I also wasn’t as aggressive in my savings goals for my retirement. While I did save for retirement, I wanted to have at least $10,000 in my business account to cover health insurance, productivity tools, small business tools, marketing costs such as web hosting, and any other business-related expenses that came my way. 

Before the pandemic, while it crossed my mind to set up an emergency fund for my business, I didn’t really get serious about establishing one until last year. Because so much is in the air because of COVID-19, and as a freelancer I’m subject to feast and famine cycles, I decided to create a second emergency fund. 

A percentage of my income goes toward my retirement account

While I’ve scaled back on my retirement savings goals, I still save regularly for my future. I auto-contribute every month to my traditional IRA, and also save weekly into my Health Savings Account. Right now it’s on autopilot, and if I don’t make any changes, I’ll be saving the max on both accounts, which is $6,000 for 2021 for IRAs, and $3,600 for HSAs. 

After my basic monthly living expenses are accounted for, I tuck away a percentage of my take-home pay into my Solo 401(k) retirement fund. Because my income changes month to month, instead of committing to a set amount, I aim to tuck away a portion of whatever is leftover.

I might revisit if I move out of the state 

Last I checked, homes in Los Angeles County, which is where I currently live, weren’t cheap. According to Zillow, the average price of a house in Los Angeles is about $810,000. If I wanted to put down 20% of the mortgage as a down payment, that would mean squirreling away about $80,000. If I wanted to put down 10%, that would be closer to $40,000.

It comes as no surprise, but some of my relatives and friends who live in other parts of the country were able to buy a home for far less. For instance, per Zillow, the average cost of a house in Orlando is $277,000. 

For now, I’m more focused on saving what I can for a rainy day fund, and also putting money into my retirement fund. Until I can comfortably save for a down payment in SoCal (eye roll) or am willing to move to a less-pricey part of the country, I’ve stopped pursuing homeownership. It’s simplified my savings so that I now focus on emergency savings, investing, and saving for retirement. 

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