43: Can it be done? Interview with a First Time Home Buyer

Hello everyone, my name is Carolyn. Welcome to the Saving for Your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives. For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this. Welcome back to the Saving for Your First Home podcast. I'm Carolyn, your money coach, and today we are super excited to invite a guest onto our show. She has a truly inspiring story, so I thought I'd bring her onto the show so we can chat and investigate how she developed this disciplined money mindset that allowed her to begin her investing journey at such a young age. So let's welcome Cynthia to the show. Hi there, how are you doing Good? how are you Good, good? Thank you so much for joining us today. Just tell me a little bit about yourself and where you're at in your career.

I'm a teacher. I've been teaching for three years permanently and six years overall, something I wanted. I'm slowly hitting my financial goals and I just put a deposit on a house, and we'll get into that a bit later.

Of course, that's super exciting Wow. Age of 29 and you've been working full time for three years and now have a down payment for your home, So you're doing something right. So we're gonna have to investigate that. Tell me a little bit about your money story, which is like your background.

Who taught you about saving and investing From a young age I was always told that I need to work for money. I need to work for it and earn it. So when I was little, i would get $5 every time I did the dishes. So I was taught to get money and save it. when I was younger And then, as I go older, when I was in high school, when I wanted to do certain things, i needed to get money for it. So if I wanted to go to the movies or go to the mall with some friends, i actually started working quite young. when I was in high school, at 15 years old, i got my first job. And then, when I was 17, i ended up working three jobs. I don't know how I did it, but I did it. It didn't taste like great, though, so that's good, yeah. So when I was working I was able to save and put some money aside And I didn't have to be so financially dependent. I got a little bit of financial freedom by doing that and tucking some money away, all while living rent free as a high school student, right. So that helped a lot And I didn't want anything to hold me back from what I wanted to do. I know I wanted to go away for school, so I wanted to make sure I had some money aside for that. And even when I was in school I did go on OSAP. I also got a job when I was in school too, so that also helped. And when I did go on OSAP I didn't spend all that money I still. I only spent what I needed and tucked the rest aside. So I guess that training from a young age you know I need to work for it And then realizing okay, so if I want to do things, i need to have some money for it And I have to put that aside. I think that really helped me.

That's great. What made you disciplined? Because a lot of people get jobs throughout high school and becomes like oh, now I'm earning money, i don't have to rely on my parents, so now I can spend on whatever I want. What were your tools that made you disciplined to actually put the money away?

So what made me disciplined? To be honest, it's because my family doesn't come from money. So I wanted to make sure that I change that narrative and I do have money put aside and I can build and invest so that my kids and their kids can create some type of generational wealth that we don't have to worry and I don't have to let money hold me back. So it was because I didn't come from money and I saw how my family struggled. I didn't want that same story, so that's what really pushed me. I need to put money aside and not have those same problems.

Yeah, I can see that because generationally we can see patterns happen and so if your parents kind of struggled, some kids will, you know, kind of maybe either fall into the same trap or do the complete opposite, And I guess also because you were going to school and had to pay for that and that's a big cost to you, assuming that that would also be a big factor on. okay, wait a minute, if I want to do this, then I'm going to have to put things away.

Yes, and then I also knew I had to pay that back and I was responsible for paying it back. So that's that also made me very disciplined. If I spend all this, what am I going to have to pay it back? And I don't have, you know, someone to just come and pay it for me. I have to be able to pay it for myself.

So that's also another barrier. That's fantastic. So what are some of the money traps? Now let's head into, i guess, university years, because that's actually when most of the traps happen. You know that you're offered debt. You're offered all these things because you're considered a young adult. What money traps did you fall into or maybe didn't just based on your past experiences?

I would say overall was pretty good. I didn't splurge on buying a new car or anything like that. I'm still driving my same car that I've always had my 2003 Honda Civic, and it's been pushed There. We go Nice Kilometers now but it's still pushing. It's still pushing And I'll drive it to the ground. But I will say, when I was in school, shopping was a thing I was spending a lot on, but I quickly broke that habit and I just spend within my means now. Otherwise, i was pretty good. I was pretty disciplined. I just paid for what I needed and I put the money aside. I actually ended up paying off all my OSAP at 25. So I was very, very good, and that was only retail at the time, so I was just doing what I can.

Yeah, that's amazing because you know a lot of people. They come out of university with these big student debts and it's not until they're like late 30s even where they're actually paying that off, because it doesn't become a priority. I think sometimes the government makes it difficult because they put the interest rate so low, and so what happens is people are like, ah, i don't need to pay that interest rate so low. Right, you know. As you know, you're going and as you get older, unfortunately you have more responsibilities and so debt can creep in, and then the student loan is still hanging over you. It makes it even more difficult.

Yes, And you know what I did. I treated my paychecks Whenever I got paid. I put about 80, 90% away. I just only spent what I needed and I toughed the rest of sign. That really helped me and I just pretend it wasn't there.

Okay, because I knew I knew not other things. That is a very strict discipline, because the normal I guess a budgeting rule is you'd have like 50, 30, 20. So for example, i know, so you're right up there. No, it's good. It's good to hear these inspiring stories, because a lot of people don't have that same discipline, and so learning how to budget and learning how to put that money away, what was your while and what drove you?

Again. It was just to be in a different situation from my family, and I want a better future for my kids where they don't have to struggle and they have a bit of a still want to create that generational well for them, and I want to teach them young about saving and investing. Investing is something I learned recently, that's before I was just so focused on save, save, save, save, save, save, get out of debt. Now I've done that, so it's like now the world is your oyster, right? I'm working so hard to have all this money in that one. Do I want to keep going down this path, just working so hard and saving all the money? because now it gets a little bit tiring. So I started thinking okay, how can I now make the money work for me? So that's how I switch gears and that's when I start plugging money into things, and I actually just recently did that this year. That wasn't my thinking. Before It was just save, save, save, get out of debt.

Let's quickly say okay, just going back to your savings plan. So would you just put it in a bank account or would you put it into like some type of a tool, like a TFSA or something like that?

So back then I didn't really know much about TFSAs. It was all just sitting in a regular checking account. I did have one TFSA, but it wasn't anything where it's growing, it's just sitting in that account. I didn't really know how to operate it or what to do with it. So if I look back, i could have made a lot more money than yeah, what I had, but that's okay.

Yeah, the savings is just the first step. To be honest with you And, like I said, you're young, so just starting your investing career now is going to tell you into the future, because not only does compound interest work in your favor. Putting your money into an investment like a home, or even to other things like your retirement, you know other goals that you may have. You can make your money work for you, like you said. So, yeah, that's perfect And okay. so along your path, did you seek advice from anybody?

Yes, recently I spoke to an insurance advisor. She was the one who introduced me into getting a whole life insurance. So that's my first type of investment. It was the whole life insurance a participating whole life insurance And at first I was a bit skeptical, but then I saw how it can work and how it can make my money work for me. I was told it's also good to start when you're young. Now I just put money in at the due for 20 years and then after 20 years I stop. I don't have to put any money in and the money just grows on its own and it works for me And at any time I can pull out money from there And if anything happens to me, that money goes on to whoever I put on file. I don't have any kids, but it'll go to my siblings if anything.

People are not really aware of what a whole insurance is. Do you think about it as like life insurance And so all that? just you know, when you die you get the money, But that's not really how it works. It's actually make it work for you during your lifetime. So, yeah, I think she started something like that very, very young.

Yeah, And I know some people might be a little bit skeptical because it is more expensive than term insurance. But when you put the money to term returns it just goes in there and then you don't get anything back, Whereas this one it's a participating life and you're participating in it and you can pull money from it too.

Exactly So that's fantastic.

She also introduced me to Morris. This time I got another TFSA, but this time a segregated fund and it was growing slowly something at my rates. And then I was also introduced to getting an RSP, which has also helped me a lot with getting a home as well. So all those things have helped me, and that was all within earlier this 2022 and the beginning of 2023.

Yeah, very recent. Very recent, yeah, because a lot of people they don't know the rules around RSPs and how we actually again, you think of it as a retirement tool, but it can be really helpful for first time home buyers as of the exemptions that are out there. So taking advantage of that and building it, and not only is it good for first time home buyers, it's also good for your tax return right.

I'm very happy when I saw my return.

So not only are you, you know you're benefiting there, you're benefiting on the other end as well. So the only thing I would caution is that when you have an RSP and you use it for a home, you do have to pay it back. So a lot of people forget about that and they're like oh whatever, you have 20 years to pay it back. I don't have any worries for you because you're a great planner, but it's just a matter of thinking about how you're going to pay that back on a yearly basis, and it can be easily divided up if you're disciplined.

Yeah, I agree.

Okay, so let's hear it. How did you put a down payment on your first home?

I want to start by saying I didn't think it was possible because a lot of the odds are against me. I'm doing it by myself. It's really hard to do it alone. It's easier to have a co-signer or someone to do it with, so you guys can have dual income. So, because it's me by myself, my income wasn't as high. So I have to get that 20% down. So I just had to make sure again, me being disciplined and using all the right tools to make sure I get that 20%. And I got it, and I didn't think I could do it. Yeah, i got the 20% down, which made it a bit easier for me. I found the right home in my budget and I got it lower than the listing price, so that was very happy about that. I bargained for the price I wanted And that's what helped me get it.

I would say So now the banks have a lot of interesting rules, like around income testing and different things. Was that a barrier at all?

Yes at first, but if you can come up with a down payment, that kind of offsets it. I wanted to put less down, but if I did, then I have to deal with all these other fees. It'd be too hard for me to do on my own, so I had to just make sure I got the 20%. And it's also very important to speak with the right people, because I was working with different people early in the year looking for a home and I couldn't get anything. I couldn't get approved for anything. And then I saw one of my old friends who is now the mortgage agent and I just reached out to him. I was about to give up, actually. And then I reached out to him and said, hey, is it possible for me to get a home without a cosigner, without any gift money from family? Can I do this on my own? And he gave me a lot of hope and, yeah, he worked through the numbers. He told me you're actually doing really well. This is the amount that you can be approved for and can you get 20% for, say, this amount? And yeah, he was able to work the numbers and I had a better budget and I knew where to look. So that's why I was bargaining with the listing prices that I saw, so I can get that number that I know I can hit and be approved for.

Yeah, the right people and getting the right advice. A lot of people they go straight to the big banks and are really tough And again they have all these criteria and restrictions on lending money And so you know from your perspective that you would have wouldn't qualify based on all of their restrictions. But when you go through someone with a mortgage broker that has relationships with banks, they can vouch for you, they can provide the numbers to the banks for you on your behalf, because they've already done some of the calculations. That in itself can make a difference on whether or not you're approved or not.

So yes, made a big difference.

Yeah, yeah. So that's great that you investigated that resource, for sure. So, okay, now what's next on your horizon? I mean, these are big things, like. I'm sure you have bigger goals ahead of you. Yes.

Well, i'm hoping closing goes well. That's going to be in the summer, so I want everything to go out of closing. Other than that, i still want to continue trying to see how to make my money work for me, possibly getting some passive income somehow. I'm thinking to somehow start a business of some sort. That's something I have to think through and think what would make sense and what I think about my passions and what I'm good at, and figure that out. Other than that, it's just continuing to pay back the RSP and investing into the accounts I do have that I had to pull from, but just investing back in.

Also. actually you spoke about the closing costs, so were you able to kind of allocate money aside, and how did you figure out how much you need?

So I got an estimate amount of closing costs, but I don't focus on that amount. I try to double that or just to make sure I have enough, just in case, because I don't want any scares. I did account for that. I did put some money aside for closing costs.

Okay, yeah, again. Sometimes it's like these hidden costs, like that kind of pop up out of nowhere, not so much for the first time home buyer, but there's land transfer tax that you will have to consider, lawyer fees, there's insurance, there's just so many things right, and you think, oh, i've got the down payment, and then all these other things come up and you're like what? So?

I'm not expected and prepare for it.

That's how my model is like be prepared for that unexpected, because you just don't know right. I know of a story actually once where someone closed on a home and the person that was selling the home they had back taxes so they weren't paying property tax. So now when you own that home, all of a sudden you become sort of responsible for the taxes that are only on that property, and so obviously lawyers can deal with it and try and get the money, but you have to close that house. That money has to be paid right, and so that was a big surprise to this person, and so you know it's just something that just comes out of nowhere and you don't even know right. Those are things to think about. Also, i think you've already gone through this now. But the home inspection how did that go?

That was good, that went well So no worries there, Yeah look at the status of the kid and everything Yeah.

Yeah. So again, yeah, these are just things that you know. You kind of have to be prepared for anything that you know may come along, and so so it's good to see that you have that reserve ready, just in case. Yes, do you have any advice for someone who is, let's say, 10 years younger, right? So we're talking 19. Okay, and they're just starting their verge on, basically, adulthood, i guess. What would you recommend for that person?

Don't blow all your money going out with friends. Put your money aside. I know you want to have your fun and go out all the time, but still think about your future and put some money aside. And also, when you do put that money inside, look into some investing options. I would say Okay, that's great.

Thank you so much for joining us. It's been a great conversation, thank you for having me Yeah. All the best and all the things that you tackle. I know you're going to do great things.

All right, thank you so much.

All right Take care. Wasn't that inspiring. I want you guys to take away three important lessons from that interview, the first being discipline. Life is going to throw you curve balls, but being disciplined means that you are focused on the task at hand. So, although life will get in the way at times, having discipline will ensure that you reach your goals that much faster. The second lesson that we should take away is to seek advice. Sometimes we think we know everything. I mean, google can tell us all sorts of things, but seeking the advice of professionals, or even just people that have walked the path before you, is really going to open your eyes to possibilities that you didn't even think of. And the final lesson is grit and determination. That is exactly how Cynthia was able to purchase her very first home at the age of 29. Determination is something that gets us through when things are difficult And you may not even know what the price is. But if we're determined to take the action that we need to on a daily basis, on a monthly basis, imagine the impact you're going to have on your finances. If you have an inspiring story that you want to share, feel free to reach out to me. I am more than happy to have you on the show so that we can all share from your experiences. I hope you guys enjoyed this one and we will see you next Thursday, same time, same place. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.