For Generation Y: the road to homeownership starts with saving
By Elaine Quigley, Realtor, CBR, CRS, GRI, Prudential Prime Properties
For many people, the American dream of owning a home is exactly that: a dream. The housing crisis, the high unemployment rate, increasing debt, and tougher restrictions on mortgage qualifications, make it seem like Mission Impossible, especially for generations like Gen Y. The “millennials,” as they’re also often called, are referred to as the group born between the mid-1970s to the late 1990s.
While this group came of age during turbulent economic times, homeownership is still a priority to them. It may, however, seem that factors are stacked against them. This group tends to be well educated – many went to college — and they also have an entrepreneurial spirit that makes them creative with their money.
But for Gen Y, if they want to achieve the American dream, a few critical steps will pave the way to the road to homeownership.
It is important to get a handle on debt. This generation likes the idea of being their own boss, working from home, telecommuting or “sidepreneurism,” the term used for people who start their own side business while still working full-time. They can be very creative in developing money-making jobs with the Internet and start-ups are often part of their dream job. However, sometimes these starts-ups are funded with only their own credit cards, which can rack up a considerable amount of debt. If the company is profitable all ends well but if not, they may be strapped with that debt which makes it very difficult to save for a home. Plus much of this generation has student loans and debts that they’re still paying off.
Like anyone interested in buying a home, focusing on reducing debt will help prepare them to qualify for a mortgage. When possible, cutting back on major expenses is a good way to start saving for that home.
For the first time, people are keeping their cars longer than ever. Many people are opting to continue with repairs and maintenance for their current car rather than have a monthly new car payment. This can be an excellent strategy to help save money as long as the repairs and gas money on the older car don’t equal more than a new car payment and the cost of gas, registration and insurance. A newer car will have a higher vehicle registration fee but also, at least initially, fewer repair expenses and it will likely get better gas mileage.
Other ways Gen Y can save are to cut the cable and home telephone cords. This can save more than $100 a month. This generation grew up with the use of computers and electronics. Many see no real need for cable or even Internet at home. Their offices are often coffee shops that offer free WiFi. They often use their smartphones and cellular data packages to watch shows and get the news. A home phone has become obsolete for many because they simply use their cell phones. Cutting household utility expenses such as these can end up saving them hundreds of dollars a year.
Still others are renting rooms out or even renting out their furnished homes when they travel for work or play. Using sites that advertise for short-term rentals, some in this generation are finding they can make a little extra cash by having a roommate or renting out their furnished home, even for a short period such as a couple of weeks when they’re away. And, of course, some are moving back home with their parents to save up for that down payment. The more they can save, the better prepared they’ll be to achieve the American dream of homeownership.
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