There are many reasons to make homeownership one of your goals, but here I'm going to highlight the most practical, tangible reason to make it your number one goal right now: it will cause your disposable income to increase over time.
What is disposable income?
If you add up your monthly income and subtract your monthly expenses, you'll get your disposable income. Essentially, it's the extra money you have when all your bills are paid. This is the money you have available to travel, go out with friends, buy gifts, increase your savings, donate to charity, etc. It's the money that helps you create the lifestyle you want. I think we can all agree, more disposable income is better!
The key to increasing your disposable income
So how do you increase your disposable income? The most obvious way is to get a better-paying job, or, get a second or third job. Or work overtime at your first job. But working more than one job and working overtime have one terrible drawback: they reduce the time you have to use the extra money you make.
Another way to increase your disposable income is to reduce your expenses. You do this by eliminating or reducing non-essential spending. Examples are to end subscriptions and memberships, eat out less, limit social outings, gifts, etc. This approach may allow you to save extra money for a time, but it requires a lifestyle change that can be difficult to maintain, and probably won't be sufficient enough to create the lifestyle you really want.
How do you increase your disposable income without working more and/or spending less? Stop renting, and buy a house. Watch how this works: When you buy a house, your largest living expense, your shelter, becomes fixed. This means your largest living expense (now your mortgage) stays the same, while your income grows. As your income grows, your disposable income grows. However, if you're renting, your living expense (rent) likely increases every time your income grows, which means you never see an increase in your disposable income. That makes it really hard to create the lifestyle you want.
Key takeaway: owning a home fixes the biggest cost in your monthly budget, so when your income grows, you can actually see and feel it in your wallet.
The power of disposable income
When your wage isn't trying to keep up with your rent, you can start to create the lifestyle you want. You no longer have to live paycheck to paycheck. You start to have power over your money, instead of your money having power over you. Maybe you take a dream vacation; maybe you invest in more property; maybe you support a cause close to your heart; maybe you save more for retirement. The point is, you have extra money, and you get to choose what you want to do with it. Can you imagine?
What lifestyle will you create?
Wondering how to get started with a real estate purchase? Start here or contact me using the form below.
See this post for understanding why finding the right lender with the right loan product to support your home purchase is critical.