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We Paid Cash: A Down Payment

We paid cash!

A testimony from Anne of Modern Mrs Darcy

My husband and I set a big hairy goal more than ten years ago. We wanted to move out of our much-loved starter home (6 people, 1 bathroom, you get it) into a slightly larger place — while keeping our first home so we could rent it out. We wanted to do it before our oldest child — then a toddler — hit the teen years.

We did our research: our banker suggested we borrow a big chunk of change off our first house to use as a down payment for the second, but we didn’t want to. We were uncomfortable with cashing out our equity: the big crash of 2008 was still fresh in our minds, and we didn’t want to give up the margin we enjoyed because of our small mortgage. Besides, once we put our first home into use as a rental, we wanted that place to cash flow. That’s easy to do with a small mortgage, but much harder with a brand-new 80% one.

So that meant we needed to save up a down payment from scratch. While still paying the mortgage on our first home. Yikes!

To make a long story short, we did it. We moved into our new place in May, and our new tenants moved into our old home a week later. Here’s how we did it:

Think long term.

We have known for over a decade that 1. we wanted to move before our oldest was a teen and 2. we wanted to keep our first home when we did.

Richard Foster says that people overestimate what they can accomplish in one year but grossly underestimate what they can accomplish in ten. We were working with a ten-year plan.

Sweat the big stuff.

Most Americans spend the most on housing and cars. We had a low mortgage payment on our first home, and we aren’t car people. (That’s a nice way of saying our cars are old and inexpensive to operate.)

Bonus: we don’t freak out when one of us dings the minivan backing into the stone wall at the park. Hypothetically speaking.

Put it on autopilot.

For years, we’ve relied on automatic deductions to take a portion of our paychecks straight out of our checking account and into savings. This was especially helpful early on when we were lacking in enthusiasm because we had so far to go.

Stick to the essentials.

The closer we got to our goal, the more motivated we became. For the last year we spent very little on nonessentials. The closer we got to the goal, the more we cut out because we were close enough to taste it.

Save dollars big and small.

Unexpected birthday checks, payments from consignment stores, yard sale funds, freelancing checks: whether it was $3 or $300, we banked all those extra income checks in a designated savings account at a not-normal-to-us financial institution that was really a pain to withdraw funds from.

Just keep swimming.

Ten years ago, it was daunting knowing that we needed to save up a big chunk of change starting from zero. But we just kept plugging away.

We were inspired by Crystal’s own journey to pay cash for a house. Like her, progress came slowly at first, and then all at once.

It wasn’t easy, and it took ten years, but paying cash for the downpayment on our new house sure felt great!

house keys

Anne Bogel loves strong coffee, long books, and big ideas. She’s putting a timely spin on timeless women’s issues at her blog Modern Mrs Darcy, where readers engage in an ongoing conversation on womanhood today. A classic INFP, Anne couldn’t choose a favorite book – or child – if you paid her, but she would love to talk about your best-loved titles and what we can learn from heroines like Lizzie Bennet and Anne Shirley all the live-long day.

Have you saved up and paid cash for something — large or small? Submit your story for possible publication here.

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7 Comments

  • Sara says:

    Good for you!

  • Thanks for sharing your story!! I find it encouraging for those of us working on those lllooonnnggg term goals! 🙂 Our goal is to pay off our final debt, our mortgage, ASAP but that can only move so fast. LOL

    BTW, love the Modern Mrs. Darcy blog!!

  • Carrie says:

    Thanks for sharing your story with us. I follow your blog and I am always motivated to set goals for my family. You are an inspiration.

  • Amiyrah says:

    Thank you for sharing this! We are looking for the same goal, and would like to give a 50% down payment for our first new home. It’s been a journey to save, but we have a plan and are sticking to it. This was something I really needed to read today.

  • JP says:

    Just keep swimming! Just keep swimming! Just keep swimming!

    Love it.

    Automation is one of my favorite parts of personal finance. Make the decision today for years to come.

    Some things I automate:
    – 401k contribution
    – IRA contribution
    – Savings contribution
    – Credit card payment
    – Electricity payment
    – Phone payment
    – Rent payment

    This frees up my time to review my weekly finances, plan for low cost retirement vehicles, budget effectively for trips, and read!

  • Wonderful post Anne!! We too made a decision 3 years ago to save for a large down payment (though we had the help of equity already in our first home!) We were amazed at how it all just added up. It seemed almost mind-boggling how much we were able to save when we got focused and put every spare dollar toward our down payment fund!!

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