Why I gave up on my plan to buy a house because of COVID



  • 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 income, I realized I had to fill my savings urgently.
  • There is no point in trying to buy a home in LA until you have enough savings and investment.
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A few years ago, I began to seriously consider the possibility of owning a home. Thanks to freelance writing, my income has increased, and it seemed like the financially reasonable thing to do. I even went through the process of getting pre-approved for a mortgage.

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

But the pandemic has turned things upside down for me and, for now, I have given up on buying a house for several reasons.

I’m more focused on saving for a rainy day

When COVID-19 hit and people suffered drastic job losses, it showed me how quickly a person’s financial situation can change. I re-examined my savings goals and realized how important it is to have a strong emergency fund. When the pandemic hit, I decided to focus on saving for a rainy day.

Before the pandemic, I had diligently put money into a house fund in my Capital One 360 ​​Account hoping to save enough for a down payment. I transferred the money to a few CD and stagger them so that the maturity date of each account is staggered. When all of my CDs expired, I let that money sit in my home savings fund. But I later decided to transfer this money to an emergency fund. My household funds alone would cover about five months of my basic living expenses.

I focused on strengthening my emergency fund by automatically saving

Because so many people were suffering from lost income, I wanted to have a little more in my savings. So every month I put a little aside in my emergency fund. It was money that I would have otherwise put in my 401 (k) solo account.

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

I have set up an emergency fund for my business

I was also not that aggressive in my retirement savings goals. Although I saved for retirement, I wanted to have at least $ 10,000 in my business account to cover health insurance, productivity tools, tools for small businesses, marketing costs such as l web hosting and all other business related expenses.

Before the pandemic, when it occurred to me to create an emergency fund for my business, I only really took the idea of ​​creating one seriously last year. Because there is so much in the air due to COVID-19, and as a freelance writer I am subject to cycles of partying and starvation, I decided to create a second emergency fund.

A percentage of my income goes to my retirement account

Although I have reduced my retirement savings goals, I still save regularly for my future. I automatically contribute each month to my Traditional IRA, and I also save each week to my Health savings account. Right now it’s on autopilot, and if I don’t make any changes I’ll save the maximum on both accounts – $ 6,000 for 2021 for IRAs and $ 3,600 for HSAs.

Once my basic monthly living expenses are accounted for, I contribute a percentage of my take-home pay into my Solo 401 (k) retirement fund. Because my income changes from month to month, instead of committing to a fixed amount, I aim to put away some of what is left.

I could see again if I leave the state

Last time I checked, homes in Los Angeles County, where I currently live, weren’t cheap. According to Zillow, the average price of a home in Los Angeles is around $ 810,000. If I wanted to put 20% of the mortgage down as a down payment, that would mean losing about $ 162,000. If I wanted to put 10%, it would be closer to $ 81,000.

It’s not surprising, but some of my relatives and friends who live in other parts of the country were able to buy a house for much less. For example, for Zillow, the average cost of a house in Orlando is $ 277,000.

For now, my focus is more on saving than I can for a rainy day fund and putting the money into my retirement fund. Until I could comfortably save for a down payment in SoCal (eye roll) or was ready to move to a cheaper part of the country, I stopped looking for homeownership. This has simplified my savings so that I now focus on emergency savings, investing, and saving for retirement.



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