Hey everyone! I have an update to share from a reader named Nichole. She first shared her story in August 2021 about how she went from -$20,000 to a six-figure savings by 26 years old. Today, she’s back with an update about buying a house and keeping her monthly payment very low.
Below I outline the steps my husband and I—both 27 at the time of purchase—took to buy a house during a hot market.
We previously wrote a post titled How We Saved Over $100,000 By Age 26. Although we did not reach our original goal of buying the house entirely with cash, we did reduce our effective monthly mortgage payment to just $116.
Yes, you read that correctly: one hundred and sixteen dollars.
I encourage you to read our earlier post for background, as this article is an update. For three years before buying, my husband and I lived in a single room with our three cats. It was tight. We’re thrilled to be in our own home now, and the cats love running around the yard and using their new catio.
First, let’s start with the house details. We bought in early 2022 during a strong market in Southern California.
House details:
- Sales price: $319,000 — roughly 1,300 sq ft, 2 bed / 2 bath on about an acre
- Price after closing costs: $327,000
- Down payment: $100,000
- Final loan amount: $227,000
- Monthly mortgage (principal & interest): $1,116
- Rent from the back house: $1,000
- Net monthly mortgage payment after rent: $116
What we prepared before buying:
- Six months of living expenses saved for emergencies
- A $1,000 emergency fund to avoid using credit cards
- A $2,000 fund for car repairs (one car is a Jaguar XF that can be costly to maintain)
- $20,000 set aside for furnishing and immediate household needs like appliances and furniture
So while we put $100,000 down, we still retained about $45,000 in additional savings. These funds stayed in interest-bearing accounts.
Where we keep our savings:
- Money market account: We moved money between accounts depending on which offered a better rate or sign-up bonus. Occasionally there are transfer bonuses—one time we earned a $500 bonus for moving a lump sum.
- High-yield savings account: Through a local credit union, currently offering near 4% APY. These accounts help protect savings from losing value to inflation while keeping funds liquid.
- Note: These are not investment accounts; they’re intended to preserve buying power and keep funds accessible. Transfers that take a few days also help reduce impulse spending.
Our original plan was to buy the house in cash, but after job changes and the stress of extended communal living, we decided buying sooner made better sense. Mental health matters more than avoiding a mortgage—this was a valuable lesson.
A few additional details:
- We paid homeowners insurance for the year upfront (about $600).
- We opted not to have an impound (escrow) account for taxes and insurance; we save taxes separately in a high-yield account and earn interest on that money during the year.
- We have a rentable back house that brings in $1,000 per month.
- No children—just three cats.
- One full-time income and one commission-based income in our household.
- Part of the house burned in 2019, which ultimately resulted in all-new tile floors, fresh paint, new appliances, a new swamp cooler, and a new chimney—upgrades that became a benefit for us.
- There was a natural death in the home previously; after taking care of the property we had no issues moving in.
Now, let’s dig into a few specifics.
Why we chose no impound account
An impound (or escrow) account bundles property taxes and homeowners insurance into your monthly mortgage payment. We declined this option and instead save the tax and insurance payments in a high-yield savings account. Because my husband receives large, irregular commission checks as a real estate agent, it’s easier for us to set aside lump sums when they arrive and earn interest on them until taxes are due.
Lenders sometimes limit non-impound options based on factors like down payment size. Our 30% down payment and a conventional loan made us eligible to avoid impound. We also prepaid insurance for the year. If we had an impound account our monthly mortgage would be around $1,400—still reasonable—but by handling taxes and insurance ourselves, we keep the monthly payment lower and earn interest on the saved funds.
What we looked for in a home before buying
We treated our first home as an investment. In a strong market, that meant focusing on certain key elements:
- Solid comps in the neighborhood—our house was one of the lower-quality homes on a block where new builds were selling for $200,000–$300,000 more. Being among the less-upgraded homes in a strong area can create appreciation potential.
- Appraisal value higher than our purchase price, which immediately created equity.
- Hidden advantages not always visible on listing sites: our property had almost an acre, a back house with electrical hookups that were grandfathered in, a chicken coop, fruit trees, multiple fenced entries, a barn on a concrete slab, and an attached two-car garage.
We’ll renovate the back house to make it rentable for $1,000 per month. Rather than pocketing that rent, we plan to apply it toward the mortgage principal each month. Paying our regular mortgage of $1,116 plus an extra $1,000 toward principal would shave about 18 years off a 30-year mortgage. Our goal is to pay off the house within 5–7 years, though we’ll reassess as we progress.
Long-term, we plan to hold both properties as rentals, buy another house, and use combined rental income (estimated at around $3,000 or more) to accelerate payoff and reach financial freedom. We saved over $100,000 by age 26, and that discipline set the stage for these plans.
Finding a good tenant
- Background check: Worth the cost; reveals rental and employment history.
- Credit check: Helps assess money management and reliability.
- Two letters of recommendation: Preferably one from a previous landlord and one from a former roommate.
- Security deposit: We ask for one month’s rent up front to cover potential damages.
- Initial interview: Meeting in person builds rapport and clarifies expectations.
- Follow fair housing laws: Always comply with laws when selecting tenants.
The buying process
We chose a 30-year mortgage but plan to pay it like a 15-year loan. This gives us flexibility with a lower required monthly payment if life throws a curveball, while still allowing us to make additional principal payments when possible.
We used a 21-day escrow in our offer, which the sellers accepted because the home was vacant. We also arranged and paid for certain inspections ourselves to ensure escrow closed on time. These choices depended on our conventional loan and my husband’s access to real estate resources; they may not be available to everyone and are often restricted with certain loan types like FHA.
Buying a house involves many trade-offs. Choose options that fit your circumstances and understand alternatives so you can make informed decisions for your family.
The purpose behind the “why”
Our home purchase is about more than owning property. We want financial freedom so we can give generously without expectation. Giving—often anonymously—has been one of the most rewarding parts of our journey. We view money as a tool to bless others once our own needs are securely met.
To stay motivated, we set a shared “why” and met weekly to review our goals. We kept visual reminders of our objectives so we saw them each morning before work. A clear purpose makes it easier to persevere on tough days.
Because we set ourselves up financially, we can now:
- Contribute to employer-matching retirement funds
- Max out our Roth IRAs annually
- Maintain emergency funds and proper insurance
- Travel while keeping a low mortgage burden
- Own property with land and generate rental income
- Support family financially when needed
- Create rental opportunities for others
- Give generously as part of our monthly budget
- Sleep better knowing we’ve built a strong financial foundation
Our future plans include:
- Owning multiple self-sustaining rental properties
- Opening a real estate brokerage
- Teaching others how to manage money effectively
- Becoming a top-earning real estate team together
- Creating a lifestyle that unlocks new opportunities
- Continuing to give with an open heart
We’re building long-term wealth and an “empire” of sorts. Saving disciplinedly has created opportunities, and we’ll keep investing toward financial freedom. Consistency, diligence, and hard work have been crucial to our success.
Lessons learned from this savings journey:
- Delayed gratification pays lifelong dividends; a few years of focus set us up for long-term stability.
- Persistence, hard work, and patience reveal much about yourself.
- When you feel like giving up, keep going.
- Every dollar saved brings you closer to your goals.
- Side hustles can quickly boost emergency funds—I’ve done everything from baking to extra cleaning shifts to earn more.
- Meeting financial goals spills over into other healthy habits and builds confidence.
If this story encourages you or you have questions about our journey, feel free to ask in the comments below!
Author bio: I’m Nichole Yanez, a financial blogger at Elizabeth And Inez. I write about money management and life as a millennial in Southern California. I work in education, but my passion is helping others start their journeys to financial freedom.