ScoreCard Research Lauren Bowling - The Penny Hoarder

Three years ago, I became the proud owner of a 2,000-square-foot single-family home in southwest Atlanta.

It was my biggest purchase to date and has been the source of endless content for my own personal-finance blog. And I bought the house as a single, 26-year-old woman making less than $40,000 a year.

Even though I write about personal finance every day, it wasn’t money magic or any type of hack that allowed me to achieve this important financial milestone. I bought my first home by leveraging good, old-fashioned personal-finance basics. Here’s how I did it:

I Saved (Super) Consistently for 12 Months

If I’m being honest, since I bought my house three years ago, I probably haven’t saved as consistently as I did before the purchase. Perhaps it’s because I haven’t had any super personal goals to achieve.

Looking back on it, I followed two big “rules” to make sure I hit my savings targets each month.

First, I automated savings from my paycheck (around $400 per month) into a separate account. This was the only way I could make sure the money made it into my savings, rather than going toward other expenses.

Second, because the goal was something I really wanted (my first home), I was able to stay incredibly focused and motivated, even when temptation called.

It’s also important to save for a certain amount of time (e.g. six months or a year), so your brain can conceptualize the realization of the goal. There’s science behind this.

In the end, I saved around $8,000 for the down payment on my first home.

I Made a Concerted Effort in My Early 20s to Pay Down Debt

I didn’t have a lot of student loans when I graduated school, but I did have mountains and mountains of high-interest credit card debt. I knew the debt was always going to be the “monkey on my back” if I didn’t get rid of it.

Right out of school, my primary focus was paying off my debt once and for all. To make this happen, I had to put my dreams of being an actor on hold, take a desk job I hated (but that paid well) and stick to my budget like a maniac.

Sometimes, to get to where we want to go, we have to do things we don’t want to do.

Homeownership is absolutely achievable if you have debt, but a healthy debt-to-income ratio helps you qualify for a mortgage and get a lower interest rate. Paying off debt before buying your first home is particularly crucial if you make a lower salary.

I Bought Well Within My Price Range

I qualified for up to a $140,000 home, but I didn’t even get close to that price point. Instead, I bought a fixer-upper for $65,000.

After investing another $58,000 from a 203k renovation loan into fixing it up, I owed $123,000 total on the home. This put my mortgage around $850 per month, which was only $50 more than I was paying to rent my apartment at the time.

While Atlanta is absolutely an affordable place to live, it was important to me to get into a home that didn’t inflate my bills each month. After all, I still only had $40,000 in income each year, so I couldn’t upgrade my lifestyle too much.  

To do this, I had to play around with a lot of numbers, but all the extra math worked to my advantage as I didn’t have to sweat my mortgage payment and increased utilities each month.

I Researched Down Payment Assistance Programs

At the time, a non-profit in Atlanta was giving qualified buyers a $15,000 down payment assistance credit. Because my income was so low, I qualified and gladly took the $15,000 to help with my closing costs.

Although down payment assistance programs can vary widely depending on your city and state, you never know what you might qualify for unless you ask. Talk to your mortgage broker about your eligibility based on your income and location.

My biggest advice to potential low-income homeowners is to start preparing your finances six to 12 months before you even begin looking for a home. The financial component is crucial, but many overlook it in their haste to find their dream home.

Homeownership is possible for anyone; it’s just important to look at what you can afford versus  what you feel your homeownership journey should look like.

Your Turn: Did you manage to buy a house while earning a lower-than-average salary? We’d love to hear your tips!

Lauren Bowling is the blogger behind the award-winning personal finance site L Bee and the Money Tree and author of The Millennial Homeowner: A Guide to Successfully Navigating Your First Home Purchase. Blogging since 2012, Bowling is now a recognized thought leader in the millennial finance space with her expertise featured in the pages of Redbook and Woman’s Day magazines and on leading online financial news sites including Forbes, The Huffington Post, CNNMoney and U.S. News and World Report.

As a personal finance blogger, I share the juiciest details of my money mistakes with the Internet.

I’m known for being an industrious side hustler and burgeoning real estate investor, but the truth is, I have also struggled with recurring credit card debt. I got into a lot of credit card debt in college, but eventually was able to pay it all off over the course of 18 months, thanks to my first full-time job.

I took the slow and steady approach then, because that kind of income was new to me, as was building a budget and sticking to it while living on my own for the first time in New York City.

I was so proud to be debt-free after years of bad habits (including a shopping addiction I had to go to therapy for), and I remained debt-free with my credit cards safely in my freezer until I bought my first home in 2013.

Back in Debt Again

When it came to my first home purchase, I’d seemingly done everything right: I bought a home well within my price range, earmarked a windfall for the down payment, leveraged city and state down payment assistance programs to cover the closing costs and incidentals that come along with a first home purchase.

I bought a foreclosed home, which, after renovations, left me with a chunk of equity in the house. However, the renovations went over budget, and by January 2014 I was $9,000 in credit card debt.

Now, $9,000 isn’t an overwhelming amount of money compared to the debt some people carry, but for me, with my car paid off and no student loan debt, it felt big.

Still, I turned back to my trusty “slow and steady” method. I thought, “I’ve done this before, I should have no trouble doing it again!”

But it was different this time. I had a mortgage and needed to grow my emergency fund. I struggled to pay off my renovation debt for the entire 12 months of 2014, but ended the year $8,100 in debt.

The “Get Aggressive” Debt Challenge

As I began 2015 still in debt, I finally decided to get serious. But I also knew if I wanted to get rid of the debt once and for all, I’d need to get creative and try something new.

At first, I thought about paying off the debt in six months, but this seemed like forever to me.

Instead, I ran the numbers to figure out if I could pay off $8,100 in three months. It wasn’t likely, but with a lot of hard work and penny pinching, it was possible.

I kickstarted my progress by putting $1,000 from my emergency fund toward the balances, which meant I’d need to pay $2,400 each month to wipe out my debt by my self-imposed deadline.

Then I began to look at all of my monthly expenses. I couldn’t save much from my “fixed” costs like my mortgage and utilities, but if I did a “Spending Freeze” where I didn’t spend any money outside of groceries and gas, I could allocate $800 from my full-time paycheck -- roughly half of it -- to my debt repayment.

But I’d still need to come up with another $1,600 a month to meet my goal.

I earned this remaining cash from my side business of freelance writing, income from my blog, and getting creative with the rest.

I sold items on eBay, babysat and did some paid voice-over work for a friend who needed talent for her business video. Basically, anything I could do to bring in a little extra cash, I did.

I didn’t buy anything aside from what was necessary. No shampoo if I ran out (I had to use the little hotel-size bottles I found in the back of my cupboard), no eating out (although in months two and three I gave myself $25 a week for “play money”), and no drinks out or fun events.

For three months, I had to hunker down. It actually wasn’t that noticeable, since my challenge went from January to March, the coldest months of the year, and I was working so much.

Why the Aggressive Approach Worked Best for Me

It all depends on your personality, but as someone who has never been able to stick to any type of restriction-based diet for very long, my idea to be aggressive with debt repayment seemed just crazy enough to work.

Paying off debt requires a lot of dedication and focus, and while it was tough to be so regimented for three months, I prefer that over torturing myself slowly and making small cuts over months and years of debt repayment.

By shortening the timeline, I was also able to focus on my goal to ensure success and save a lot of money in interest. This strategy helped me save about $100 per month in interest charges, or about $1,100 in 2015.

After all, you can do anything for three months, and now the debt is gone and I have my life back.

It’s been about four months since I finished the challenge, and I’ve since been able to use the debt freedom to begin working for myself full time. I built in rewards along the way, but my “big treat” to myself for paying off the debt was buying a few things for my house.

Could the Aggressive Approach Work for You?

Before taking on your own aggressive debt challenge, look at your habits in other areas of your life.

Do you prefer to be extreme for a short amount of time? Are you the type of person who likes to “just get it over with?”

If so, this strategy may work for you. Think about what you want to pay off, choose a timeline and monthly amount you can work with, and then brainstorm a payoff strategy around your schedule and lifestyle.

My aggressive debt challenge worked so well, I’m thinking about doing another 90-day challenge, maybe around getting to 20% equity in my home, or hitting a specific savings target. Either way, it feels nice to finally have my life back from credit card debt.

Your Turn: Have you ever tried an aggressive debt-repayment timeline like this? How did it go?

Lauren Bowling is the blogger behind L Bee and the Money Tree, where she shares the wisdom of her past money mistakes. Bowling’s expertise has been featured on, Business Insider, The Huffington Post, U.S. News and World Report, and Lifehacker (among others). She is also the host of the award-winning internet talk show, Awkward Money Chat. Find her on Twitter and Instagram -- @lbeemoneytree.

If you own your home, you’ve probably thought about renting out a spare bedroom to increase your monthly income and pay down your mortgage. And renting to friends or relatives is better than finding a “random” roommate through word-of-mouth or Craigslist, right?

At least, that’s what I thought. I purchased my first home in July 2013, and my younger brother moved in shortly after. He cuts the grass, cooks dinner and pays rent. I also rent the third bedroom to a childhood friend, and as such, pay virtually none of my $850 a month mortgage, although I do cover all of the utilities on my own.

While renting to friends and family you "know" may seem like a good idea, it can actually be more difficult than you realize -- and if you’re not careful, can do lasting damage to your relationships. Here’s what I learned while serving as a landlord to my friends and family.

Be Direct in Your Communication

Communicating with friends and family is definitely more difficult than with communicating with someone you don't have a personal relationship with. I know this seems counterintuitive, but even the best personal relationships may feel strained when mixed with money and living situations.

For starters, if there’s tension, you not only have to worry about clearing the air, but making sure you say what needs to be said in an appropriate way and at just the right time. While you may feel comfortable telling a random roommate “I need the check by the 5th of the month,” you may not be so forward if your roommate is your baby sister or best friend. I have an especially hard time with this as I hate nagging and feeling like I’m “demanding” money from people.

Here’s how I got over this hurdle: I've found it’s best to set aside time to talk specifically about the issues, rather than just adding them onto the end of an otherwise friendly conversation. If you really don’t want to talk face-to-face, an email can often get the point across in a pleasant, non-confrontational way. Consider what strategy your loved one will best respond to; some people may view an email as a "cop out," while others may prefer to react on their own time.

If you’re still struggling to address issues directly, repeat to yourself, “It’s just business, it’s just business.” Sure, it can be tough to have direct conversations with close relatives and friends, but you have to look out for your finances as well.

Know Your Rights -- and Your Tenant’s

Did you know that your tenants have different rights depending whether they’re friends or blood relatives (parents, grandparents and siblings)? In most states, even paying rent each month does not give blood relations “tenant rights” in a family home -- the line between “landlord” and “family who helps out around the house” is blurry. (Click to tweet this idea.)

For example, if you’re related to your tenant and want to kick them out, you’re often legally allowed to simply throw their belongings out on the lawn. If you wanted to do the same to a friend, you’d need to initiate eviction proceedings because they have basic “tenant rights.” This can be advantageous if you rent to a family member, then things get ugly and you want to kick them out of the house without the hassle of eviction proceedings -- especially if they leave without notice or damage the house. You can’t sue them, but you don’t owe them anything either.

Establish Rules and Get Everything in Writing

Paying rent and being a friend of family member doesn't mean your tenant gets to do whatever they want. Rules differ when renting a separate home versus renting out a room in your own living space, but consider what’s non-negotiable for you and communicate these rules before anyone moves in.

For example, I have a general rule about not having friends over after 10 p.m. on weeknights, and I also have a rule about parking in the driveway. If I rented out a separate single-family home, I wouldn’t need those rules, because they wouldn’t directly affect my comfort.

Both you and your tenant should sign a written rental agreement. Having a written contract, even an informal one, is a great way to shore things up between the two of you and make sure you’re on the same page regarding rent payment, shared responsibilities, move-out dates and house rules.

Lay Down the Law

Once you’ve signed a rental agreement, stick to it, even when it gets tough. You’ve communicated directly, researched your rights as a landlord, and agreed on house rules. Your home is your asset and you have the right to feel comfortable with what goes on there.

These tips aren’t meant to scare you. Living with close friends and family can be wonderful, since you know them well. You don't have any hidden crazy neuroses to worry about, and they can provide a wonderful support system you wouldn't otherwise have access to. When my ex and I split up, my brother was right there for me, helping me through the worst of the breakup. Renting to loved ones can also make a house feel more like a home, and be a great way to keep up with one another. Just make sure you know about the challenges before diving into an arrangement like this.

Your Turn: Have you rented to (or from) a family member or friend?

Lauren Bowling is the blogger behind popular personal finance site, L Bee and the Money Tree, a diary of her financial triumphs and mishaps. As a writer, Lauren’s work has been featured on The Huffington Post, Yahoo! Finance, and She lives in Atlanta with her dog, Murray, and spends her free time renovating her first home and eating frozen yogurt.