Dear Penny: Can I Buy My 14-Year-Old Her Dream Home on My $45K Salary?
I am a 37-year-old mail carrier and make $45,000 a year. With overtime, I hit around $50,000. My salary increases slowly every year until I max out at $71,000, which takes 13 years to reach, and I'm only two years in. I live in Massachusetts which is incredibly expensive and not livable on my salary.
I have a daughter and have been promising her a house for a few years now. She’s 14. I’d like to buy one before she's 15, or at least before 16. At the moment, it's not possible.
I know that “get rich quick” schemes don’t work. But there has to be something!
I’ll be honest: I'm not exactly talented or skilled at anything. I am a former personal trainer, but that path isn't lucrative unless you're training sport teams. I've thought about teaching fitness online, but due to my job, I’d only be available after 5 p.m. most nights. Plus, it’s a very tricky venture.
I've tried to learn how to make apps, but I'm technology-illiterate. I’ve invested a few hundred in crypto and stock, but those aren’t exactly quick ways to build income.
Also, I should mention that I have about $30,000 saved up in the bank. It’s supposed to be for a house. But now I know I could use that somehow to invest in making more money. I’m scared to lose the money, and I have zero idea of what to invest it in.
With that said, what can I do to drastically increase my income within a six-month period? You constantly see everyone saying, “Start your own business” or “Start an online business.” OK, but what!? Everyone makes it sound like the easiest thing in the world. I don't have products to sell.
What can I do to start making a second stream of income and give my daughter her dream of a house?
If I knew of ways to get rich quickly, I’d be sunning myself on a yacht in Turks and Caicos right now instead of writing this column. Or at the very least, I’d already be a homeowner. But like you, I’m grappling with the fact that homeownership feels ridiculously out of reach right now, even compared to a couple of years ago.
I think you need to be honest with your daughter. Tell her that home prices and living costs are rising way faster than your salary. That means you’ll have to save longer to reach your goal. You also may need to readjust your expectations for what your dream home may look like.
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The fact that you’ve been able to save $30,000 on a $45,000 salary tells me you’ve done a good job of budgeting your money. It really doesn’t take talent or skill to be a successful investor.
What it takes is patience. The most surefire way to build wealth is to consistently invest a small amount each month in an S&P 500 index fund. Over long periods of time, the S&P 500 has always delivered positive returns. Any “opportunity” that allows you to amass a fast fortune is highly risky at best. In any such venture, you’re a lot more likely to lose everything than you are to double or triple your money.
That said, you typically don’t want to invest money in the stock market for shorter-term goals like buying a home. Instead of trying to drastically increase your income over a six-month period, aim for a more realistic goal. How about if you start with the goal of earning an extra $100 a week?
That seems doable if you’re able to make a go of online personal training — even if you’re only available a few evenings a week. If that’s not viable, look for a side gig that’s flexible and doesn’t require a big upfront investment, like delivering groceries for Instacart, driving Uber or doing small jobs on Taskrabbit. Once you’re consistently earning $100 a week, then aim a bit higher.
Put the extra cash you earn somewhere safe, like a savings account or CD. Meanwhile, check with a local lender about whether you qualify for down payment assistance.
Your daughter may be disappointed that you can’t buy a home as quickly as she’d like. But you’d be hard-pressed to find any teenager who isn’t disappointed with their parents sometimes. I suspect that at least part of her eagerness for you to buy a home reflects the FOMO of the adults around her.
Use this as an opportunity to teach your daughter a lesson in patience and persistence. Even if she’s not happy that you can’t buy a house right away, be the adult. Any home purchase you make will be determined by what you can afford, not what your 14-year-old wants.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.