Three Financial Lessons We Can Learn from These New Homeowners


This is a case study of an ordinary couple making smart financial decisions. It's meant to highlight how everyday people can become masters at budgeting and financial planning.


LaTisha Styles and her husband, newlyweds living in Tennessee, recently bought their first home -- a huge step in their young lives.

How did they budget for this expense? How clear of a financial plan did they have? What were the numbers – and what can you learn?

Let's find out, by looking at the case study of this ordinary American couple.


LaTisha had been renting a modest apartment in Atlanta for several years. When she and her then-fiancé, now-husband became engaged, she moved to Tennessee, where her husband works. That's when they decided to buy their first home together.

"We knew the price that we are willing to spend was around $150,000," Styles said. "Because my husband is a federal employee he was able to take advantage of a special offer through Pentagon Federal; they were offering financing for new homes for only 5% down."

"We estimated $2,500 for closing costs, added that to the 5% down that we would need, and we saved that much for the home."

Take away lesson #1: The couple budgeted for closing costs and other unanticipated expenses. They didn't assume that they'd only need to save for the downpayment and leave it at that. They gave themselves a margin of error.

Once they knew their budget, they began looking at various neighborhoods that were conducive to the type of life they wanted to create together: a place with cute houses, great neighborhood shops and amenities, and a well-respected school system.

"The house we chose is in a great neighborhood," she said, "and was available at a discount because it was a foreclosure."

Take away lesson #2: They bargain-hunted, eventually choosing a foreclosed home in order to save money. But they still knew what qualities – such as good schools – belonged on their list of "musts," and they weren't willing to compromise on the few attributes that mattered most.

How did the couple save money for the downpayment and closing costs?

"My husband and I always aim to save at least 30 percent of our take-home pay," Styles said, "and so we had the $10,000 on hand."

As committed money-savers and bargain-hunters, Styles says that Tennessee's lack of state income tax is "beneficial" for their budget.

"There is good and bad to it because the sales tax is much higher (than I'm used to)," she said. "But I appreciate not being taxed on my ability to earn. It definitely incentivizes me to make as much money as possible, and to stay here until we retire to Florida, where there's also no state income tax."

As an added bonus, Styles says, not getting taxed on income "makes me motivated to earn money but demotivated to spend money," Styles says, "and so my spending habits have changed." 

That means the couple might save even more money, which they can use for big-ticket items like home maintenance and repairs.

Take away lesson #3: The couple anticipates expenses in the future and saves for these costs today. They know, for example, that they'll eventually need to repair something in their home. They don't know what, and they don't know when, but they recognize that occasional repairs are inevitable – so they're saving for this expense now. This way, if their dishwasher breaks or their HVAC needs to be replaced, they'll be financially ready.

"As a homeowner there's definitely more maintenance required," Styles said. "When I lived in an apartment, my landlord handled changing (HVAC) filters, did all of the landscaping and took care of any issues if anything broke.

As a homeowner we have to take care of those items. Also as a homeowner it's harder to pick up and leave like you can with an apartment."

"But it's nice to have your own home," she says. "You don't have to share walls with other apartment dwellers. There's also more relative stability as a homeowner, because if you're renting you may have to move if the owner decides to sell, or the cost of renting might increase drastically."