Saving For Dummies written by Stupid

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NO RESPONSIBLE person dives into property investing without careful planning. I say it because I consider myself irresponsible, even stupid. And if you don't wish to fall into the same trap I did, you may want to extract a few lessons from my own missteps.

About seven years ago, I was still working in Quezon City in the Philippines and had an extra 15,000 pesos ($300) in my ATM plus an equivalent of 60,000 pesos ($1,268) in foreign currencies stashed in the closet's deep recesses. The wife and I went on a so-called tripping to a housing project located an hour's drive from Ortigas. It was not the first such tripping and the marketing agents took us to two sites we did'n't like. At the third project site, I instantly fell for the development's concept and convinced the wife we had to reserve a unit, never mind that we couldn't imagine how everyday life would be commuting between the house and the workplace. I withdrew 10,000 pesos for the reservation on our way back to Ortigas where the agents later dropped us off.

To cut the story short, I wasted the reservation fee. The money I stashed in the closet (yes, I was actually that stupid to think that the closet was safer than the pillow as a vault) disappeared, so there was no way I could pay the minimal downpayment the developer required before the transaction could be completed. And there was no way I could recover the reservation fee.

I then ditched the idea of buying a house, but each time those agents handed out flyers at the malls I could not completely ignore them. I later began working outside the Philippines and each payday a hazy picture of a house flashed in my mind, which I would brush aside immediately. For two years, we could have saved a third of my monthly income and I did, but we always found a reason to spend it. And spending what little savings we had was easy because we had no monthly financial obligations to meet other than school fees and apartment rent.

Less than two months ago, the wife and I fell for this condominium project in Mandaluyong. We had no money. But our heads were screaming: You ought to buy a unit and begin investing in a future home. We caved in, borrowed money from the sister-in law and prayed for luck and more blessings.

Had we built a small fund for property investing, we wouldn't have gone through all the trouble of borrowing money and sitting on a seat's edge every month's end when a cheque is about to be cleared by the developer.

It's easy really. Every payday I could have saved a third of my income, deposit it in a separate account and do this for at least two years. At the end of this saving period, I could have assessed our readiness for this major investment.

Saving regularly for at least two years (depending on how much your income is) also gives you an idea of the kind of house that you can afford. Once you sign the Contract To Sell (that's the document you sign when buying a house) and you've been saving regularly for this investment, you will have a better idea of how easy or difficult it will be to pay the mortgage.

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