If you plan on buying a home, there are several key things you can do to help save for the down payment.
1. Set a target goal. Talk to a mortgage professional to find out how much you can afford. That way, you’ll know roughly how much you need to save for your down payment. Research shows that people who have a specific dollar amount in mind for a savings goal have a better success rate.
2. Assess your spending habits. Don’t just make a rough audit of your monthly rent, utilities, insurance, or groceries. Look into your bank and credit card statements from the last three months to really see where your money is going. Doing so will help you figure out where you can cut back.
3. Reconsider your TV package. Speaking of cutting back, changing your TV package can save you a lot of money. The average cable bill hit a record of $103 in 2017, which is a 40% increase from 2010. You can always call your local provider to negotiate a new package or lower rate. Look at other local competitors so you can use them as leverage in your negotiations.
4. Consider dropping your gym membership. If you use your membership regularly, this might be difficult. If you don’t go to the gym very often, consider dropping your monthly membership. Look into some of those online home courses that you can take. There are some great online courses available for your exercise program.
5. Unload some of your stuff. Selling some of your items locally or online can help you reach your goals. Even niche items can be sold through online services like Craigslist or eBay. You may not be sitting on a fortune, but the stuff people are willing to pay for in combination with your savings can help you reach your goal.
6. Think about getting a second job. You probably think that your 9-to-5 job is enough, but think about opportunity cost. That hour you spent watching the Kardashians or SportsCenter is $10 you could have made pouring coffee at your local coffee shop, driving an Uber, or even doing some freelance work. Using your time a little more wisely can help you reach your goal.
7. Open a high-yield savings account. If you are earning more money from that second gig, don’t keep it in your checking account, where it’s not accruing interest. Instead, use a high yield savings account. You will have daily access to the money and accrue daily interest as well.
8. Get a cash rewards credit card. Ditch the no-frills card and go for one that offers cash back rewards. It’s an easy way to earn extra money if you pay your bills on time each month.
9. Save your tax refund. That’s a nice yearly chunk of change. If you can commit to putting away your tax refunds, it will be easier for you not to spend it and you will have it set aside for your initial goal.
Following these nine tips will help you save for your down payment and prepare for your home purchase.
If you have any other questions about buying a home, just give us a call or send us an email. We would be happy to help you!