Down Payment Savings Tips to make your Home Dream a Reality!

One of the most intimidating factors concerning buying a home, especially for first-time homebuyers, is thinking about saving for a down payment.  Not only is it stressful but it can all too often seem unrealistic, especially with the notion that you need to save 20% looming over you.  Fortunately, there are quite a few ways in which you can save for that daunting down payment that is both impactful and easy!

Here is a list of ways to successfully save for the down payment on your next home:

Automatically transfer money into a designated savings account each month.

If you don’t already do so, make sure you’re saving money every month by setting it up to automatically withdraw from either your account or your paycheck.  This way, you won’t have to worry about forgetting and you’ll be saving a designated amount each month. 

Decrease your unnecessary expenses.

This is one of the biggest and most effective ways to save money!  Once you sit down and take a look at it, you’ll be surprised at just how much you can save by cutting back on the things you don’t really need.  Start by making a list of all of your expenses, down to the amount you spend a week on getting that much-needed coffee.  Once you have your list, prioritize what you need to continue with and consider what could be cut (does the coffee really outweigh buying a new home?).  Various expenses to consider cutting, at least for a little while, could be:

• Cable

• Going out to eat/getting food from anywhere other than home

• Going out for coffee

• Hold off on buying new clothing for a couple of months

• Instead of going out for a date night, consider dinner and a movie at home

• Consider making people thoughtful gifts this year instead of buying them

Forego taking a vacation for at least a year.

If you’re a traveler, consider taking a break from planning vacations for a year, or two.  Instead, look at how much you typically spend, on average, a year and save that money towards your down payment.  Depending on just how much you travel, this could end up being an entire down payment right here!

Consider a second job or miscellaneous side jobs.

This is one of the easiest ways to make extra money for many people.  Whether you’re looking to help out with others’ yards on the weekends, or hoping to monetize one of your hobbies, having a second income can add up quickly when it’s for the sole purpose of saving.

Save the extra income that comes along with an annual raise or a promotion.

If you happen to get a raise, or a promotion, while you’re saving for a down payment, congratulations!  If you’re able, put all of the extra money you’ll be making due to your change in income into a separate savings account dedicated to the down payment.  You won’t even know you’re missing the money because you have been living off your original income all along!

Focus on paying off any high-interest debt.

When it comes to paying off your bills, it’s important to stay current with each one.  If you have extra income to pay some off early, make sure you’re putting it towards the debts that have the highest interest rates attached to them.  The faster these interest rates can be paid off, the easier it will be to save. 

Sell the possessions you no longer have use for.

While this most likely won’t lead to a significant amount of money, every little bit helps.  Plus, when you do get that new home of your dreams, it will make packing easier!

Don’t spend any of the money you get from filing your taxes. 

If you’ve already planned on how you’ll spend the money you get back from filing taxes next year, consider changing your mind.  This can be a significant amount of money easily put toward a down payment, without having to change anything about your everyday spending habits!

Consider Paying for items with Cash

This is beneficial for a couple of reasons.  First, when you pay with cash, you know exactly how much you’re able to spend.  Using a card often leads to spending more than originally anticipated.  Second, if you’re used to using a credit card, you won’t have to worry about any added interest.  Unless your credit card balance is paid in full every month, the interest charged on purchases can be incredibly high.

Rid Yourself of Impulsive Grocery Shopping

When you head out to the grocery store, make a thorough list, first.  Start by going through your kitchen and make sure you write down everything that you need.  Then, meal plan!  Write down only the ingredients you’ll need for meals that week and stick to the list!  You’d be surprised at just how many impulsive purchases we make when strolling through the aisles and they add up quickly!

While saving for a down payment on a new home can feel more like dread than excitement, it’s important to remember that you can do this!  With a little motivation and remembering what’s important, you’ll have saved enough in no time! 

Are you looking to buy or sell a home?  Get in touch with Masha Halpern, the Triangle’s leading realtor, by calling 919-414-0337, emailing to Masha@MashaHalpern.com or visiting our website and following us on Facebook! Let her expertise, knowledge, experience and exemplary service help you accomplish your real estate goals!