Saving for a down payment can be a difficult step of the home buying process. Here are a few ideas to help begin the saving process for a down payment:
1. Examine your spending: Sit down and take a look at your spending habits over the last few months. Are there expenses you can cut out? Those twice weekly dinners out, or maybe that gym membership that you never use. Let’s say you decide to eliminate your $30 a month gym membership that you never use. In a year you would save $360 ($30 x 12). In addition, if you eat out multiple times a week if you eliminated one dinner out then you could save approximately ($30 x 4 x 12) $1440. Making a combined savings of $1800 a year. In cutting two items from your weekly or monthly budget you could save quite a bit of money towards a down payment.
2. Sell unwanted items: If you are thinking about buying a home then you will have to move eventually. Why not stream line your moving process and collecting money for a down payment by selling some of your unwanted items. Look through your home are their memorabilia, household furniture or any other items that you no longer need. Many times a garage sale, craigslist or eBay are excellent ways to sell things that you no longer want.
3. Put aside extra money: Did you get a bonus, tax refund or tips lately? Since those funds are not calculated into your normal budget put them straight into savings.
4. Take the pantry challenge: The pantry challenge is very simple. Instead of buying groceries at the store one week go through your freezer and pantry. Sometimes this takes a little creativity but can help you cut out a grocery bill every few months. If you pay $200 a week on groceries and do the pantry challenge 5 times in a year you could save $1000. This is also a great way to eat up food that may be getting closer to expiring too!
5. Consolidate credit: If you have a lot of credit cards many times it may be wise to consolidate your credit to a 0% interest rate credit card. These cards usually have a 12 month to 24 month window where the interest rate will remain at 0%. This will allow your credit cards to stop accumulating additional debt in interest. If you may off the credit cards before the 0% window runs out you will be in even better shape in the long run. Putting money into your pocket instead of towards interest.
6. Downgrade: Consider items you can downgrade. For example if you still have cable you may want to consider on-line screening services like Hulu Plus or Netflix which are way cheaper. Your cable bill may cost you $50 a month while subscribing to Hulu Plus costs $8 a month. This could save you $42 a month and $504 in a year. Or do you have a very expensive cell phone bill, can you downgrade to a lower ranking or does another company offer the same services for cheaper?
If we were to combined the following examples (Downgrading, pantry challenge and examining expenses) this person would have saved: $3304 in a year. A very respectable start for a down payment.
These are just a few ideas to save for a down payment for a home. If you are still struggling to save for a down payment then contact us. We know of many grant programs and other ways to help assist buyers find money for their down