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Owning your own house may seem off in the distance, something unreachable. And so you are content to rent.
But don’t be! Owning your own house is one of the best investments you can make in your life. Each month that you pay rent, you are literally purchasing a home FOR someone else.
You are paying their mortgage off, or better yet if they have no mortgage now, you are just making them rich!
Why not put the same amount of money each month into your own house, so that someday if you want to sell it you get it all back, plus some.
It is not nearly as hard as you think. You can actually purchase a home or as little as 3.5% down if you are. a first-time home buyer! That means if you find a cute little house for $150,000, all you need $5,250 for a downpayment.
If you haven’t started saving for a downpayment yet, start today! Here are 5 ways to save money for a down payment.
1. Create a budget and stick to it
Its hard to save when you aren’t keeping track of where you are spending. If there’s nothing to hold you accountable, the spending comes too easily!
Create an actual budget today. Write down all your expenses, bills, rent, insurance etc. Subtract everything you have to pay, from what you make.
And, then you can know exactly how much extra there is each month that you can put into savings. Make a line item for entertainment, but don’t overspend that!
Write down the amount you can and should be saving each month, and hold yourself to stick to that goal.
2. Drop UNNECESSARY expenses
When you write down all your expenses to create your budget, carefully review each item for things to cut.
If you are paying $160 a month for cable, but could drop to a cheaper program that is $120 do it. And then put that money into a savings account for a downpayment on a house instead.
Trust me, you will enjoy that cable much more when you are watching it in your own home!
Look for bills that can be reduced or cut altogether. Paying someone to mow your lawn? Do it yourself for a few months! If you find several bills to reduce, and a couple to remove you could end up with a couple hundred extra for savings each month.
If you just save an extra $200 a month, you’ll have that $5,000 downpayment in two years just from that!
3. downsize your lifestyle
One of the most effective ways too save money for a downpayment is to downsize. For instance if you have a super new car with a super hefty monthly payment, consider ditching it. Turn it in for an older, less expensive car so you can save.
The good news is, once you’ve save enough money for a downpayment, you can always upgrade your car again.
The short term sacrifice of a cheaper car is worth it in the long run. Some other ways to downsize might be to get a roommate if you have an extra room to rent. Or to stop spending on clothes or eating out for a few months.
4. set up automatic withdrawals for savings
If you find it hard to trust yourself to have enough extra to save at the end of the month then set it up automatically.
Create an automatic direct deposit or withdrawal from your paycheck straight into a savings account for the day you get paid. That way the money is already gone and you can’t use it that month!
There are a lot of automatic savings apps out there that will help you. My favorite is Acorns, which rounds up your spare change every time you make a purchase and places into savings. But the best part is it uses that change to purchase stocks so you are making even more than you saved!
5. make extra income to save money for a downpayment
My favorite way to quickly save money for a downpayment, or any purpose really, is to make more money.
The fastest way to save is to increase your income. You can take a part-time job, or start your own side hustle to kick up your savings.
Let’s say you take an extra job on weekends waiting tables at a restaurant, or babysitting for the neighbors. It could add up to $1,000 or more a month.
Getting back to that $5000 downpayment, that means you could save up enough to buy a house in just 5 short months!
Plus, as an added bonus, you might have fun and meet new people!
If you want more flexibility than a part-time job may offer, then start your own side hustle like these folks did.
There are tons of tips and tricks out there to help you save money for a downpayment. The point is, it is a lot easier than you think, you just have to start! Today!