Saving for a home down payment is tough, here are 5 tips to get you started
Figuring out how to save for your first house is harder than ever. Living expenses always seem to rise faster than pay. Our dollars are stretched to pay for necessities and it can be hard to find any extra to save. If your goal is to get into the housing market, there are creative ways to make your money work harder for you so you can enjoy the dream of home ownership sooner than you thought.
The methods you use while saving for your first home will depend of course on the type of person you are and your individual circumstances, but if you follow even a couple of these tips, you may find yourself ready to move into that dream rancher, townhouse or colonial even faster than you could have thought possible.
1. Consider buying and living in an RV
No, RVs aren't stylish or sexy and they don't come with a garage or granite countertops, but they're cheap and actually very comfortable. I know, I lived in a 36' 5th wheel for 3 years. Find a good deal on a 5th wheel trailer or travel trailer and park it at a trailer park in your area. Make sure to find a clean park that charges a low monthly pad fee. It may not be glamorous, but rather than giving hundreds or thousands of your hard-earned dollars to somebody else every month for rent, you're paying into an asset that you can sell and use toward a down payment on a home.
If you haven't ever been in a 5th wheel, check them out at a local RV dealership, you will probably be surprised at how spacious and comfortable they are. Do some research and buy below market value. Meticulously maintain your trailer to keep the value high for resale. When it comes to learning how to save for your first house, there's no better bang for buck then taking what you would pay for rent and using it to buy a sellable asset. When my wife and I started asking about how to save for our first house, this advice was given to us and it's the best tip we've had to date!
2. House sitting
Advertise that you're interested in house sitting. You may find a job as a house sitter that will give you free or even paid accommodation for weeks or months. People need their homes cared for when they're away on business, holiday or for any other reason. Putting your stuff in storage and house sitting for a while is a great way to put some money away to save for a house. It's also worth trying for a partial rent agreement where you perform duties around the property in exchange for some or all of your rent. If you have skills as a tradesman or anything else that could be of use to somebody don't be afraid to advertise and ask for a work for rent agreement.
3. Give up non-essentials
Your priorities are obvious on your bank statement. You want to know how to save for your first house? Here it is in one word: reprioritize. If you are paying $50 or even $100 per month for your iphone, and don't absolutely need it for some reason, give it up! Pay out your contract and do without a phone for a couple of years. That will be an extra $1200 per year you could be saving for your first home. If you spend too much on fast food, start packing snacks instead. You will save both your money and your waistline.
4. Take the bus
If you drive in to work or school every day, you're likely paying for insurance, fuel, parking, maintenance and possibly even toll fees for the privilege. Learn how to reduce your commuting expenses. Park or even sell the car and buy a transit pass. It's not classy, but it will put more money in your pocket that you can save for that house.
5. Take a second job
This is obviously not an option for everybody, but if you're really motivated and can save all that you earn at your second job, it's a good way to make some quick cash to save for a home. Consider something that you can make tips at like a waitress, pizza delivery or limousine driving. Give it your absolute best, and you will do well with tips. Put this money into your house savings fund and quit when you no longer need the second job.
If you seriously want to know how to save for your first house, you have to be willing to do what others will not. This will likely involve giving up some things that your friends all have (new cars and smart phones come to mind). In the end however, it will be well worth it.
Purchasing property in this day in age is possible, but if you don't have family that can (or is willing) to help you, you will need to be creative and sacrifice to make it happen. Write out a plan so you have a realistic timeline for how long you are going to do each of these things and how much you plan to earn. It's easier to sacrifice for the short-term when you have a written plan to get back on track.