Buy that home faster with these tips
Saving money to purchase a home can be challenging; here are some tips to make you realize your dream faster
1. Develop a goal - Identify key things such as the type of home you'll purchase (Single Family Residence, Duplex, Townhome, Condo, Etc). Include your price range (ex: $175-$200k) and the time in which you'll close on the home. If you'll be getting a loan, research the type of product that fits your needs.
2. Create a budget - For example, you want to purchase a $200,000 home with a conventional loan and 20% down. 20% ($40,000) plus miscellaneous closing costs/expenses at say an additional 5% ($10,000) comes to a total of $50,000. If you have $26,000 in savings currently, and plan to buy in 2 years, you'll need to save at least $1000 per month.
Identify where your money is currently going (Groceries, eating out, fuel, entertainment, travel, clothes, gifts, rent, etc) to help you achieve your monthly savings goals.
3. Pay yourself first - Automatically put part of your paycheck in an account setup specifically for saving towards your goal. Make this money hard to get to unless in an absolute emergency. For example, most employers will allow you to direct deposit part of your paycheck into account A and the remaining into account B. Account A can be the savings towards your down payment while you live off the funds in account B.
4. Supplement your income - Think of ways you can earn extra income. Can you add extra value at work and earn a raise? How about investing in companies you understand and are passionate about? Maybe sell some of those paintings stacked in your garage.
5. Identify how much you'll actually need - Building on item #2, speak with a real estate professional to get an accurate estimate of your total out of pocket money needed to buy the type of house you want. Don't forget the costs of furnishing the new place.
6. Get creative - Would riding your bike to work be a fun way to exercise and save money on gas? Do the neighbor's kids need a math tutor? Think of some outside the box ways to solve the problem.
7. Sell things you don't need / use - This can be both liberating and a good way to make some extra money. Don't be a hoarder.
8. Cook, don't eat out - How much are you spending on eating out? Would you rather have a house or a spare tire around your waist
9. Share your goal - Although you don't want to wear your ambitions on your sleeve (as there are always naysayers that may bring you down), tell a few close friends/family members about your goal so they can help you achieve it and understand any lifestyle changes it may entail
10. The Joneses are broke - Spoiler alert: that new BMW won't make you happy. Rather than trying to purchase self esteem by having nice things, appreciate what you have.
Hopefully some of these ideas will work for you. Thanks for reading and happy saving.