Before attending open houses or mapping out your dream kitchen, you need money to put down on a home. Luckily, saving for a down payment doesn’t have to be daunting. By carefully putting money aside each month and simplifying your needs, you can become a homeowner, too. Here are some tips on how to get started:
1. Save Your Tax Refunds
Instead of spending this cash on a trip or luxury item, tuck most of it away. Whether your tax refund is hundreds or thousands of dollars, it will bring you closer to what you need to put down on a home. Talk with your banking institution or financial planner about a short-term investment option so you can get the highest interest rate possible on this chunk of money.
2. Deposit Holiday Gift Money
Do your family and friends give you money on your birthday, holidays or special occasions? These little windfalls can quickly pad your savings account. When you write a thank-you note for your next monetary gift, let the giver know it’s going toward your future home.
3. Tackle a Second Job
Even if you work a demanding full-time job, it’s not impossible to take on a second job. Try to find a gig that’s simple and enjoyable, such as a hobby that translates into a paycheck. For example, if you love gardening, see if your local florist or garden center needs extra help on the weekends.
4. Sell Unused Personal Items
Because you’re planning a move, it’s time to declutter and evaluate all your possessions. If you find that you haven’t gone for a ride on your motorcycle, used your sewing machine or stepped on your treadmill in a while, sell them online and put the cash aside for your down payment.
5. Decrease Your Retirement Contributions
Temporarily adjust how much you’re investing into your retirement. Contribute less while you save for the down payment, and once you get the keys to your home, increase your retirement contributions.
6. Ask Friends and Family
The people who trust and believe in you want to see you succeed. It doesn’t hurt to ask them for assistance with the down payment on your first home. Some may be willing to loan — or even give — you the money so you can buy the house sooner.
7. Stash Unexpected Windfalls
Did you recently gain an inheritance or walk away with a surprise holiday bonus from work? This unexpected money should be deposited directly into your savings account and put toward the down payment of your home. If the sum is sizable, consider investing the money in a short-term, high-interest bearing account to earn some more cash.
8. Cancel Services and Subscriptions
If you haven’t actually read the magazines on your coffee table in the past few months, it’s time to cancel those subscriptions and increase the amount of cash in your savings account. You may also want to cancel your cable subscription and stream TV shows and movies over the Internet instead.
9. Brown Bag It and Save
It’s easy to spend $15 a day going out for breakfast and lunch during the work week. Instead, prepare your own food at home, and you could save a bundle.
Saving for a down payment on a new home is a process. But over time, even the smallest contributions add up. Stay diligent, and you’ll soon be making a valuable investment in property ownership.
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