While it’s still possible to buy a house with little to no money down if you have good credit, it’s certainly not advisable for most people. Paying for Private Mortgage Insurance (PMI), having a larger monthly payment and being underwater on your mortgage from the very beginning all put you at a financial disadvantage. If you’re looking for some clever ways to put aside your down payment without resorting to cases of ramen noodles, here are some tips to get you started.
Lower Your Utility Bills
Yes, plenty of financial planners will tell you to ditch the cable bill or gym membership, but there are a ton of other ways to push your monthly commitments even lower. Attack your utility bills. If you live in a cold area and are paying for natural gas to heat your current residence, consider picking up an electric throw blanket so you can notch the heat down and save. Start timing your showers, and stop running the clothes washer before it’s full. While these little things may seem trifling, they add up. Also look into utility assistance and grant programs in your area. If you meet the criteria, submit an application. Take the savings and put it into your down payment fund.
Spend a Little to Save a Lot
When you’re trying to save thousands of dollars, the urge to skimp can become overpowering. For example, many pundits recommend skipping your morning latte to save money. Any caffeine addict will tell you this is a bad idea. If you have a Starbucks addiction, spend the money to buy a good coffee pot and the requisite ingredients to make your coffee. While you are still paying for morning coffee, you’re saving a significant amount that could be put into savings. Rolling your own cigarettes, making your own wine and cooking your favorite takeout dishes at home work the same way. Rather than depriving yourself, you can still have the things that matter to you while continuing to save.
Set Your Goal Jar Out
Find a big jar and print out a picture of a house you find beautiful in your preferred location. If you want a spacious two-bedroom in La Jolla, print out a photo of one you admire and tape it to the jar. If your goal is a penthouse in downtown Chicago, do the same. As long as the photo represents your dream, it’s perfect. Empty your pocket change into it. Put in a dollar for every time you say a swear word. Throw in a five dollar bill each time you make out your rent check. When the jar is full, deposit it into your down payment fund at the bank. If you plan to be saving for a long time before purchasing, you may decide to splurge and celebrate every time your fill the jar.
Trying to save up a down payment can seem like a huge undertaking. By enlisting these strategies, you can set aside money each month and have a healthy balance when you start shopping for the perfect property for you and your family.
