10 Ways to Save for a Down Payment
When you think about buying a house, one thing needed is a down payment. Ideally, you want to have saved 20% of the purchase price. In this area where the average price of a home is just a little more than $250,000, that would be $50,000. Here are some ideas of ways to save for your largest purchase:
1) Sell things you don't use - when you are thinking of moving, selling things to declutter is a good idea any way. You don't want to move things you don't need or use. So sell them on eBay, Craigslist, Facebook, or have a good, old fashion yard sale. Put the proceeds in your savings account.
2) Cancel Subscriptions - monthly subscriptions are everywhere these days. Everything from Amazon, Hulu, Netflix, whatever of the month club, car wash, kid's projects. There are SO MANY. Take inventory of what you use and what subscriptions are duplicated or you could live without them for a little while.
3) Cancel Cable TV - because of the prevalence of subscriptions, we found that we could cancel cable TV and save about $100 or more a month. We replaced it with an internet based TV that was much cheaper and still gave us the channels that we wanted to watch.
4) Shop Around Other Services - We also found that we could switch to a different cell phone carrier and save another $100 a month. Review other services like internet, cell phone, etc.
5) Skip Your Vacation - If you were to skip your vacation for one year and stay home, how much would that save you? An average family spends $2,000 to $5,000 per year on vacation.
6) Get a Second Job - Spending some extra time earning extra money can quickly add to your savings. You can go the traditional route of working in retail or delivering pizzas. If you are looking for something a little less traditional, check out these side hustle ideas.
7) Reduce or Stop Eating Out - Depending on how often you eat out, this could easily be upwards of several hundred dollars a month. Make a concerted effort to eat at home or bring food with you, if you have to be out. Even convenience food from the grocery store can still be cheaper than eating out. Like a skipped vacation, not eating out could save several thousand dollars a year.
8) Cut Back on Grocery Bill - Similar to eating out less, just cutting back some on the grocery bill can quickly help build your savings account. Use coupons or things like iBotta for additional savings.
9) Save Your Tax Refund - Instead of spending your tax refund, put it straight into the savings account. Or better yet, adjust your tax withholding so that you don't get a refund (or owe either) and put that gained money into an interest bearing savings account.
10) Automatic Deduction - If you have the ability in your budget set up an automatic transfer into your down payment savings account. This way it happens without you even having to think about it.
While some of these may be permanent changes because you realize you can live without them, most of these are intended to be temporary. You can go back to your "normal" life once you are in your new home.
Having a large down payment will help you avoid extra monthly charges of PMI. This could save you up to a couple hundred dollars a month. It should be noted it is possible to purchase a house with as little as 0% or 3% down depending on the type of loan you get. We are here to help you navigate what loan works best for you. We can also connect you with some great loan officers to help you, too.
What other ways could you save for a down payment?