With rent prices expected to rise and pass home values by the end of the year, now is a great time to consider purchasing your very own home. With fixed mortgage payments and a more stable market, choosing to invest in your own home might be the best option for you in the long run. However, coming up with a down payment can be a challenge for home buyers.
Here are some of Core Capital Group’s strategies to help you save money for a down payment.
1. Cut down on Large Expenses
Yes, even the smallest of sacrifices make a difference when you are trying to save money, but let’s be realistic – skipping a coffee at your local café simply will not make a substantial difference to your account balance. For faster results, you need to tackle your biggest expense – rent. With rent at times consuming over 30% of your take-home pay, finding a solution to cutting down this expense will help you save more money to put towards your down payment. Negotiate with the landlord for a better rate, or if that does not work, consider moving to a different location or downsize. If comfort and location is not something you can give up, you could always bring in a roommate to cut down expenses.
2. Automate Savings Contributions
Savings contributions are often mistakenly assumed to be optional when planning our finances, and even if we decide to contribute, it is usually a “leftover” amount. You need to take saving seriously. Begin by talking to your payroll department and telling them that you want a fixed amount automatically deducted from your paycheck and deposited directly into a specified savings account. Applying this strategy means smart saving and a significant end result.
3. Save Windfalls
The simple idea of receiving a bonus or windfall brings many to the edge of spending temptation, but temptation is also accompanied by that little voice in the back of our heads urging for self-restraint. With the average tax refund expected to rise this year, this would be a good opportunity to invest the extra bit of money towards your down payment. Your future self will be thankful!
4. Save Less for Retirement
Although saving for your retirement is usually encouraged, allocating funds towards your down payment is just as important. No, this does not mean you should abandon your retirement account altogether, but if you have already made a contribution to your retirement, maybe it is time to think about the present.
5. Family and Friend Assistance
Gift funds are also a great way to contribute towards a down payment. Under 2015 annual gift tax exclusion law, any individual can gift any other individual $14,000 per year, tax-free. Family and friends are usually happy to help their loved ones realize their dreams, so why not ask for some assistance?
Every goal can be achieved with just a little motivation, and owning your own home is incentive enough. Save money for your down payment by minimizing rent, managing bonuses, and not hesitating to ask for help!