Figure Out How Much You’ll Need
Figure out what that end number is so you have a realistic goal. The average renter will save for a down payment within 6.5 years. Typically, a first-time home buyer needs about a 20% down payment, but it can be as long as 3.5%. Home prices are rising in many areas, especially Austin, so you may want to budget for a bit more than expected in case the price of the type of home you’d like to buy increases.
Download a Budget App
Budget apps can help to organize your expenses and keep everyone on track and accountable. You’ll be able to see what you’re spending, and how much you’re spending for specific expenses such as dining out and entertainment costs. By getting a better idea of what your money is going towards, you can make informed decisions on where to cut costs that will lead to savings.
Pay Less Down
If you otherwise have excellent credit and are willing to borrow a bit more to cover closing costs, you may be able to qualify for a loan that requires a lower down payment. Saving 10% takes less time than 20%. However, talk to your lender to see what options are available to you. You may be limited in what houses you can purchase.
Pay Off Credit Cards
Everyone loves being debt-free! Pay off those credit cards with the highest interest rates first. The interest rates on credit cards often approach 21 percent. This is only slightly better than borrowing money from a loan shark (perhaps safer, though). The faster you can pay off credit card debt, the better you’ll be able to save for a home; your credit score will improve as well! Since most people have much more than $2000 in unsecured debt, paying off credit cards is a smart first step before home ownership.
Save on Energy Costs
Find smart ways to save on the utilities you do pay. If you are responsible for the electric bill, think of ways to reduce energy/water use. Turn off lights when not in use. Install power strips that don’t suck energy when devices such as the television or DVD player aren’t in use. Make it a goal to save a little more on your energy use each month. Even a difference of $10 is money you can put toward a down payment in the future!
Reduce Your Food Budget
The average family of two adults spends about $625/month on groceries! This is on a moderate plan that’s neither extremely frugal nor extremely luxurious. However, what if you did go extremely frugal for a while? How much could you save for your dream home? What if you ate eggs and toast for one night a week, shopped sale items and used coupons? Probably the most expensive part of most people’s food budgets is dining out. If you didn’t dine out as much, how much money would you save? You don’t even have to be that extreme. You can make simple changes, such as eating out once a week or taking your lunch to work instead of eating lunch out every day.