As I always tell my kids, that homeownership starts with a down payment. Check out these 20 great tips on how to save and put together your down payment for your new home! If you have any other tips please share them…everyone deserves home ownership!
20 Down Payment Saving Tips for 2020
WRITTEN BY JAYMI NACIRI POSTED JANUARY 2020
Buying your first home can seem like an insurmountable goal, especially if your expenses are already high. Pricey rent, not to mention car payments, insurance, utilities, groceries, and all the other realities of life, can make it hard to save.
Many renters assume they’ll never be able to buy a house for this reason. They spend so much money month to month, there is little or nothing to put away. And the idea of coming up with tens of thousands of dollars for a down payment seems impossible.
But here’s the reality: The current national median home price is $257,000, and 3.5% of that—the minimum amount needed for an FHA loan—is just under $9,000. Does that seem more doable?
The truth is that there are probably a bunch of cuts you can make to your current budget to come up with that kind of cash. Here are 20 ideas for 2020.
Set a frugal but realistic budget
Do you know how much you spend every month on bills, necessities, and incidentals? Many people don’t. Having a debit card makes it easy to spend, spend, spend, and, often, a lot of what is being purchased is unnecessary, frivolous, and counterintuitive to your goals if you’re looking to buy a home.
Setting a budget is key. But it has to be a realistic budget so you can stick to it. We love mint.com, a free website from the makers of Quickbooks, that can help you set up a budget and track your spending.
Cut the cord
“The average cable or satellite user spends a little over $100 a month on their TV bill, which means canceling their service could save them over $1200 annually. But many pay TV defectors will likely be looking for an alternative way to watch their favorite programs,” said Mental Floss. “Assuming you’re one of the 83 percent of consumers who pays for both TV and internet, switching to a web-based service shouldn’t be too expensive. An Amazon Prime plan costs $99 a year, a basic Netflix subscription costs $132, and Hulu costs $96. Even if you spring for all three choices, you’ll still only be paying $327 annually, saving you about $875 if you’re a former cable subscriber.”
Work out at home
Go for a run, jump rope, do some planks, or take a fitness class on YouTube. There are tons of options for home-based fitness that will allow you to take a break from the gym, and the payments. That $60 a month translates to $720 a year.
Pause your retirement savings
“If you’re already saving for retirement, this might feel really weird,” said Dave Ramsey. “After all, Dave normally recommends you start investing 15% of your household income for retirement right after getting your emergency fund in place. But if you’re planning on buying a house in the near future, hold off on your retirement savings and redirect those funds toward your down payment. It’s temporary, so don’t worry. Once you’re sipping coffee in your new breakfast nook, you can get right back to that 15% toward your retirement goal. Think of it like this: If you’re currently investing $500 a month into 401(k)s and IRAs, and instead, you put that toward your down payment savings, you could save around $12,000 in two years. That’s a big boost to your savings timeline!”