6 Steps to Saving for a Down Payment
1. Plan for progress – Your Dream Budget.
Saving isn’t all dollars and cents, it’s a little emotional. That’s why we
recommend finding a few visuals to remind you why you’re in the
saving game. They could be photos or a list of features of your dream
home. Whatever your focal point, we recommend storing it close to
your budget, wallet, or in the place you pay bills to remind you of what
you’re working for.
2. Slow your Spending – The 10-day rule.
The biggest enemy of spending is the impulse buy. So, for purchases
over $25 exercise some self-discipline and give yourself 10-days to
decide, Is this purchase for a real need or a want?
3. Avoid the Convenience.
Your mother was right, good things take time…and so do cheap
things. From coffee on the go to lavish meals out, most consumers are
paying quite a bit for convenience. Try to avoid your local convenience
stores and become friends with your kitchen to help your bottom line.
4. Drink More Water.
According to the National Soft Drink Association, the average
American Household spends about $850 annually on sweetened
drinks. In contrast, water costs just a penny per gallon. Do this and
you’ll start your life as a homeowner not only richer, but a bit healthier
too.
5. Track Expenses – Face Your Truth.
We scoured the net and all the experts agree, the only thing more
powerful than creating a budget is actually reading and tracking it. We
suggest you schedule some time with yourself every week to face the
truth about your spending habits and find new ways you can save.
6. Eliminate the excess spending.
Locate the excess in your budget and slash it. Trade the gym for home
workouts, expensive movie nights for checking out free videos from
the library, and keep an eye out at the end of each month for services
you aren’t using.
Serious Sources for a Down Payment!
These suggestions aren’t for the faint at heart.
But, if you’re serious about saving up these
sure fire moves will help you reach your goal.
Payroll Deduction: One of the best ways to save money is to hide it from yourself. Payroll deduction or allocating a piece of your direct deposit to a special savings account can be a great way to trick yourself into saving.
Tax Refund: You know it’s coming, why not
use it toward your down payment? If you’re
really serious about home ownership, talk to
an accountant about tax planning to make
sure there is a little green at the end of the year
to help you with your down payment.
Borrow from the 401k: It’s not losing your
retirement, it’s more so using a piece of one
investment to make another. First-time
homebuyers can one-time borrow up to
$10,000 from their Individual Retirement
Accounts (IRAs) without paying the early
withdrawal fees. Be sure to talk to your 401k
or IRA administrator to find out how it will
impact your retirement.
More Work: Yes, I said it; more work. If
you’re serious about reaching your down
payment goal, consider spending a few hours
working part-time. 10 hours/ week at $10/hour
all year will get you $5200 closer to your goal.
Florida Real Estate by Jeffrey Metzger 