One of the greatest hurdles to home buying is coming up with the down payment. Here are a few softer practical strategies to help you clear the hurdle and come up with the cash you need.
- Payroll Deductions
One of the best ways to save money is to hide it from yourself. Payroll deductions 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.
- Find More Work to do
Yes, we 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.
- 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 saving. They could be photos or a list of features of your dream home. Whatever your focal point, store it close to your budget, wallet, or in the place you pay bills to
remind you of what you’re working for.
- Slow your Spending – The 10-day Rule
The biggest enemy of spending is the impulse buy. For purchases over $25 exercise self discipline and give yourself 10-days to decide if this purchase is for a real need or a want?
- Avoid the Convenience
From coffee on the go to lavish meals out, consumers pay quite a bit for convenience. Avoid your local convenience stores and become friends with your kitchen to help your bottom line.
- Track Expenses – Face Your Truth
We scoured the net and all the experts agree, the only thing more powerful than creating a budget is tracking it. Schedule time with yourself each week to face the truth about your spending and find new ways to save.
- Eliminate the Excess Spending
Locate the excess in your budget and slash it. Trade the gym for home workouts, movie nights out for rentals at home, and keep an eye out at the end of each month for services.