Saving for a down payment can seem daunting if you’re on a tight budget or living check to check. It is nearly impossible to make a plan and stay on that no matter what. But it’s important to stay motivated even when your plan goes temporarily awry. To achieve your desired result in going from broke to home owner, you need to set a goal.
It’s no different than setting a goal to lose weight, but it takes determination. Follow these steps and you’ll be well on your way!
1. Make a plan and write it downMake a breakdown of what you will need for a down payment, broken down into what you’ll need to save weekly or monthly. Set a finish date for when that goal will be reached. Be sure to save this in a safe place like your phone or computer so you can review it whenever you need a boost to remind you of what you’re saving for.
2. Make some budget cutsIt may not be easy, but saving for something as important as a new home is worth it. Look over your monthly bank statements for areas to cut back. Take out any set monthly expenses—rent or existing house payment, car payment, and anything else that can’t change.
Then look at car insurance, health insurance, and anything else that could change if you made changes to your coverage.
Then consider things like cell phone bills, cable, internet service. If you’re not using all your data on your cell phone plan, that may be a place to trim. Perhaps you don’t need such fast DSL service or every channel in your current cable package. Every little bit helps.
Don’t forget the little expenses that add up like eating out or those coffee runs to Starbucks. Even cutting down to twice a week will really add up in the long run!
3. Let someone else make some cuts
If you’ve gone through your budget carefully and don’t see any (or many) easy places to cut, let a best friend or close family member take a look at your budget. They might see some things you don’t, or might be able to ask some hard questions you aren’t willing to ask yourself.
4. Know how to bounce back
Expenses come up. Maybe you needed to repair your car or even accidentally went out on a shopping spree. Feel the buyers remorse and beat yourself up over it (but just a little). Things happen, but rebounding from those things will help keep you on your target.
Maybe a friend was a bad influence on your spending (we all have that one friend who wants to go to the bar every night, right?) Ask that friend to walk away for a little while so you can avoid the temptation.
The important thing is to move forward with your plan.
5. Look for ways to make extra money
Do you have skills you could use to bring in a few bucks? Perhaps you can put your Spanish fluency to good use and tutor high school kids. Maybe you can take that piece of furniture you refinished and turn it into a weekend business, hitting early-morning garage sales on weekends and selling your pieces on Craigslist.
6. Cook your dinner
Eat out five nights a week now? Cut back to two. If you’re not a fan of cooking, sub in easy-to-make or already-made meals on the other three nights. Grab a roasted chicken from the supermarket plus a bagged salad, or a ready-to-nuke meal from a specialty market like Trader Joe’s or Costco.
7. Not ready to give up your restaurant habit?
Those coupon packs that come in the mail actually have some useful stuff inside, including restaurant discounts. If you can save 20 percent off your bill a couple times a week, you won’t feel so guilty for dining out.
Another great way to save when eating out is by timing it to nights when restaurants have specials, like kids’ eat free nights. Googling “kids eat free” should yield list of participating restaurants in your area.
8. Don’t become a hermit
Cutting back doesn’t have to mean locking yourself in your house, never using any gas, never going to any movies or seeing your friends socially.
But make sure your friends and family know about your plan so they can support you while you’re saving. And you can involve them in your plan by enlisting their help to plan fun and free (or cheap) nights out.
9. Stay Positive
If you believe at all in the power of positive thinking, this is the time to act on it. And if you don’t, fake it! Staying positive will get you through the rough times (and they will be there!) Remember you are going to be a home owner and you can do it. This is only temporary.
10. Keep your eye on the prize
When everyone runs off to the Caribbean for their summer vacation, you’re probably going to want to chuck it all. But remember that the Caribbean isn’t going anywhere. Plan for a dream vacation or other activities after you’ve closed escrow.
Need more hints and tips? Ready to start looking? Call Helen today at 847.967.0022 or email [email protected].