Like many people who start out as renters, you may have decided that it’s high time you take the homeownership plunge yourself. But there’s a huge hurdle – that little problem of the down payment money!
Just be glad you’re in Texas – not Australia – you might have had to give up your avocado-toast habit. Jokes aside, giving up small, everyday conveniences is one way to accumulate money toward your down payment. Latte factor, anyone?
Old-school advice will tell you to learn from the past and save your money until you have 20 percent or more. But whether it’s 3.5 percent or twenty percent, that’s often 100 percent less than many of us have when we decide it’s time to buy.
Hidden down payment money
Knowing you have to start saving is all well-and-good but where do ordinary folk find that kind of money to save?
Many potential buyers have a wealth of down payment resources. No, they aren’t all obvious but diligent searching can reveal some of this hidden treasure. Here are a handful of often unnoticed places where down payment funds could be hiding.
Kick off your down payment, savings account by selling off all the things you own but don’t use. If you’re committed to buying a home, offloading your stuff – for money – is a great way to start funding that down payment. There’s an added bonus – it can be the start of decluttering – an action that makes any move easier.
Anything of value can find a willing buyer and with the advent of online marketplaces, finding those buyers is simplified. It’s a cliché but ones man’s trash really can be another man’s treasure.
Don’t ignore the potential cash injection you can bring in from things you may already own.
Trimming the existing budget
You’ll find, as your down payment starts to grow, your motivation may increase. Dig deeper into your budget and you could be surprised where it can be trimmed with little discomfort, adding cash to your deposit money.
Start by looking at the small ways you’re spending money every day. Expensive habits are a good starting point. It’s that old “latte factor” on steroids. If you smoke or enjoy craft beer, cutting these habits can boost your health and help you lose a few pounds while adding to your deposit.
And if you like a daily latte, enjoy restaurant lunches in the week, or grab take-away most nights, your strategy could be to gradually phase them out and sock that cash away in your savings. Other considerations would be to cut the cable – try Netflix instead – and start cooking from scratch – again better for your health.
This is the basis of a bare-bones budget, cutting out all unnecessary spending in order to pay more toward your deposit account. It isn’t forever, a bare-bones budget is only meant to be a temporary plan to get your deposit money saved.
Get a side gig
Adding to your down payment savings account will speed up your home buying timeline but earning more money can magnify your hard work even further.
Most of us have skills and experience we can tap into and monetize like cleaning houses, babysitting, or mowing yards. Then there are online sources like TaskRabbit for hands-on work or Upwork where the jobs range from translation to being a virtual assistant.
Money supplied by your side gig will help your deposit savings grow fast.
Lost and found
Are you expecting a windfall? Most of us experience some degree of “found” money throughout the year. From a tax return or a work bonus to an unexpected inheritance, these windfalls last a lot longer if they’re applied to the bricks and mortar of your own home