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Four Easy Ways to Save for a Down Payment
In previous posts and articles, I've made it clear that I'm not a fan of down payment assistance programs. The reasons I despise the program are many, but, the main reason is they're entirely unnecessary.
Most often first-time homebuyers use the program thinking that they need 20% down, and, they cannot obtain that on their own. Nothing could be further from the truth. The most popular programs only require 3-3.5% down. With this being the case, you can save this amount yourself, and, you'll be surprised how quickly you can do it!
For a goal I wanted to accomplish, I recently did a test to see how quickly I could save the amount of money I needed. I went through my budget, eliminated the waste and made some adjustments so I could achieve my goal. The results were staggering!
Here's what I did to trim my budget:
- My cell phone bill was $300 per month. I had AT&T since the dawn of time so never considered looking here to save money. When I analyzed my monthly bill, I could not figure out why it was so high. I switched to TMobile and had the same service for $100 per month.
Savings: $200 per month - $2400 per year
- My cable bill was $200 per month. Looking back, it was dumb to not think of this sooner because I don't watch a lot of television. There's a couple of shows I like, but I mostly tend to power watch things once they go on demand. I switched to SlingTV, and with it, I have more available to watch than I did before, and, I get it for $20 per month. Best yet the service is fantastic.
Savings: $180 per month - $2160 per year
- We used to spend about $150 per week on groceries. When you consider it's only myself and my husband, to this day, I have no idea what we bought with that money. When we started paying attention to it, we realized that most of what we purchased ended up in the garbage. We each have crazy schedules so by the time we got around to fixing something; it had gone stale. Dumb move. We started meal planning, and I cannot tell you how awesome that has been! We make a plan, make a list and then only buy the items we need to make the meals we planned. Not only has it saved us money, but also time since we're no longer trying to figure out what to have for dinner. We're now spending about $200 per month total on groceries.
Savings: $400 per month - $4800 per year
- Because we never planned out our meals, it wasn't uncommon for us to get takeout at least three times a week. As delicious as it always was, it was still at least $60 per week for fast food. Since we were now saving ourselves the time spent thinking about what to eat, we ate out less often. Now, it's a once a month treat. We'll go out to treat ourselves once per month and generally drop $50 or so.
Savings: $190 per month - $2280 per year
There were other little things we did, but these are the places we saved the most money. As you can see, it doesn't take a calculator to figure that the savings above totals up to a heck of a lot of money in one year.
But we are talking about a down payment for a home here, so let's tally it up. Just with the four tips above, the savings is $11,460. If you wanted to buy a house for 250k, your down payment for an FHA loan would only be $8750! If you did not spend elsewhere what you saved you'd not only have your down payment, but money left over as well!
What other places in your budget can you save money? Spread the word and let me know your ideas, and I'll add them to my next article!
If you have questions about any part of the mortgage process, feel free to contact me. I'd be happy to help!
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