If you’re planning to buy your first home this year, it’s time to begin saving for a down payment. Even if you’ve already researched different mortgages and expect to qualify for one with a lower down payment, it’s a smart idea to have funds available for closing costs, moving, and any unforeseen expenses.
If you need to kick your savings plan into high gear, try implementing a few of these savings strategies. You may be ready to move up to homeownership sooner than you thought possible.
1. Set up a dedicated savings account.
Having a dedicated saving account makes it easy to set up automatic deposits so that a portion of every paycheck gets directly deposited into this account. If you decide to open a new account specifically for your down payment, shop for an account that offers higher interest rates and low minimum deposits.
2. Cut the cable bill.
If you have cable or satellite TV, call your provider to negotiate a lower rate. If this doesn’t work for you, consider canceling cable and buying an antenna. Sites like DisableMyCable.com3 show you what channels are within range – enter your zip code to see.
3. Review your smartphone usage.
Compare your monthly usage to your monthly data cap. Smartphone users waste an average of 26% of their data1 so you may be paying too much. Also, it’s never a bad idea to check out the competition – you may save big by switching to a new provider.
4. Take a staycation.
Skipping a vacation can help you to maintain your hard-earned savings and give you spare time to do some profitable decluttering. For example, you can sell unwanted clothing, furniture, and other items on sites like eBay, Poshmark, and Etsy, or phone apps like OfferUp and Mercari3.
5. Drive past the drive-through.
Avoiding take-out is a simple, effective, and potentially healthy way to save. Take a minute to add up last month’s restaurant and take-out expenses. You may be surprised to see how much you spent. Begin bringing lunch to work when possible, and skip the $5 caramel macchiatos for the home-brewed version.
6. Review your credit card rates.
Higher-interest cards can slow your savings, but there are several ways to reduce their effect on your plans.
Call each card issuer to ask for a lower rate. You should already be making on-time payments each month to establish a good credit score, so call the cards where you’ve been a long-time customer.
Identify the card with the highest rate and pay it off as quickly as possible, then begin paying off the card with the next highest rate.
Transfer your existing card balances to a new card that offers a zero- or low-interest rate for these transfers.
7. Find a second, part-time job.
Spending just a few hours a week at a second job is a great way to increase your savings account balance. Depending on your occupation, you can use your business skills in a part-time remote or freelance job, or turn a hobby into a profitable part-time business.
8. Work out more; spend less.
Recent stats2 found that less than half of us get our money’s worth from gym memberships. Start jogging, hiking or cycling with friends, or buy kettlebells or weights for home use. You’ll also find hundreds of free yoga, pilates and fitness classes on YouTube and Amazon Prime.
9. Tell friends and family about your goal.
In addition to being a great source of support and encouragement, they may know of part-time job opportunities, offer to consolidate smartphone contracts for major savings, or invite you to share a gym or athletic club membership (many offer guest privileges to members).
Contact a Stearns mortgage loan originator to discuss your financial goals and receive friendly, no-obligation advice.
10. Start smarter with guidance from a licensed home financing pro
Having a brief talk today can help you shorten your path to homeownership from the first step.
Feb 24, 2020
1. How Much Data Do You Really Need?
2. Americans spending $1.8 billion on unused gym memberships annually
3. Stearns Lending does not endorse these websites. They are provided as an example to illustrate the types of services available.