When it comes time to buy a house you have to have a sizeable down payment to qualify for a mortgage. The days of 100% financing are gone, and while there are some programs that require as little as 3% down for first time home buyers some programs require as much as 20% down.
Even at just 3% down, on a $500,000 house that is $15,000 and then when you add in reserves and closing costs, it requires that you have a nice amount saved up. One of the easiest ways to speed up the saving process is to eliminate unnecessary spending from your daily life.
Even just cutting out $20 a day can put an extra $6,000 a year into your home fund. There are a lot of ways to eliminate costs that won’t impact the quality of your life. In fact, some spending cuts will actually contribute to a healthier lifestyle.
Expensive fancy coffee.
When is the last time you had an overpriced coffee at a place like Starbucks? “There are some people that make a stop at Starbucks part of their morning routine. Some of these drinks can cost anywhere from $5 to $8 each, and then when you have multiple a day the money can really add up,” advises April Gillmore of ClickFirst.
Instead, make coffee at home or take advantage of coffee at work. Even the instant k-cups are more economical and avoiding the fancy expensive coffee will not only save you money but it will greatly reduce your daily calories and sugar intake. Those fancy drinks are packed with both.
Junk food and snacks.
Spending money on candy bars and snacks can add up fast, and these foods never fill you up so you often over-buy them and you waste money and consume poor quality food that is unhealthy. Healthy eating also contributes to things like healthier skin, increased energy levels and better mental clarity.
Imagine if you eliminated just $3 a day from this type of junk food splurging. That is an extra $1,200 a year that could go towards you home down payment. When you then consider two people in the household, that is almost $2,500 a year. When you combine this with all of the other money saving tips you can really accumulate a much larger down payment amount, which lowers your mortgage payment.
Eating out at lunch.
We are all busy. The last thing you want to do is prepare food in advance and pack a lunch, when it’s so much easier to go eat out. Well, a sit-down meal is going to cost you at least $20 when you consider the tip and all, and even picking up fast food will set you back $12 or so.
“These are both unhealthy options and packing a healthy meal can help you pocket an extra $5,000 to $6,000 into your down payment fund,” offers Tad Thomas of Thomas Law Offices. Do you want to eat burgers daily and become obese and out of shape or do you want to be healthy and save money for your new home at the same time?
‘The cost of going to the movies is astronomical these days. In order to be competitive, movie theatres have had to adopt a full-service approach, with dine-in options and big fancy seats. Less seats due to the size means higher ticket prices,” offers Ignacio Soria of CANN & Co.
Dinning-in means expensive food and drink tabs, then the service charge on top of that can be an easy $150 bill for a Friday night movie date. Skipping this an opting for Netflix at home can help you put an extra $600 a month into your down payment fund. Now you don’t have to eliminate all fun entirely, but a weekly movie date isn’t ideal if you are trying to save for your first home.
We all like to get away and go on a nice vacation every year, but if a new home is in your future it might be wise to stay local and maybe do some close weekend trips rather than spending thousands of dollars on a trip.
“Buying a home is very rewarding, so don’t think you are taking a step back by cutting out some spending leading up to the purchase. Sometimes sacrifices like this are what make the difference between buying a home or buying you dream home,” suggests Pedro Del Nero of Vaporizer Vendor. A local weekend getaway could help you put thousands more down on your home.
App and iTunes purchases.
We are all addicted to our mobile phones and apps are a huge cost. While most apps are free to download many popular apps have in-app purchase options that hook many people. Since they are linked up to an iTunes account it makes purchases seem innocent.
You don’t have to physically take out your credit card so it’s easier to follow through with the purchase and not think twice. Be aware of what you are buying and instead of buying albums on iTunes look for free trials on popular music streaming sites instead.