Now that we’ve discuss how to calculate your downpayment amount and how to create a budget for it we will discuss some unique ways to save up your down payment.
1- Set up a separate account for your downpayment. Set up your downpayment savings account in a higher yield savings account such as a money market. Make it somewhat difficult to access so life’s emergencies don’t tempt you to take money from this account.
2- Earn secondary income. There are many opportunities to earning some extra money to set aside for a downpayment. From pet sitting to freelancing, if you can devote an extra 10-15 hours per month on a second income you can certainly saving a couple extra hundred dollars each month.
3- Start a $5 jar. Think of this as an adult piggy bank. Every time you receive a $5 bill tuck it a way into a savings jar. This can add up to several hundred dollars in no time.
4- Avoid fees. Paying fees is a great way to waste your money. Be sure to pay your bills on time, use ATM’s that are free with your checking account, and don’t let the parking meter expire. Paying fees can cost your a couple hundred dollars each year. That is money that can be earning interest in your down payment savings account.
5- Tax withholdings. If you are receiving a refund every year you are giving the government a loan with no interest! Make sure to adjust your tax withholdings for the following year, and whatever extra money you see in your paycheck should go straight into savings.
6- Automatic Savings Allotments. Many employers offer the option of splitting up your direct deposit into different accounts. You can opt to automatically save a percentage or specific dollar amount from each paycheck into your down payment savings account. You’ll be less tempted to spend it and maybe never miss the money if it never reaches your checking account,.
7- Live smaller/ have a roommate. Minimize the amount of rent you pay as much as you can while saving for your downpayment. It is wise to save the difference between what your rent is and what your mortgage would be. This way you know you’ll be able to comfortably once you have a mortgage.
8- Live with no car or only one car. The amount of money that it takes to maintain and insure a vehicle is astronomical. If you can find a way to use public transit or find other means of getting around you can save upwards of $500 monthly by removing the expense of maintaining and insuring a vehicle.
9- Cut cable. There are still ways to enjoy television programs through Netflix or Hulu Plus for a fraction of the cost. This can save you $100 or more per month, a large amount to contribute to your down payment savings.
10- Get rid of your home phone. In the same regard as cutting cable, many people can find it redundant to have both a home and cell phone. Get rid of that extra $50 expense per month and sink it into a high yield savings plan.
11- Get better insurance rates. You can shop around to see where the best rates are, or if you like the service of your current insurance carrier, call to get your policy discounted. Many insurers will offer promotions to keep a customer that is in good standing.
12- Negotiate a pay raise. If you are doing well on your job try to negotiate a pay raise, it never hurts to try. If you do succeed place whatever you raise you receive should go straight into savings for your down payment.
13- Cash back credit cards- If you earn cash back through a creditor, put the cash earned straight into your downpayment savings account. Make sure you pay the bill in full each month to avoid interest charges.
The idea of saving $25,000 toward a down payment may be daunting, but with some creativity and perseverance you can save a sizable amount toward your down payment. Utilize as many ideas as you can that are listed above to save a larger amount in a short period of time.