You don’t have to live like a pauper to save up for a down payment for your new home. Here are five strategies that can help you sock away the savings.
Set Up Direct Deposit Into Your Savings Account
You’d be surprised how quickly you can accumulate a sizable nest egg when you set aside money from every paycheck and deposit it into your savings. To ensure you are not tempted to skip your monthly savings, simply set up automatic transfers with your financial institution, and transfer a set amount from each paycheck to your savings account.
Be sure to shop around for savings accounts that offer the most competitive interest rates. You might also consider opening a savings account that isn’t connected to your checking account so you’ll be less tempted to dip into it.
Put All Extra Income Toward Your Down Payment
By extra income, we mean cash gifts, income tax refunds, bonuses earned from shopping apps, work bonuses…any unanticipated or unbudgeted income can go straight to savings.
This may mean you have to wait a little longer to splurge on something you want to buy, but keep your goal in mind. You won’t have to sacrifice forever, and you’ll be glad you saved that money when you’re grilling burgers on the patio of your new home.
Sell Unwanted and Unused Items
It never hurts to go through your home and pull out all of those long-lost items you never use (and frankly forgot you even had), and sell them to someone who will use them.
Not only does your house get cleaned out, but you can also pocket some extra cash toward your down payment.
You’d be surprised at how much money you can make from posting items on eBay or Craigslist. Or ask the neighbors to go in on a mega online or block sale with you. The bigger the sale, the more customers you’ll attract, and that equals more profit for you!
Say Good-bye to Your Gas Guzzler
If you own a large truck, SUV, or luxury vehicle, consider trading it in for something a little more affordable. For example, if your car payment is only $300 instead of $500 a month, these savings can really add up.
Another option to look into is carpooling. Many companies arrange for carpools from areas that are far away. It’s a great way to save money on gas and car maintenance.
Use Your Investments
If you’re considering tapping into investments to help out with your down payment, keep in mind that it’s more financially sound to use taxable investments first, such as stocks, bonds, and mutual funds rather than dipping into your retirement accounts.
If you have a secure job, you may consider taking out a 401(k) loan. Keep in mind that withdrawing money from your retirement accounts prematurely can potentially incur extra costs and penalties, so speak to your financial and tax advisors before choosing to use your investments.
Remember, some mortgage loans don’t actually require substantial down payments, so shop around, get expert advice and find out what type of mortgage loan best suits your needs.
Once you do, you’ll know how much you’ll need for a down payment. With a little perseverance, you’ll have one saved in no time!
Sponsored by: SchoolsFirst Federal Credit Union. We care about helping educators and their families receive the home loan financing they need from a credit union they can trust. Give us a call today at 800.462.8328, ext.8288 to talk about your first time home buying needs.
Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us at 800.462.8328, ext 8288 for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.
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