Are you currently renting, but dream of one day owning your own home? Then you know that one of the most crucial first steps to making this dream a reality is to start saving up money. Unfortunately, there’s a little thing called “life” that can sometimes get in the way. Bills add up, debt may be a constant shadow making it harder for you to save up, and let’s face it, sometimes a fun night out can help to empty your wallet.
With all of these to consider, on top of paying monthly rent with no equity to show for it, it is a lot easier said than done with it comes to saving up to purchase a house. The key here is to budget and find the perfect balance of paying your rent while saving up money for a down payment at the same time.
Keep in mind that saving up 20% of the purchase price is not an obligation for most financing terms. You may also qualify one of the many Down Payment Assistance programs out there. Here are some tips to help you out if you are in this predicament:
- Budget: It’s always important to budget, but it’s especially crucial if you are struggling to pay rent and bills, while trying to save at the same time. Luckily, this day and age, we are fortunate to have technology on our side. There are many cheap and/or free budgeting apps out there. Fudget, LearnVest, and Dollarbird at just a few to name.
- Find Extra Cash Online: The internet has opened up a vast array of different opportunities for you to find gigs to earn that extra cash. Maybe dog-walking? There are small online companies you can register with that will set you up with pooches and their owners. Good at arts and crafts? Sell on websites like Fiverr and Etsy. Try freelance writing for different websites that need articles and that will pay you for it. Even get paid to complete surveys online. The opportunities are endless!
- Don’t Be Late On Payments–Use Auto Pay: To make sure that you don’t end up with late fees, interest, and dings on your credit score, make sure that you make all of your payments on time. Signing up for an auto pay system can help you with this.
- Down Payment Saving: Make sure that you always stash away money each paycheck to save up specifically for your down payment. This is obvious, but one thing that most people don’t do that they SHOULD do, is treat your down payment just as you would any other bill–treat it the same as rent, electric, your phone bill, etc. Putting this money in a separate savings account can be very helpful.
- Don’t Touch Your Savings: One way to help out with saving up for that down payment is to make your savings account “hard” or inconvenient for you to access. It’s easy to do this by putting your extra money into an account that does not offer you an ATM card for it. Additionally, you should use a bank account that requires you to pull out withdrawals only in person. It’s less convenient than a normal savings account, which may encourage you not to touch it next time you see that brand-new TV or pair of jeans on sale.
- Get Out of Debt: This is one of the most crucial things you can do; get yourself out of debt. If you’ve got some debt that needs to be paid off, like a credit card, it is important to pay it all off ASAP. This will help to bring your credit score back up, which is also an impacting factor for how much your potential future down payment will be. It will also be one less thing that is sucking the money out of your bank account with all that interest tacked on.
These are just a few tips for saving up to buy a house while you are renting. Apply them to your life and you will be surprised to see how fast you can meet your goals and finally be able to purchase your dream home!