According to a 2014 Profile of Home Buyers and Sellers survey, thirty-seven percent of homebuyers claim it only took them six months or less to save up money for the purchase of a home. The rest took between a year to a year-and-a-half. So it's feasible to complete this goal successfully by the end of the year, at least. The national median average for the down payment required from first-time buyers is 6-percent. For repeat buyers it's 13-percent. Most people expect that number to be egregiously higher than it is. In fact, that number is quite often over-estimated. So again, it's very possible to save up enough money for the down payment within a limited amount of time. Will you have to sacrifice money in your budget and forego certain luxuries? Probably, but maybe not as much as you would expect. Here are some tips on how to save.
1. Create a budget (be honest and realistic about your needs vs. expenditures vs. savings)
2. Don't touch your savings (make a rule to keep hands off until it's time to make that "down payment" withdrawal)
3. Set up automatic savings deposits (do this through your employer's payroll so it gets subtracted from your paycheck before it hits your main bank account)
4. Save all "unexpected" incoming funds (anything surplus that you didn't expect, including bonuses and tax refunds, sweep away into that quarantined savings account)
5. Don't focus on the little ways to save; focus on the doozies. (it's easier and faster to focus on your largest expenditures, such as ways to cut down on utilities, than switching to mayonnaise sandwiches from your usual egg salad, for instance)
6. Downsize (is there a way to move into a one-bedroom instead of a two, and save in the process? can you make your coffee at home instead of getting one every morning in the drive-thru?)
7. Save less for retirement (now is the time to stop focusing on that matching 401-k and focus on short-term savings to quickly save the amount you need for your down payment)
8. Enlist the help of a support network (tell your in-laws you won't be meeting them at restaurants for dinner anymore, or very often. Tell your friends your savings goals and allow them to support you along the way)
9. Reward yourself in the midst of the process (if, for example, you have cut out going out to dinner from your monthly budget, consider fixing a fancy meal at home once a week. You don't want to be miserable, right?) So, in a nutshell, simply create a budget, hands off the savings, and make sure you're not completely overdoing the saving. The number-one reason New Year's resolutions often fail is because the goal is too lofty and unrealistic. Don't make that mistake with this one, especially since it is of critical importance for one buying a home in the near future. Make sure you give yourself plenty of breathing room, and in the meantime, happy home-hunting!
Consider allowing the Claus Team to be alongside you in the process. We are here around-the-clock to provide you guidance, support, and show you the homes you have your eye on. Our New Year's resolution is to continue to provide you excellent service, and place you in the home of your dreams. We are a team of patient, friendly counselors ready to meet and exceed your expectations! Call us today and get a free estimate on your home or market analysis. We look forward to the call!
(Photo Credit: Jeanine and Brad Claus)
The Claus Team