Being a renter does have some advantages. No paying off the mortgage, no property taxes, and the landlord takes care of any maintenance and repair costs. However, renting your home does have one major drawback: You are spending money on rent without gaining any equity of the property.
Many renters want to own their home, but struggle to find the cash needed to make a down payment on a property.
In fact, a recent survey conducted by the website gobankingrates.com showed that a fifth of adults in the U.S. don’t use a savings account, while a third of those that do have zero funds in their account.
Below you will find some top tips to help you start saving and put aside enough funds to put a down payment on a home.
Set a target
Knowing how much you can afford to spend on a property is crucial to help you identify how much you will need to save for a down payment.
After working out how much you need to save, you should compile a detailed saving plan to reach your target. Having a target goal to reach will help you buckle down and start to put money away. You will find it hard to save if you try and set aside an unknown amount of cash for a down payment.
Work out your spending habits
Go through your credit card and bank statements for the last few months to find out where your money is spent. You can then focus on the areas of spending you can cut back on.
Cut down on your cable bill
The average household bill for cable TV has rocketed in the last 5 years and now stands at nearly $100 a month, up nearly 40% from 2010. Unless you already have, cutting down on your cable bill is a great way to save money every month. If you just can’t bring yourself to cut the cord, you can talk to your cable provider and attempt to lower the bill and shop around for a better deal.
Get rid of your gym membership
Make the outdoors your free gym. Jogging, cycling and hiking are all great exercise and don’t cost a penny. If the weather is bad or you are already signed up for a year’s membership, most gyms offer a discount if you can get a friend to join.
Downsize your current rental property
If you currently rent a one bedroom apartment, then downgrading to a smaller studio can save you hundreds of dollars a month. A smaller property also means cheaper utility bills.
Make some income on the side
Due to today’s technological modern world of mobile internet and smart phones, it is easier than it ever has been to make some money from a side job. If you own a car, then you have a huge advantage and can jump straight into work with opportunities like Uber and Postmates.
Get a high yield savings account
Leaving your savings in a checking account does not earn you any significant interest. Move your funds to a high yield account and get some interest on your savings.
Get a credit card with cash rewards
Drop the no frills credit card that you currently have and get hold of a credit card with a great cash back reward scheme. Credit cards that offer a reward scheme usually have a higher interest rate, so be sure that you make regular on time monthly payments to clear the balance.
Put aside your tax refund
It can be tempting to spend what you get back in your tax refund each year, but by putting aside any money returned you can make big steps to reaching your goal of affording a down payment.
Sell some of your stuff
Pick a day in the summer months with a forecast of good weather and throw an old fashioned yard sale. Post signs around the neighbourhood in the days leading up to your sale and get online to promote it on facebook and craigslist. The more promotion you do, the more people turn out, and the more money you make selling your stuff.
Sell your stuff online
Are some of your possessions valuable or highly sought after? You will probably get more cash by selling them online through eBay than you will at a yard sale. While, larger items of furniture tend to sell better on Craigslist.