HOW DO I SAVE FOR A DOWNPAYMENT ON A HOUSE ON THE MONTEREY PENINSULA?
I hear this question all the time...how do I save for a downpayment on a house? We are having enough trouble paying for all of our expenses....But guess what?
YOU CAN DO IT...
You hear the news all around you..interest rates are down..prices have never been better....Yes, it is all true.
But, if you don't have a down payment..you really can't take advantage of this great market. One of the greatest hurdles to home buying is coming up with the down payment. I hope this can help you to face the challenge head on and fulfill your American Dream.
1. Make a poster board outlining your dream...be it pictures of homes in neighborhoods you want to live in, a list of features that you want in a home..make it emotional. Visualize what you want, imagine it happening for you. Put this in a place that you will see every day. I believe that if we write down and focus on what we want...it comes to us.
2. Think about what you spend your money on. My husband has a "wish list". Now I am an impulse buyer. In the past, if I wanted it, I bought it. Since I have met him I have changed. I now decide do I need it, or want it. For anything over $25.00, give yourself 10 days to decide if you need it. Do you really need that new pair of shoes, dinner out, the latest gadget? Use self discipline and take that money you would spend and put it away..you will be surprised how fast it adds up.
3. Avoid convenience...instead of spending $4.00 for coffee in the morning on your way to work, buy a cute on the go coffee cup, take your coffee with you, pack your lunch, make friends with your kitchen. Bargain shop for groceries, cut out coupons. Don't spend money on beverages, drink more water. According to the National Soft Drink Association, the average American household spends $850.000 a year on sweetened drinks. Water costs just pennies a gallon. I am not talking about expensive bottled water either...get a water filter at home, buy some to go containers...and drink water...you will not only be richer, but healthier.
4. Track your expenses create a budget and stick to it. Track your spending habits..see where your money is actually going..you will be surprised to see all the money that gets wasted on silly things. My 25 year old daughter writes down every single dime she spends for anything. she has a notepad in her purse and she writes it all down...good practice. (yes, I taught her to do that). Find new ways you can save.
5. Track your expenses...where are the excess in your budget? Identify it and slash it. Do you need that gym membership? running or walking in the neighborhood is free (and your dog might appreciate a daily jog with you). We found a great deal on cable, phone and internet that cut out about $100.00 per month. Don't get comfortable with what you are doing now. Become pro-active in your quest for saving every month, Be aware of things you are paying for that you don't use or need.
I understand that some of these solutions are difficult. We are all busy and change is hard.
EASIER WAYS TO SAVE MONEY:
Payroll deductions - Hide it from yourself-allocate a portion on your income to a special account to trick yourself into saving.
Tax Refunds-Why not allocate it to a special account to save for your down payment? Talk to your tax professional to see how you can plan your life so you have a good refund at the end of the year.
If you have a 401K - borrow from it. You are taking a piece of your investment to make another one. First time home buyers can borrow up to $10,000 from their IRA without paying a penalty. Talk to your IRA admiinistrator find out if this is a good option for you.
I know you will not like this but---work more. If you are serious about buying a home, if you work part-time even 10 hours a week at $10.00 an hour, in a year, you will have $5,200 more toward your down payment.
Anyone who is serious about buying a home can do it. It takes dedication, discipline and planning. But you can have the American Dream. You can have it all!!