10 Hacks for Saving Money in Prep for a Home Purchase
Many days, achieving the lifelong dream of homeownership may seem impossible. Especially for Millennials, who have been fraught with pitfalls from housing shortages to high-interest rates, COVID-19 to an economy in chaos, and student loans to soaring home prices.
While it isn’t easy, we’re here to tell you that it is possible to plan towards owning your own home. Today, we’re here to share some hacks for saving money that can help you prepare for a home purchase.
Automate your savings
Determine a monthly amount you’d like to go toward your savings and set up an automatic transfer. By getting the money out of your checking account shortly after payday, you can avoid the temptation of spending it.
Is the amount you set too low or too high? No problem. You can control the amount you automatically transfer and adjust as needed.
Tackle high-interest debt
Look at your debt and analyze what has the highest interest. Is it credit cards? Student loans? Car payment? Assess and pay down the accounts with the highest interest rates first. This will allow you to make your money work best for you.
And if you pay off a credit card, be sure to keep the account open. Having available credit will help your credit score.
Sell an extra vehicle
If you have any extra car or motorcycle sitting around, take the opportunity to sell vehicles that you are not using. Not only does it eliminate a car loan payment but also an extra insurance cost each month. Plus, with automobile prices high, you may even get close to, if not more, than you paid for it!
Cut down streaming services
Many people cut the cord on cable services because it was too expensive. But many people are realizing having many different streaming services costs nearly as much as they were paying for cable.
Analyze your subscriptions, determine which you need or use the most, and cancel the rest. By cutting down your monthly streaming services, you can add a little extra to your savings account—even if it is $20 or $40 per month.
Cut down on rent
For most people, their largest monthly expenditure is rent. Can you possibly downsize to a smaller apartment? Can you stay with relatives for a while? Do you have an extra bedroom you could either rent out or list on Airbnb? Many people get creative and find ways to cut down that hefty monthly expense.
Open a high-yield savings account
A high-yield savings account is a type of savings account offered by banks and credit unions with a higher interest rate than traditional savings accounts. While traditional savings accounts average a 0.35% interest rate, plenty of high-yield savings accounts offer rates of over 3%. That’s nearly 10 times more! When saving for a home, this will allow you to earn a bit more cash along the way.
Pick up a side hustle
If you have an internet connection, it has never been easier to pick up a side hustle. Many of the side hustles are flexible around your commitments, too. For instance, if you have a car, you could consider working a few hours on a rideshare app or delivering food. If you’re a writer or graphic designer, check into Upwork. If you enjoy physical labor, look around for snow shoveling or grass cutting jobs. Or, how about plant-watering, dog-walking or house-sitting? It has never been easier to make some extra money on the side.
Rent out your car
If you don’t want to work a rideshare app yourself or wear down your car many days a week, consider renting out your car on the weekends or when you’re not using it. This will allow you to passively earn some extra money.
Check into sites like Turo and TravelCar to help you understand the steps to get your car in use when you don’t need it.
Clean out your apartment
Most of us have many items around our apartment that are not being used. Perhaps you have an elliptical in the extra bedroom or some clothes on hangers you haven’t worn in years. By looking around your apartment with a careful eye, discover what you don’t need or use regularly that can be sold to the willing public. Consider listing these items on Craigslist, Facebook or eBay.
Find free activities
On the weekends, of course, it is fun to go to concerts or check out that hot new restaurant in town. But those things add up quickly. By checking out libraries, parks or even YouTube, you can discover free activities, like books, movies in the park, or yoga classes. These free alternatives are great ways to explore your city—and save some cash.
Consider co-buying a home
For those of you counting at home, consider this one a bonus. Have you considered co-buying a home with a group of friends or family members? Co-buying is when two or more people purchase a property and agree to share ownership. By co-buying a home, you can combine your purchasing power to offer a quicker path to homeownership. Plus, you may even be able to afford a slightly larger home or a home in a better area.
If you’re willing to be patient and make a few changes, your dream of owning your own home may be a lot closer than you think. A few sacrifices will be well worth it when you find a house and make it your home.
Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.
