20 Down Payment Saving Tips for 2020Written By: Jaymi Naciri
Many renters assume theyll never be able to buy a house for this reason. They spend so much money month to month, there is little or nothing to put away. And the idea of coming up with tens of thousands of dollars for a down payment seems impossible.nbsp;
But heres the reality: The current national median home price is 257,000, and 3.5 of thatthe minimum amount needed for an FHA loanis just under 9,000. Does that seem more doable?nbsp;
The truth is that there are probably a bunch of cuts you can make to your current budget to come up with that kind of cash. Here are 20 ideas for 2020.
Set a frugal but realistic budget
Do you know how much you spend every month on bills, necessities, and incidentals? Many people dont. Having a debit card makes it easy to spend, spend, spend, and, often, a lot of what is being purchased is unnecessary, frivolous, and counterintuitive to your goals if youre looking to buy a home.nbsp;
Setting a budget is key. But it has to be a realistic budget so you can stick to it. We lovenbsp;mint.com, a free website from the makers of Quickbooks, that can help you set up a budget and track your spending.
Cut the cord
The average cable or satellite user spends a little over 100 a month on their TV bill, which means canceling their service could save them over 1200 annually. But many pay TV defectors will likely be looking for an alternative way to watch their favorite programs, saidnbsp;Mental Floss. Assuming youre one of the 83 percent of consumers who pays for both TV and internet, switching to a web-based service shouldnt be too expensive. Annbsp;Amazon Primenbsp;plan costs 99 a year, a basicnbsp;Netflixnbsp;subscription costs 132, andnbsp;Hulunbsp;costs 96. Even if you spring for all three choices, youll still only be paying 327 annually, saving you about 875 if youre a former cable subscriber.
Work out at home
Go for a run, jump rope, do some planks, or take a fitness >
Pause your retirement savings
If youre already saving for retirement, this might feel really weird, saidnbsp;Dave Ramsey. After all, Dave normally recommends you start investing 15 of your household income for retirement right after getting your emergency fund in place. But if youre planning on buying a house in the near future, hold off on your retirement savings and redirect those funds toward your down payment. Its temporary, so dont worry. Once youre sipping coffee in your new breakfast nook, you can get right back to that 15 toward your retirement goal. Think of it like this: If youre currently investing 500 a month into 401ks and IRAs, and instead, you put that toward your down payment savings, you could save around 12,000 in two years. Thats a big boost to your savings timelinenbsp;
Make your lattes at home
This has been a hotly contested topic, with many financial experts insisting that millennials are throwing their money away on expensive coffee drinks and millennials countering that they should be able to spend their money any way they want. Shawn M. Carter wrote about this topic fornbsp;CNBCnbsp;and admitted that he had spent 2,300 at Starbucks in one yearnbsp;
Ditch the dry cleaning
Save hundreds of dollars per month with a few dry cleaning tricks. There is anbsp;difference between dry clean and dry clean only, saidnbsp;Capitol Hill >
Simply switching from name brands to generics at the grocery stereo can save you 160 per month, per Dave Ramsey.nbsp;
Cook at homenbsp;
According to meal planning servicenbsp;Wellio, You can save around 16 per meal by cooking at home, saidnbsp;MyDomaine. That means if you cook just one meal at home a week that you would normally buy from a restaurant, you could save 832 a year. Extrapolate those savings out over multiple nights and you could have your down payment in no time
Make your lunch
Imagine all the money you could save if you were also bringing your lunch to work Even if you just weave in a day or two a week, you could save 150 a month or more.
Use those coupons
We all get mailers that have coupons for local restaurants, but how many of us actually use them? If you are going to go out for a meal, use that buy one entree, get one free offer.nbsp;
Do competitive research on credit cards
You could be throwing away money on credit card rates that are higher than they should be.nbsp;LendingTreenbsp;has a great breakdown of the best options, hitting on interest rates, rewards programs, and other important details.nbsp;
Use your points
Savings those credit card points for a vacation? Check to see if your points are redeemable for cash. If not, they may be able to be turned into gift cards, which you could use for daily spending, which would free up that money for your savings.nbsp;
Mow your own lawn
That 30 per week may just put you over the top, or at least help pay for your closing costs.nbsp;
Clean your own house, too
Serious savings sometimes calls for sacrifice. Will 200300 per month make a difference to your savings? Were betting the answer is, Yes.
Adjust the temperature
You can save money by lowering the temp by a few degrees in the winter and raising it in the summer. According to thenbsp;U.S. Department of Energy, the savings can add up to 10 per year by simply turning your thermostat back 7-10F for 8 hours a day from its normal setting. The percentage of savings from setback is greater for buildings in milder climates than for those in more severe climates. You can easily save energy in the winter by setting the thermostat to 68F while youre awake and setting it lower while youre asleep or away from home. In the summer, you can follow the same strategy with central air conditioning by keeping your house warmer than normal when you are away, and setting the thermostat to 78F 26C only when you are at home and need cooling.
Buying in bulk can save you money, but those savings may evaporate if you end up letting all the food you bought spoil. Shop your Costco list with a friend and split up the apples and avocados, and the toilet paper and paper towels, too. You can save hundreds of dollars per year.
Say goodbye to plastic
Theres a worldwide effort to ditch single-use plastic bottles, and doing so could help save the planet while saving you money. Get yourself anbsp;25 Brita filternbsp;and stop buying bottled water. Youre looking at a savings of more than 100 per person, per year, in the household.
Stop carrying a balance on your credit cards
If you carry a balance on at least one card every month, youre unnecessarily paying interest. Wouldnt you rather be earning interest instead?
Get the right bank
There are plenty of banks that dont charge monthly fees or ATM fees. That can save you 25 or more per month, and it all adds up. Ally continues to get high marks for its online bank account. This account pays a modest interest rate and offers free Allpoint ATM uses and up to 10 in monthly reimbursements for other bank ATM fees, saidnbsp;The Balance. There are no monthly fees, plus no fees for ACH transfers to or from other banks, no fees for cashiers checks and no fees for incoming wires. This account also offers free checks, which come in handy for your landlord or anyone else who still wants to get paid like its the 1990s.
Another way to lower your footprint and save some money is by driving to work with a colleague.nbsp;Ridesharenbsp;estimates that, For a person with a longer than average commute e.g., more than 12 miles and carpooling 250 days a year, the potential savings in a two-person carpool could exceed 1,500 For even more savings, trade off cars to lower the wear and tear on your automobile.nbsp;
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