The first step in the saving process is budgeting. If you don't know where your money goes every month, it's impossible to divert money to your down payment. Start off with reviewing your bank statements and all your credit card payments. Consider how much you spend each month on nonessentials. After you categorize your expenses, look for areas where you can cut back. Set a definite (yet realistic) budget for each category and stick to it. Consider your savings a non-optional expense.
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Consider Downsizing.
One fast way to save more money towards a down payment is to downsize. Downsizing is the processs of reducing your expenses and living below your means while you save. When you downsize, you reduce the amount oyu pay for necessary expenses and instead divert that extra money into your savings account. Moving into a smaller apartment, or selling an extra vehicle are ll great ways to downsize. A simple life may be more enjoyable than you expected!
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Tax Refund.
Consider using your tax refund towards your down payment! Tax season may be the perfect opportunity to qualify for a new home. IRS tax refunds are eligible as a source for a down payment for homebuyers. With several low-down payment options available, even a small tax refund may be the key to becoming a homeowner!
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Ask For a Raise.
Living pay check to pay check, with little wiggle room? It might be time to ask for a raise. Use these tips to increase your chance of success.
Time is right: Timing your salary conversation is the best way to set yourself up for success. The best time is during your annual performance review.
Come prepared: Never walk into a salary discussion unprepared. Gather specific performance data and results from projects you've worked on. Lay out exactly how busy you've been and what you've been working on.
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Reduce or Cut Out a Bad Habit.
Reducing or cutting out even one bad habit can help you put away a good chunk of dollars a year. Consider quitting the following unhealthy habits and divert the money to your down payment fund.
Impulse Buying: If you're prone to impulse shop, you may want to consider cutting down on thos type of purchases.
Getting Takeout: Takeout and fast food are easy and convenient, but it's not so easy on your wallets. Try coooking a few meaks at home each wek instead to cut down on costs.
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Skip a Vacation.
Exploring new destinations can be an amazing experience. However they are often expensive experiences.
On average, families of four spend about $4,500 on vacation. That's a decent chunk of money! Consider saving that money for a down payment. Get creative with a "staycation" in your local area instead. Here are some ideas to get you started:
Explore a historical site
Plan an at-home spa day
Try a local cooking or art class
Go camping at a local park
Try a new restaurant
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Pick Up a Side Hustle.
In today's world, it's a lot easier to earn money on your own time with a side hustle. Here are a few ideas you can use to get started:
Pickup freelance work
Drive for a ridesharing company such as Lyft or Uber
Pet sit or walk
Test apps and websites
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Chop Down Your Debt.
If you're on a mission to buy a home, diverting your extra income toward your debt might seem counterintuitive. However, debt-to-income ratio (DTI) is a factor when applying for a mortgage.
Take some time to treduce your debt before you apply for a mortgage loan. Look at exactly how much you owe on your credit cards, student loans, personal loans and auto loans, and create plan to tackle it!
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Automate Your Savings.
If you're the type of person who's prone to impulse shopping, you may want to consider automating your savings. First, decide how much you want to save per month for your down payment. Then contact your bank and authorize an automatic withdrawal from your primary account into a separate savings account. When you make your money less accessible, you may be less tempted to buy things you may not need. Just remember to schedule your withdrawal on your payday or when you know you will have enough money. Overdraft fees can put a serious dent in your savings goal.
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Rent Out Your Spare Room or Parking Space.
Do you have an extra bedroom in your apartment? If you do, consider listing it on an online hospitality website like Airbnb. With Airbnb, you get to control who uses your space and when. You can approve dates and guests ahead of time and rent out your spare room on Airbnb. This can be an amazing source of extra cash on the weekends.
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