Buying on a Budget
The older I get, the more I think to myself: “Whoa. That was a really adult thing to do.” Like when I bought my first car, finally signed up for my own health insurance plan, and started putting household appliances on my Christmas list (I’ll take a Vitamix, please).
Buying a home will definitely be one of these moments. In fact, it’s probably the most “adult” thing a girl can do. At least in my mind it is.
As it turns out, I’m not the only one who thinks so. The housing market is slowly rebounding, and many folks are starting to think about ditching their pricey apartments in exchange for abodes of their own. Unfortunately, many of these wannabe homeowners stall out at the very first step: saving money for a down payment.
This shouldn’t come as a surprise, though. A lot of us have student loans to repay, crippling credit card debt on our shoulders, and hefty car payments to make. Couple these expenses with sky-high rental prices and a weak job market and it’s no wonder Millennials are having a tough time squeaking by. How are we supposed to save money for a home purchase on top of that?
While you won’t earn enough money for a down payment solely by cutting up your Starbucks Gold Card, buying a place of your own is totally achievable if you take some serious steps toward improving your financial fitness.
Whether your ideal home is a craftsman with a white picket fence or a sleek condo downtown, it’s time to stop spending and start saving your hard earned dollars to buy the home of your dreams. Let’s get started:
Set a realistic price range
According to the finance website Money Crashers, one of the most common mistakes first-time homebuyers make is overspending. You know what you can afford. Don’t bump up the high end of your original price range if you don’t find your dream home right away.
Cut out unnecessary expenses
Speaking of overspending, unsubscribe from those Groupon Getaway emails and delete the Jimmy Choo pumps from your Piperlime shopping cart. To save money on going out with the girls, take advantage of post-work happy hour specials. You can also skip Starbucks and make your own coffee at home to save about $1,000 per year and bag your own lunch every day to save another $2,600 per year.
Live off of one spouse’s income
If you’re married or are planning to buy a home with a significant other, try living off of only one income. If you can swing it, setting aside one partner’s paycheck for the house fund is an amazing way to watch your savings account grow at lightning speed.
Think about tapping into your IRA
If you’re a first-time homebuyer, you can use up to $10,000 of your IRA funds to buy a home. Are you married to someone who is also a first-time homebuyer? You can both withdraw from your IRA funds for a whopping total of $20,000. That’s a good chunk of change! Just make sure you consult with a financial expert.
Use your tax refund
Believe me, I know it’s hard, but please resist the temptation of “treating yourself” to a Rolex and put the money you get back during tax season toward your down payment. If you never let the cash hit your checking account and put it straight into savings, you’ll never even miss it.