What’s the all American Dream? Why it’s home ownership of course. According to the Census Bureau, home ownership is at a historic low right now, of only 62.9%. Why? Well after coming off of a huge housing bust, many homeowners lost their homes to foreclosure and bankruptcy. Credit was ruined and lives were ruined.
Never fear though, we’re rebounding.
The economy is strong, the housing market is coming back and it’s time to jump on the bandwagon again. But how do get there? Here are some simple steps to start saving for a home.
- Start a Budget– This has to be your first step. I mean if you don’t know how much money you have and how much you’re spending, how are you ever gonna save. I highly recommend starting with a simple budget and give it a go. You’d be amazed at how much money is flowing out of your account that you don’t realize. And it all adds up at the end of the year.
- Auto Deposit Savings– Most banks and institutions do have this sort of system and it works great. Figure out your budget, and then put the rest in savings. And do it automatically. If you have a steady job with a non-variable income, it’s almost too good to be true. Have the bank transfer the money into savings the day it hits your account. You’ll never even miss it because it won’t be there for long. If you are self-employed or have a variable income, it’s a little trickier. You can do an auto deposit, but always make sure you leave enough to cover your budget costs. You can set an amount, or you can pay your bills and put the rest in savings manually. This leaves a little room fudging though. Some self-employed people, put a set amount every month in savings, pay their bills, and whatever is left at the end of the month, they transfer over to their savings. This works too, although I highly recommend getting as much of it out of your account as quickly as possible since we have a tendency to spend what’s there.
- Sell Assets– This is a no-brainer, I think. If you own stuff, that’s not making you money, but it’s worth money, well adios. I understand holding onto investment pieces, such as jewelry or art, but there’s probably stuff around that has maxed out it’s earning potential or even stopped, and does you no good to sit on. I say sell it! Check out this article on the Top 20 Things to Sell to Make Extra Cash.
- Ask Your Parents/Family for Assistance or Early Inheritance– I love this idea, because who doesn’t wanna help out their family? This can be a great avenue for those that have parents that may want to help out or stand to inherit money in their future. Of course, I can only recommend something of this nature, with a stipulation to check with your tax advisor, for any tax implications.
- Find a Side Hustle– What’s a side hustle you ask? Well, it’s a side job, usually done around other work hours where you work for extra money. It can be anything from Uber driving to babysitting, to even freelancing. Check out this the Top 50 Side Hustle Jobs for more ideas.
- Save Tax Refunds– This pretty much goes without saying, but you should be saving your tax refund every year. I know many people that like to use their tax refund, for vacations, electronics, a new car, etc. But if you save your tax refund every year, for 4-5 years, it will add up to be quite a hefty sum for most. Just try it, that vacation can wait!
- Drive a Cheaper Car– I’m a big proponent of sizing down your car. If you drive an expensive Lexus, size down to a Toyota. If you drive a new car, trade it in on a cheaper used car. Always buy used too. There’s no reason to buy new anymore. Cars are so much more reliable and dependable, you can safely buy a used car with little worries. Most Americans are driving more car then they need. Don’t get me wrong, I understand needing a minivan for all your kids, but buy a used one, and keep it till it drops. Kids are notoriously hard on cars and trust me, no one cares what you’re driving in the end.
- Have a Staycation Instead of a Vacation– This is kind of the story of my life. I’ve never really taken vacations before, partly because I grew up on a small farm, and you just didn’t have anyone to look after the animals, and partly because I’m cheap. Yes, I dream about traveling, but it’s usually modestly. And a staycation is a great way to save money. Why spend tons on airfare, hotel, tickets, food, etc, when you can do something fun in town, for much cheaper. All the better if you live in a fun city where’s there are lots to do and explore. Heck, try camping. Kids won’t remember lavish vacations, they remember the times spent with family, laughing and having fun. It’s doesn’t need to cost you a fortune.
- Look for New Home Owner Assistance Programs– There are plenty of homeowner assistance programs out there to help out new, emerging, veteran, and various types of homeowners. There are various programs, such as FHA, VA, USDA, Good Neighbor Next Door, Fannie Mae/Freddie Mac, FHA 203K, Native American Direct, and many more. Don’t be afraid to look for state-funded grants, and loans for your area.
- Downgrade Your Lifestyle– I know, I know, you say, but downgrading my lifestyle is no fun. Well, you’re right. We as humans get used to our surroundings, behaviors, patterns, and all things with our lives. Asking you to change them can be quite hard. But what if I told you that it might just be temporary, or even better for your health, or you just might like the change in the end. I always tell people that when making changes we don’t like, to just think about it in the present tense. I’m not asking you to stop eating out entirely, just maybe not every night. Or maybe try riding the bus instead of driving every day? It’s simple really, just make a few small changes and they will add up. Look for more ideas on 19 Ways to Simplify Your Life.
- Move In With Your Parents, Save Rent– Ok, I know what you’re thinking, this is crazy, right? Well not entirely. If you like your parents, and they like you, and they still have room, this is a great idea. And it saves tons. I know this can be quite a burden on you, your family, and your parents, but if you can make it work, it’s awesome. And remember, it’s only temporary!
- Get Rid of Cable, Internet, Netflix, Magazine Subscriptions– This topic is one of those things that sneaks up on us. Because it does add up, and sometimes can add up to quite a bit. I wouldn’t suggest going cold turkey and quitting the cable and all the subscription channels at once. I’d narrow it down. Pick one or two. I got rid of my cable and went with Sling TV and save myself $75/month. That’s $75 that can go into savings, or help pay off a bill. And as far as subscriptions go, I just let them run out. I don’t read all the magazines they would send, and if I need something, I can always go to that place where there’s free stuff. What’s it called again? Oh, that’s right, it’s the library.
- Start an Envelope Budget, and Stick To It. – And finally, we have the infamous envelope budget challenge. If you’re struggling to stick to your budget and save, just try the envelope budget. It’s a simple system, where we pay our bills, hopefully on auto draft, put money in savings, (also on auto draft), and keep our monthly stipend in cash, in pre-determined envelopes. Then we stop using our debit and credit cards and only use cash. It’s an awesome system, although it requires some patience and diligence. For more info, check out What is an Envelope Budget?
So there you have it folks, the top 13 ways you can save for a house. Don’t feel the need to implement every single one at the same time, that can be overwhelming. Just pick a few, that probably doesn’t look too painful, and start there. Then after a few weeks/months, add some others. It will get easier with time, I promise.
And guess what? In a few short months/years, you’ll be ready to start searching for a home!!
