Ready to start planning for a new home? While it is exciting, there are several steps to ensuring a successful home search and lending process, starting with your budget. Yes, it is time to look closely at your budget and start saving for the down payment and closing costs now. It’s also not as intimidating as it sounds.
Looking at Expenses
Take a good, long look at all your monthly and daily spending habits. Many banks have website functionality to take a closer look at where you are spending your money. If not, make a simple list or spreadsheet of necessities like utilities (including internet), rent, insurance, car payments, and other regular debt for the past three months. Then list the ‘free’ spending like coffee shops, restaurants, takeout, and subscriptions.
From your morning coffee, pastry, or regular ‘treat’ to getting takeout again tonight, there are many dollars spent on non-essential items. The average American spends over $200 per month on takeout and $165 or more on coffee-related drinks per month. We’re not saying to cut out all the spending, but cut down and opt for frozen meals (some healthier than takeout), and make coffee at home for a much more affordable price. The savings could be in the range of $3,000 a year!
From the list you made looking at your spending, first, look at savings to remove a few. It can be easy to forget that not only do you pay Netflix, but perhaps Disney, Hulu, and other streaming services monthly. Plus, these add up quickly if you also have a cable service. Look closely at the list and determine if you can cancel most or all of the ‘extra’ streaming. An alternative while saving money is to use apps like PlutoTV and other free streaming services or borrow DVDs from a library. If you opt for cutting the streaming altogether, it could be another $350 per year in your savings account. Cutting other subscriptions for online access to gaming sites, dating apps, and more will add to your account. Remember, every dollar counts!
The Alternative Gig Life
Regardless of what you do in your regular job, there are likely to be many options for additional income. You can do driving, delivery, and on-call services like personal shopping after hours and off-days. There are also many sites for the gig economy, where you can post your skills and apply for gigs and less than part-time jobs. You will need to pay attention to tax requirements for this extra income, and you can quickly bring in a couple of hundred dollars a month. The trick is transferring your gig earnings into a savings account each month or set an auto-transfer to occur regularly.
Penny Pinching Thoughts
Taking the time now to start saving money for your new home will be worth the work. From spending less on drive-thru coffee, eating out, and digital subscriptions to opting for extra work through gigs, your savings account will start growing.