If you know me, you know my husband and I have been looking to relocate for some time now but I’m still looking for employment in our new area, and we’re still trying to find the perfect [starter] home.
If there is one thing I regret, it’s having not saved any money! Don’t get me wrong, we were responsible and we both had the “emergency funds” and cushion in the bank account, not living paycheck to paycheck or anything.. but were no where near a 20% down payment (plus the 3% closing costs) on the types of homes we wanted.
So lets not be unrealistic here. Saving a full down payment in the next few months is going to be near impossible, unless you win the lottery, find a sugar daddy, sell your soul or something else unlikely. Hunker down for a while.
1. START SAVING NOW, THE EARLIER THE BETTER.
Even if you aren’t looking to buy in the immediate future, start now. Even if you think you’re 5 years out. Think about how much you need to put down on a 250K home. 20% down will cost you 50K plus your 3% closing 7,500. That’s 57,500$ alone without the inspection even. I don’t know who has that kind of money just sitting around, but we definitely didn’t have that much saved. And most people can’t save this amount quickly, so the earlier the better.
So if you’re like us, we have to use a FHA loan, we unfortunately make too much to qualify for a USDA loan and can’t put down enough to get a conventional mortgage.
So for a FHA loan on a 250K home:
The minimum down payment is 3.5% of the total loan= $8,750
Plus your 3% closing costs= $7,500
So you’re already at $16,250 CASH. (again, for a 250K home)
[The other issue you’ll run into if you can’t afford to put down a full 20% down, is the mortgage insurance you’ll have to pay. Talk about spending money for no reason.
This is going to cost us as extra 170$ per month until we can pay off the 20%.
SO SAVE NOW!]
2. Work overtime, don’t waste your time with survey sites, etc.
I see all these blogs talking about sites like swagbucks and taking surveys.
I’VE TRIED IT. It is literally a waste of time. Your best bet is to work overtime at your current position if it’s available. Most employers offer time and a half pay and other incentives for overtime.
WHY did I ever think I would make more money taking online surveys than working overtime?! I have wasted so much time trying to take surveys, only to find out a few minutes in after typing in all my salary, age, educational level, etc. that “I don’t qualify”. I feel qualified to take surveys but whatev’s.
Most of these websites require you to reach a minimum amount of money or “points” before you can cash out. I have a total of about 4 dollars on swagbucks and I’ve had the account for at least a year. I downloaded their app again and used it straight for 2 days with my spare time. 2 DAYS AND I MADE LIKE 2 DOLLARS. Even if you’re making minimum wage, it’s more than 2 DOLLARS.
Plus, I will never see those 4 dollars. They’re going to sit on that website forever because I give up on making literally nothing for so much tedious work.
3. Start cutting down on your spending
Eating out, buying grocery items you don’t need, online shopping, etc.
I have a BIG problem with online shopping. And it has probably been the hardest thing for me with us saving for a home. I fill up my online shopping carts constantly, debate and debate on whether I should buy it, and then reluctantly close the browser windows. Look at me growing into an adult.
I looked at my finances back in November of last year, and I spent almost $600 on eating out between starbucks, ordering food delivery (those delivery fees y’all), and me and my husband eating out. Mind you this was just on my account, I don’t even wanna know how much extra was spent out of his account. We ate out literally all the time.
Plus, on top of spending that 600$ on eating out, I also spent over 500$ on groceries. Groceries that I wouldn’t eat, and then would have to throw out. So we started meal prepping. We are both off weekends, so each Sunday I pick up groceries, and get to cooking for the week. I now spend about 250$ month on groceries and we hardly ever eat out.
(BTW, look at the Walmart Grocery app, it’s amazing. Add all your grocery items to your online cart, chose a pick up time, and they bring them out to your car. No more impulse buying. FOLLOW THIS LINK TO GET 10 DOLLARS OFF!)
Another thing is to go through all your recurring payments and see what you don’t use. I did this and realized I was paying $30/mo for something I forgot to cancel after the free trial ended.
All in all, doing these 3 things we have been able to save about 4 grand a month (each working about 12 hours of overtime per week). I didn’t even think that was possible! So we now have enough for our minimum down payment and will start paying off our high interest debts (credits cards, darn you).
There are other things you could try doing, but these listed above have been the best for us. I like instant gratification and other things just don’t work as quickly and take too much work. But, you could try holding a garage sale, baby/house/dog sitting for friends and neighbors, cancelling gym memberships and TV subscriptions, but I don’t want to sacrifice what I enjoy.
I am not a financial adviser, but if it works for me, it might work for you.
UPDATE: We found the perfect home and closed on it in February 2019!