Yay! You’ve decided to buy a new home. Congratulations! You are one step closer to achieving the American dream. With a little planning, you can save up some major cash before closing. The larger, more substantial your down payment is, the lower your monthly payment for the years to come. Start your savings plan as soon as you can to get the biggest return.
- There are two ways to have immediate savings and stash some cash. The first is to look at what you are spending NOW and cut back to just the necessities. Look at your cable bill. Most of us spend $150 or so a month. For the next few months, consider dropping extra movie channels and lower your bill. Next, look at your grocery bill. Try to spend a little more at the store and eat at home more. Eating out is convenient but it can take a bill toll on your monthly budget. You will save 20% right away, just by removing the money allocated for gratuity and sticking that cash into savings. Eating at home (or with mom and pops) can save big time! If you must eat out, sip water and skip the apps and desserts for the lowest bill possible. Making coffee at home and depositing your spare change are more hidden sources to help you with your down payment savings. There are tons of free coupon apps. Check them out for grocery and dining savings.
- Okay, this next tip has the potential to pay off with each paycheck, but I recommend you speak to your CPA for advice. What you are looking to do is adjust your withholdings from your paycheck to get more cash now by having less taken out. Once you become a homeowner, mortgage interest and tax deductions will be thousands a year so often times, you can have less taken out now since you will have more in itemized deductions. With each paycheck, cash will start to stack up!
- Now that you have some extra cash, it’s important that you DON’T spend it! It’s tempting to buy furniture or home décor but this will take away from the bigger picture, a lower monthly payment and better spending habits. Open up a separate savings account, just for your new home. No debit card for this account. Save! Save! Save! Most mobile banking apps connect all your accounts so as you easily transfer money from your checking account to your savings as you come across extra dough.
- Call your momma! Call your daddy! Tell your immediate family that you are building your dream home. They will be so proud of your decision and may offer a little cash or housewarming gifts. Let them know you set up a separate savings account and would love a cash deposit if they are generous enough to be able to help out. This is especially effective for those couples engaged to be married. I personally followed this strategy and was able to rack up thousands in wedding cash to use for my first home. Our bank even made a deposit in the account as a reward for opening a new savings account with them. Think back to high school graduation. Jackpot! Family is a great source of support as you grow your future.
- Closely look at credit cards. Call your financial institution and see if you can get a lower interest rate. Credit cards can often be in the 15%-20% range. Getting a lower rate can immediately lower your monthly payments and help your budget even more. Speaking of credit cards…don’t use them! Don’t open any new accounts and don’t make any purchases over $1,000 until you close on your home.
Five easy tips. There are so many ways to save extra cash each month. No matter what your income, you can always be rich…just spend less than you make. Easy to remember but sometimes hard to do. Stick to the plan and evaluate each month so you can see how fast your down payment is adding up. The feeling you will have at the closing table knowing you did it just by tweaking your spending habits will be so rewarding. Plus, all these months of new habits and you will think twice when choosing how to spend your hard-earned money. Good luck! You can do it!
Start your new home journey today!
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Founded in 1991, Adams Homes is known as the premier home builder and is one of the largest privately-held home building companies in the southeast. Adams Homes has built more than 40,000 new homes since 1991 and builds in seven states including new homes for sale in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee with corporate headquarters in Gulf Breeze, Florida.
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