Down payments are tricky business. When buying a home, you need to put down a payment that will offset future costs and future interest rates. Most people recommend putting down ten-percent, but twenty-percent is probably the ideal percentage because you will save a lot of money that way and doing so will offset many future costs. Here are five ways you can save for that downpayment!
1. Pay Off Credit Card Debt
Credit cards are useful, and they do come in handy at times. But, in the end, all of that debt will just weigh you down and drag you further into a swamp of hidden costs and bills. Before buying a home and making that downpayment, you want to purge your debt. Especially credit card debt, it just keeps on adding up and adding up.
One method of paying off credit card debt, known as the “avalanche method”, has to do with putting a large chunk of your income into paying off debt that increases with interest. You can do this with credit card debt, and other types of debt as well. But, it’s advisable to start off with just the debt that increases with interest. Once you purge that debt from your life, you will find that you save a lot of money and end up taking home a lot more.
2. Cook Your Own Food
Going out to eat adds up. It may not appear to be a huge deal, and it really isn’t, but in the long run, you will save quite a bit of money. This is true of many other habits. From buying Starbucks on a daily basis to smoking cigarettes. These may seem like sacrifices – and, in a way, they are – but they aren’t particularly big sacrifices and the benefits are impressive and very tangible.
3. Take Advantage Of IRA Programs
If you’ve never owned a house before, then the IRA is legally obligated to let you put down $10,000 of IRA funds as a downpayment. Or, if you’re married and both of you are first-time buyers, then they will pull from retirement accounts and this will allow you to put down $20,000, rather than $10,000. What’s interesting about this “First-Time Buyer” rule is that you can have owned a home in the past, just not in the past two years. So, maybe you owned a home twenty-years ago, but if you currently live in an apartment and have done so for a couple of years, then you qualify for this program.
4. Sell Some Of Your Old Junk
We all have some junk in our life. Stuff that we never use – maybe we never used it at all – and never will use again. We don’t need it, and we’re not sure why we still hold onto it. It’s just there. Gathering dust and taking up space. But, if we choose to sell some of this junk, we could actually earn a decent chunk of change and we’d free up some space in our homes and in our lives. Don’t let that stuff weigh you down.
5. Take On A Second Job Or Start A “Side Gig”
Find a second job – something that you can work at part-time – and put the money earned from that job into an account that is directly for the downpayment on your new home. Or, alternatively, you can start some kind of “Side Gig”, such as a business of some kind. You can do this quite easily now, money really isn’t a stumbling block, and if you’re willing to commit a few hours a week to this side gig, whatever it may be, you can actually earn some really good money that will help you pay for the down payment.
Max Akin Writing 