Consolidation Plus: 6 Ways to Fast Track Savings for a Home Purchase
Saving up for a 20% down payment on a home may seem intimidating. And for first-time home buyers, it might seem downright impossible. But with a few tips from the professionals at Consolidation Plus, you could be on your way to saving a big chunk of your down payment in just a few months.
1. Log Daily Expenses
Simply by tracking your daily expenses, you’ll find new ways to reduce your spending. Like how food journals help people lose weight, tracking your daily expenses will help you identify little things like the expense of buying coffee each morning versus taking advantage of free coffee in your office. It might seem small, but these types of things add up.
Kevin Gallegos of Consolidation Plus also recommends using cash in place of a debit or credit card. He references studies that have shown that people spend 15 to 20 percent less when they pay using cash.
2. Reduce Utility Bills
Simply by using cold water in your washing machine, you save up to 90% of the energy the machine uses during the washing cycle (another tip from Consolidation Plus VP, Kevin Gallegos). You can also save extra money by skipping the dryer when you can.
Further, by turning down your water heater’s hot water temperature to 120 degrees, you can save money in standby heat loss, per EnergyStar.gov.
3. Create money-making opportunities
Get creative and turn your free time into cash, whether that’s by selling unneeded items or leveraging your skills into a part-time money maker. By tutoring, babysitting or doing miscellaneous work for people, you can add to your savings fast.
4. Research the market
Instead of sitting on your hands for years saving money while prices continue to rise, get in on the action. Adjust your expectations and consider a home in a less desirable neighborhood. Better yet, buy a fixer-upper and do some repairs yourself. In this way, you’ll leverage the equity you build in a lesser home to pave the way to buying your dream home.
5. Don’t abandon your priorities
Kevin Gallegos of Consolidation Plus, emphasizes staying focused on paying rent and credit cards to avoid costly debt and damage to your credit score. Even with a large down payment, you may struggle to qualify for a loan with poor credit history if you’ve neglected credit card payments.
6. Automate savings contributions
Many people view savings as a luxury – this is a mistake. Calculate your budget so that you know how much you can save each month. Then, set up an automatic transfer of your monthly income to your savings account.
Taken in isolation, each of these steps may not put you in a home within the next few months. But don’t underestimate the power of these steps being taken simultaneously, on a continuous basis. When savings and responsible spending become a habit, you take back control of your finances.