Everyone dreams of one day striking out and finding a place to call your own. Sometimes that’s an apartment, but more often, the dream is to own your first house. That can be quite a challenge because of the accompanying cost.
If you’re not substantially wealthy or well-off, immediately buying a house will take time. First of all, it’s considered normal to put down a down payment of 20 percent, although the average is actually along the lines of five percent. Even after paying the down payment, you have to keep up with monthly mortgage payments, which average to over $1,600 a month on an average 15-year loan.
Here are four ways you can start saving up for your first home before you even see a professional mortgage broker.
1. Ditch Credit Card Debt
One of the most substantial burdens to saving up for a house is making numerous other payments. Aside from student loans, credit card loans form a significant part of a household’s collective debts. According to one study, the average credit card debt of a single American family is $16,000.
Although you can theoretically pay off a credit card debt alongside a mortgage payment later, it would become harder for you to keep up with both. Before you even buy your own home, you need to get rid of your credit card debt first. Start reducing your usage of credit cards and pay them off slowly.
2. Cut Significant Costs
You can’t expect to save quickly or effectively if you keep making costly purchases and accruing significant costs. You need to consider every major purchase you’re going to make and think if they’re worth it in the long run.
Examples of high costs you should reconsider include the following:
- Expensive vacation trips. The longer you are on vacation, especially abroad, the more expensive the travel costs can be. Stick shorter holiday trips like hotel staycations or simply a weekend at home.
- Luxury goods. Pricey handbags, costly shoes, and expensive gaming devices should all be examined critically before buying them. Do you need them and their price tag, or can you leave without them?
- Costly accommodations.
3. Cut Minor Costs
It’s not only the big purchases that can set back your savings efforts. Small receipts and expenses can all pile up and cost your hundreds of dollars in the long run. By cutting these low costs whenever you can, you’ll have an easier time allocating money for your house savings.
Examples of minor costs you can reduce include eating in restaurants. When you can whip up a meal at home, you can cut the costs of traveling to a restaurant and paying a significant mark-up for your food. You can also buy more secondhand products like clothes that can be cheaper than buying them new.
4. Get Rid of Extra Vehicles
Cars are very convenient, but they’re also aren’t cheap. Aside from the initial purchasing price, you also have to deal with monthly payments and maintenance. On average, a new car will cost over $500 a month and approximately $99 in maintenance fees.
Tempting as it might be to buy your significant other or favorite child a new vehicle, consider whether they need it before doing so. Unless they have to travel excessively far away for work or school and commuting options are out of the question, you shouldn’t buy a new car.
These are just a few ways you can trim down your expenses to make sure you can afford your own home quicker. You can assess your cash flow for more methods; you can save more money and live the dream.