Owning your own home is the fulfillment of the American dream. Therefore, it is understandable that you want to eventually save enough money to make this dream a reality by saving for a down payment. Thankfully, you can save money for a home even while paying off debts and getting your finances in order overall by putting the following tips into action.
Read on to learn more about how to make real progress towards home ownership.
Set Priorities Correctly
Understandably, you want to save money for a home. This makes sense. However, don’t make the mistake of neglecting to pay debts to get ahead on the purchase of your new home. This will only make your situation worse. Instead, set your priorities correctly. You can successfully pay off debt and save for your home simultaneously by carefully allocating your money.
Of your unspent money, allocate 70% for debt repayment and 30% to your savings for your future home. This means that when you set your priorities correctly, you can effectively accomplish both goals, saving for your future home while paying off existing debt.
Boost Income by Getting a Side Gig
There are two main ways to increase your financial margin or the difference between what you have coming in and going out. That is to increase your income or reduce your expenses. Therefore, another way to get ahead on your finances and save money while paying off debt is to take on an additional job. This will increase the amount of money you have coming in and then go towards both your debt and your savings goals.
Make sure that if you do opt for a side gig, if it’s a job that you won’t have taxes withdrawn from, you are saving money for taxes, otherwise, any amount you were able to save or put towards debt will be negated by what you have to pay out in taxes.
Some of the most popular side gigs you can try that can give you that income boost you desire include the following:
- Driving an Uber or similar ride service.
- Delivering food.
- Working at a grocery store part-time.
- Working from home for a company offering customer service or creating travel plans or more.
- Selling homemade items and goods or offering needed services.
- Walking dogs, dog sitting, or house sitting for vacationing families.
Reduce Expenses
This is the other option to quickly make a difference in your savings or debt repayment, by reducing expenses. Consider debt repayment and saving for a home a unique situation. This means it deserves your undivided and somewhat ultra-focused attention.
In other words, it might be hard to make the necessary changes to save money or to pay off debt in a more rapid manner, but it’s worth it in the short term to make headway on your important goals.
Consider Loans and Interest Rates
Another important step to take when trying to save money for a home and pay off debt is to consider the current atmosphere of home loans and interest rates. This will tell you if now is a good time to invest in a new home or if it would be better to focus longer on debt repayment.
Understanding loans and interest rates and how they are trending will help you as you move closer to fulfilling your dream of home ownership.
Save Any Extra Money You Can
When you are attempting to save money for a new home, take advantage of any lumps of money to do just that and make a significant impact on your goals instantly. For example, if you get a raise, allocate the bulk of it to debt repayment and savings.
If you get a tax refund, do the same. If you get a gift of money or an inheritance, avoid spending the increase unwisely and instead put it directly towards your goals of home ownership and debt repayment.
Cut The Cost of Living
While it might not seem like it will help you reach your dream of home ownership any quicker, in reality, the more you can reduce your cost of living overall, the more resources you can direct to both debt repayment and saving for the future. This means it’s helpful to reduce unnecessary expenses as mentioned above, but it’s also wise to evaluate your expenses and cut your costs as well.
Consider the following general cost-cutting tips to make more leeway in your goals:
- Compare car insurance rates. It’s amazing how much money you can free up from your monthly expenses when you change car insurance companies.
- Create a budget. While many consider budgeting the bane of their existence, you won’t get anywhere if you don’t first create a plan. This means budgeting out what you have come in and what you have going out and creating a plan for each dollar. This also includes determining how much you need to save to get into the home you want.
- Don’t use DoorDash or other similar services when trying to save for something of this magnitude. These services can be immensely helpful and convenient, but they are completely unnecessary, and using them can wreak havoc on your savings and debt repayment goals.
- Don’t pay for unnecessary purchases like lottery tickets, manicures, magazine subscriptions, and more.
- Cut off unnecessary luxuries like cable, gym memberships, home décor, concerts, traveling, and more.
- Reduce eating out when possible. When you can make it at home, do so, and save money on your food budget.
You can Do Both: Save For a Home and Pay Off Debt
You might be tempted to think that you have to focus on one goal at a time, either saving for a home or paying off debts. However, if you keep the above tips in mind, you can achieve both goals at the same time. This means you will be able to achieve the dream of home ownership while also accomplishing your goal of paying down debt. You can do both!
Just keep the information listed above in mind, work hard, and remember this is a temporary state, meaning you won’t always have to do without luxuries or convenience items- you are making a sacrifice now for the short-term to get ahead in the long-term.
