Saving money when you’ve got expenses that seem to consume most of your earnings can seem impossible. Trying to save up for a down payment for a bigger house while maintaining the one you’re currently in that takes time, careful planning and plenty of discipline. Here are five tips to help you become more financially responsible and reach your goal of buying a larger home sooner rather than later.
Create a Budget
A well-established budget lets you visualize where your money is going. Prioritize expenses such as your current mortgage, food, and utilities above others. Examine areas you’re willing to sacrifice on for your new home and make cuts to non-essential spending.
Pay off your Debts
Paying off other debt is the first step to gaining more control of your own money. Student loan and credit card debt have interest that you pay on the balance monthly. Interest charges apply every month and it is in your best interest to pay these off faster to avoid paying more in the long run. Reducing your monthly obligations also reduces your debt to income ratio, making your financial situation more desirable to places like Republic State Mortgage Co. However, not only does paying off your debts look good it also can help your credit score.
Cut Extra Spending
It’s nice to have that cup of coffee every morning on your way to work or to go out to eat with your co-workers, but these small purchases add up. Making impulse purchases takes away from saving for your house. Consider alternatives such as packing your lunch or bringing coffee from home. Don’t cut everything out completely, though. Moderation is key and if you deprive yourself of all the little luxuries, you’ll be less likely to stick to the plan. Treat yourself once a week instead. The savings will add up in no time.
Set up a Savings Account
If you don’t already have a savings account, now is a great time to start one. Set aside a certain dollar amount or percent of your income to automatically go to that account. Pretend the money doesn’t exist so you aren’t tempted to spend it in a pinch.
Use Free or Cheap Entertainment
Fun activities don’t have to cost money. Consider renting books or movies from the library instead of buying them, buy ingredients to make your favorite take-out meal at home or seek free entertainment instead of costly outings for the family.
Buying a bigger home might not be as far in the future as you think. With some self-control and frugality, you’ll reach your goal sooner rather than later.
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