THE DOWN PAYMENT:
Step #1
First, look back at your last 6 months of bank statements. Where can you be saving a few hundreds each month?
Maybe you need to cut your cable, give up restaurants, unsubscribe from Netflix and Crave and HBO, and Hulu and Amazon Prime and… should I go on?
Point being, you’ll find saving opportunities in your bank statements.
You probably won’t save four figures a month from doing this (unless you live a really extravagant lifestyle), but you can certainly save a few hundred each month, and over the course of a few months, those savings really add up.
And hey, these cutbacks don’t have to be permanent, god knows how easy it is these days to resubscribe to cancelled subscriptions.
Step #2
Now that you’ve made some cutbacks and you have some extra cash flow, make sure you allocate those extra funds to your savings account.
There’s no point in saving money on one thing if you’re just going to spend it on something else that doesn’t bring you closer to your saving goals.
One easy trick to help you save is to set up automatic transfers between your accounts. For example, if you can afford to save $1,000 every month, set up a recurring transfer where your digital bank withdraws $1,000 from your regular bank on the 1st of every month. Then, as you adjust to saving, you can slowly increase the amount you’re transferring or make manual transfers when you have additional funds.
Give every dollar you earn a slot; for example, $1200 on down-payment savings, $500 on rent, $300 on groceries, $150 on transportation, $100 entertainment (you still got to live a little) and so on.
Obviously I am just using arbitrary numbers here, but you get the point I’m trying to make.
Every dollar you earn should have a specific purpose, and then make sure you stick to your plan and track your progress throughout each month.
SHORT TERM PAIN FOR LONG TERM GAIN:
Consider a side hustle , or a second Job. If you are looking at ways other than savings to put together your down payment. Many people consider some of these options to get the money together.
SELL THINGS ON A SECOND HAND MARKETPLACE
Make use of your unused items and put them on second hand marketplaces like Craigslist, Kijiji or Facebook Marketplace, just to name a few.
You’ll be surprised how quickly it sells on these marketplaces – As the famous saying goes, one man’s trash is another man’s treasure.
Some people choose to sell other (perhaps more valuable) belongings, jewelry, cars, and other things. Is it a hobby you have outgrown and you are ready to move on to a different lifestyle? Only you will know if this is something that is bringing value to your life or is this something that is just a possession.
RADICAL 90 DAYS OF SAVING
“Okay, so a 90-day saving blitz might not be something you find anywhere else on the internet, because well, I basically made this up. But trust me, I’ve done this myself and it works.” The Financial Geek
Take 3 months, or 90 days, and commit to spending barely any money. The Challenge is to get as close to spending no money at all.
Obviously you are going to have to spend some money on the absolute necessities like food and shelter, but even on those things, think of creative ways you can avoid those expenses.
Move home, freeload of a friend, drink only water and buy cheap boxed up food, avoid bars and restaurants, disconnect your cable, unsubscribe from Netflix, steal toilet paper from public washrooms if you have too! (Kidding! Stealing is bad, do not do this!)
But seriously, going on a 90-day saving blitz is a CHALLENGE, but it can be a lot of fun.
Ideas on saving strategies come from nerdwallet.com and TheFinancialGeek.com
Start here: Figure out what you need and set a goal!
The amount you need for a down payment depends on the home, but it ranges from 5% – 20% of the purchase price.
(FYI at the time of writing a quick search in Oliver shows 8 single family homes under $500,000, 1 Townhouse, 5 apartments and 9 mobile homes all under $500,000)
Many people try to come up with a down payment of at least 20% to avoid the need for mortgage loan insurance. Others will buy as soon as they have the minimum down payment required just to get into the market. What you settle on is a personal choice, but it also depends on the amount of money you qualify to borrow from a mortgage lender.
Admittedly, saving for a down payment can take a long time since it comes down to simple math. For example, let’s say you need a down payment of $30,000, and you can only save $1,000 a month. It’s going to take you two-and-a-half years to reach your savings goal. Fortunately, there are a few strategies that could help you boost your savings.
START BUDGETING
If you want to speed up your process in saving money for a down-payment, you need to start budgeting.
Budgeting is key when setting saving goals of any kind.
Why? Because you need to know where your money is going.
Have you ever looked at your bank balance and wondered, “WTF? Where did I spend my money?” Yeah, me too.
The amount you need for a down payment depends on the home, but it ranges from 5% – 20% of the purchase price.
(FYI at the time of writing a quick search in Oliver shows 8 single family homes under $500,000, 1 Townhouse, 5 apartments and 9 mobile homes all under $500,000)
Many people try to come up with a down payment of at least 20% to avoid the need for mortgage loan insurance. Others will buy as soon as they have the minimum down payment required just to get into the market. What you settle on is a personal choice, but it also depends on the amount of money you qualify to borrow from a mortgage lender.
Admittedly, saving for a down payment can take a long time since it comes down to simple math. For example, let’s say you need a down payment of $30,000, and you can only save $1,000 a month. It’s going to take you two-and-a-half years to reach your savings goal. Fortunately, there are a few strategies that could help you boost your savings.
START BUDGETING
If you want to speed up your process in saving money for a down-payment, you need to start budgeting.
Budgeting is key when setting saving goals of any kind.
Why? Because you need to know where your money is going.
Have you ever looked at your bank balance and wondered, “WTF? Where did I spend my money?” Yeah, me too.
Step #1
First, look back at your last 6 months of bank statements. Where can you be saving a few hundreds each month?
Maybe you need to cut your cable, give up restaurants, unsubscribe from Netflix and Crave and HBO, and Hulu and Amazon Prime and… should I go on?
Point being, you’ll find saving opportunities in your bank statements.
You probably won’t save four figures a month from doing this (unless you live a really extravagant lifestyle), but you can certainly save a few hundred each month, and over the course of a few months, those savings really add up.
And hey, these cutbacks don’t have to be permanent, god knows how easy it is these days to resubscribe to cancelled subscriptions.
Step #2
Now that you’ve made some cutbacks and you have some extra cash flow, make sure you allocate those extra funds to your savings account.
There’s no point in saving money on one thing if you’re just going to spend it on something else that doesn’t bring you closer to your saving goals.
One easy trick to help you save is to set up automatic transfers between your accounts. For example, if you can afford to save $1,000 every month, set up a recurring transfer where your digital bank withdraws $1,000 from your regular bank on the 1st of every month. Then, as you adjust to saving, you can slowly increase the amount you’re transferring or make manual transfers when you have additional funds.
Give every dollar you earn a slot; for example, $1200 on down-payment savings, $500 on rent, $300 on groceries, $150 on transportation, $100 entertainment (you still got to live a little) and so on.
Obviously I am just using arbitrary numbers here, but you get the point I’m trying to make.
Every dollar you earn should have a specific purpose, and then make sure you stick to your plan and track your progress throughout each month.
SHORT TERM PAIN FOR LONG TERM GAIN:
Consider a side hustle , or a second Job. If you are looking at ways other than savings to put together your down payment. Many people consider some of these options to get the money together.
SELL THINGS ON A SECOND HAND MARKETPLACE
Make use of your unused items and put them on second hand marketplaces like Craigslist, Kijiji or Facebook Marketplace, just to name a few.
You’ll be surprised how quickly it sells on these marketplaces – As the famous saying goes, one man’s trash is another man’s treasure.
Some people choose to sell other (perhaps more valuable) belongings, jewelry, cars, and other things. Is it a hobby you have outgrown and you are ready to move on to a different lifestyle? Only you will know if this is something that is bringing value to your life or is this something that is just a possession.
RADICAL 90 DAYS OF SAVING
“Okay, so a 90-day saving blitz might not be something you find anywhere else on the internet, because well, I basically made this up. But trust me, I’ve done this myself and it works.” The Financial Geek
Take 3 months, or 90 days, and commit to spending barely any money. The Challenge is to get as close to spending no money at all.
Obviously you are going to have to spend some money on the absolute necessities like food and shelter, but even on those things, think of creative ways you can avoid those expenses.
Move home, freeload of a friend, drink only water and buy cheap boxed up food, avoid bars and restaurants, disconnect your cable, unsubscribe from Netflix, steal toilet paper from public washrooms if you have too! (Kidding! Stealing is bad, do not do this!)
But seriously, going on a 90-day saving blitz is a CHALLENGE, but it can be a lot of fun.
Next post will be on accessing Government Home Buyer Programs and Preparing to meet with a Mortgage Broker
Ideas on saving strategies come from nerdwallet.com and TheFinancialGeek.com
