The New Rules of What It’ll Truly Take To Save Up for a House TodayBy Janet Siroto
May 2, 2022 EnvelopeFacebookTwitterLinkedinPinterestIf you’re saving for a down payment for a home—particularly your first—you probably know this is one tricky real estate moment. With inflation sending prices spiraling, mortgage interest rates ticking up, and biddings wars on homes more the norm than the exception, it’s clear that homebuyers will need to save every cent in order to compete in this crazy market. This means you’ll need to bring your A-game to saving up for a house. Yet if amassing a down payment seems all but hopeless, we’re here to help. Here’s how to turbocharge your house fund so it’s ready for your house hunt. Related articleKnow your numberBudgeting is easier when you know exactly what your goal is. Do you need $50,000? $60,000? Much more? Figure it out so you can get real about saving. “I would recommend that prospective homebuyers ‘back into’ the math,” says Jason J. Krueger, a certified financial planner and financial adviser with Ameriprise Financial Services in Madison, WI. “Start with how much house you want to buy and what type of loan—for example, conventional mortgage, FHA, VA,—which dictates the required down payment. The next thing is to determine when you want to buy. This then allows someone to aim for a specific target.” So let’s say that a year from now, you hope to buy a $300,000 house with a 5% down payment, which amounts to $15,000. Divide $15,000 by 12, and you’ll see that it would take saving $1,250 a month to reach that goal. As you look at your cash flow—how much income is coming in versus how much is going out—you can assess how realistic that amount is, and adjust as needed. Let tech track your cashLet’s be real about what’s happened during the COVID-19 pandemic. Did you wind up subscribing to every pay-per-view platform out there? We get it. Did you start ordering takeout (like, a lot) because you were sick of cooking? Understood. But if you’re in savings mode, it’s time to recalibrate and get rid of some recurring and random charges. Money is a funny thing; it seems to flow like water—often down the drain. To help you get a grasp on why your dinero is disappearing, consider downloading a cash-tracking app. Mint is one well-reviewed example. It’s a free app that syncs an array of accounts (checking, savings, credit cards, and more) and can categorize your spending into buckets. You can set spending caps for each of them, and as you approach the limit, Mint lets you know. It’s a seamless way to stay on target with savings. You might also be interested in “zero-based budgeting system” apps like YNAB, or You Need A Budget. These help you plan where every dollar you earn should go. It requires a commitment from you to keep on top of your financial life, but that’s the point. You become more intentional about managing your money and trimming areas where you are spending a bit too freely. ___
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