How to save for a house in one year? What can I do to save for a house in one year? These are the most common questions you would have in your mind if you have prospects of owning a home in one year. It is no lie that this is daunting and an uphill task especially when you don’t have the large sum of money heaped in your savings account.
Rising prices of homes, poor or low credit history and factors that limit qualification of a mortgage by first-time buyers make the dream of owning a house in just a year seem impossible. Despite this, saving for a home and owning it in one year is not only feasible but also very possible. It calls for tremendous financial discipline and sacrifice to achieve it.
The first thing to consider when you want to save for a house in a year is the total cost of the house. Depending on the city or the state you live in, prices of houses vary greatly. Having the total cost of the house will help you in determining the down payment you will have to make which in most cases is 20% of the cost of the house. For instance, if the price of the house is $300,000, this means that you would have saved $60,000 which is the down payment. Breaking down further would mean you will have to save $5,000 monthly.
Now, considering your salary, you will most definitely make the wise decision of going for a house that will not leave you bare bones. Besides down payment, you will also want to factor in insurance, closing costs, escrow fees and initial payment on taxes that will count in the whole process of having a home of your own.
Here are eight creative and key ways that will help you save for a house in just twelve months:
1. Cut Down Your Rent
One of the things that probably takes a larger percentage of your salary is rent. Cutting down on this will contribute immensely to your savings. Some of the ways you can do this include cost sharing. Having a roommate with you will go a long way in making you save a lot through cost sharing. Residing in a relative’s place or seeking the help of a friend who is understanding is very vital. Another bold step to take is taking up the responsibility of lawn-mowing or raking which always contribute to the cost of your rent. You can do this by having an agreement with your landlord. You will be surprised that you can save $100 which translates to $1200 in a year.
2. Consider Buying Most Basic Things
Reducing your monthly expenditure so you can always have something to save can be difficult. It always boils down to the question of whether you need something or not. A good example to explain this is in a case where you drive to work despite it being a walking distance. You will need to consider those things can do without so that in case of always driving to a workplace, you can walk instead or even consider other alternatives like using public transport which is way much cheaper. You can also give ride-sharing services a shot and you will be surprised at how much money you will remaining in your account which will go into saving for a year for your house.
3. Forego Little Expenses
The little expenses range from subscriptions from entertainment services like Netflix, buying unnecessary clothes, coffee on the go, or fast food dining is to mention a few. I would say these are unnecessary that take a good portion of your salary without really you noticing it. If you become conscious of this you will be doing yourself good in the effort of owning a home. Instead of buying food or coffee, prepare it at home or minimize the number of times you buy out food. Embrace DIY approach and you end up saving even $200 monthly which comes to $2400 in a year.
4. Focus On Bare Necessities
Use of cell phones, insurance payments, and credit cards always incur you a lot of money. You will need to consider cutting down significantly for you to have extra money to save for a house in a year. Look out for discounts and reward plans. You may easily hit $300 by doing this which will see you have $3600 in one year’s time.
5. Find Ways Of Earning Extra Income
Side hustle or taking a second job is another significant way of getting extra income which will enable you to buy a house beside the savings you make. As a first time home buyer, you will have to go out of the comfortable zone and find a side hustle which will place you at a better position of acquiring your own home. This might look so tasking but another way is working hard in your current job to earn a promotion that will give you a better pay. Make sure to explore opportunities in the workplace that will bring extra income.
6. Cut Down On Luxury And Entertainment
A single date night to the movies can cost around $40; the cost of the two tickets, popcorns and a drink like soda. Foregoing or minimizing the number of the movie night out would save you a lot. If you also have the habit of buying a bottle wine every plus six-pack, you will need to consider dropping for the sake of saving that $70 weekly. You can also exercise on your own at home instead of paying for the gym membership which can see you save almost $50 monthly.
7. Adopt Minimalism
This another good way of sourcing for savings. You can always sell newly bought items, clothes or items that you don’t really need you have extra of them. There is always plenty of market for this in Facebook Marketplace or Craigslist. You can also re-sell unopened items on sites like Tradesy. This can earn you whopping $1000.
8. Put Your Savings In A Different Account
Mixing your savings for a house with other savings account is not a good idea. One may always be tempted to withdraw in case of emergency or even for an impulse purchase of items. Another advantage of having a different savings account is that you will always be able to check the amount you have deposited over time. This enables you to monitor your progress and need to make adjustments so as you can achieve your goal.
With these tips on how to save for a house in one year, you can be sure to make your dream come true by following and making every single tip be part of. Exercise a high level of discipline and come out of your comfort zone and will have it.