How to save for that down payment on a new house.

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Dreaming of a house?

Step one is to Stash some Cash for that down payment on your new home. Here are some ideas to help get you started!

Step one in preparing to purchase a home is to get your finances in order. Speaking to a financial adviser is a great idea when trying to understand where you stand and how to realistically reach your goals. They will review your income, assets, and spending habits. Together you will work to build a financial plan to save enough for the down payment on your new house. 

Even though it is nice to set your goal to save 20% of the cost of the home, many mortgages allow you to put down less. Depending on your situation and qualifications, you may be able to put down as little as 3-5% to secure a mortgage!

Saving money can be a challenge, especially for those caught up in certain spending habits or those who are already living on a tight budget. This post will be updated as we discover new money saving ideas worth sharing. 

If you have a great way to save, we would love to hear all about it in the comments below!


1. Set a Budget

When you have a financial goal. It is critical that you take the time to sit down and create a budget. More importantly... stick to it!

Think about every little monthly expense and make a detailed list. Critically analyze what's on the list that you absolutely need and what you can live without.

Think about your spending habits. Are you eating out multiple times a week? Are you addicted to your daily Starbucks? Do you pay for any premium TV channels that you can live without? Do you have an excessive shopping habit? Do you grocery shop while hungry and purchase a bunch of unnecessary food that eventually goes to waste?

Once you analyze your current spending and commit to trimming back, download a budgeting app to help you stay on track! Holding yourself accountable is difficult at first, but eventually becomes a really good habit. 

There are many budgeting apps available for download to your smartphone. I use Goodbudget, which I find to be pretty straight forward. Remember, if you decide to use Stash, make sure to include it in your monthly budget under Savings!

Another tip is if you are paid on salary, ask your payroll department to automatically send a set amount from each pay period directly to your savings account. 

2. STASH INVEST

Start investing with @Stash today and get $5 to get started! 

This is my personal favorite!

Investing in the stock market has always sounded exciting to me, but I was always way too overwhelmed every time I attempted to research it. I had no clue where to begin or how to begin. Then about a year ago, I discovered a great investing tool called Stash Invest.

Stash is a phenomenal app for beginner investors that allows you to invest and save with as little or as much as you can personally afford. The platform is very user friendly with tutorials and blogs to help guide you in understanding stock investing.

Stash Invest is backed by Apex Clearing Corporation and are SIPC-protected.

With Stash, you invest in ETF's (Exchange Traded Funds). Think of an ETF like a basket of investments all bundled up into one fund. Stash gives the ETF names, which make them easier to wrap your head around. For example, one of the ETF's I invest in is called 'Home Sweet Home'. This ETF includes companies like Home Depot, Lowe's, Johnson Controls, Toll Brothers, and Whirlpool. You buy into this bundle and as these companies grow, your money grows!

Most investment platforms require you to purchase full shares of an ETF, but the biggest benefit to Stash is that they allow you to purchase a percentage of a share. So if you only have $10 a week to stash away, it's totally fine! Watch your ETF's and stash your $10 in whichever is lowest that week! Buy Low, Sell High.

Important to remember: Like with any investment, there is of course risk! Understand that investing in the stock market is NOT a savings account. If a company you invest in crashes, so will your money!

It's actually a lot of fun once you start to get the hang of it! I'm saving, I'm learning about stocks, and my money is growing faster than it would in a bank. For me, Stash is a total win. Check it out for yourself! If you sign up through the link below, you will get $5.00 to start with. Download the app, read some of the blogs, explore the platform, and decide if it's a good option for you!

 

3. Reduce your Debt

Before applying for a mortgage, you will first need to reduce your debt to assure your lender offers you the best rate. Talking to your financial adviser can help you map out a game plan.

I'll let you in on what I did to climb out of the credit card hole I was in. Did you know that you can apply for a credit card that offers a 0% transfer fee (typically within the first few months) and 0% APR (typically for about 15 months)?? Wow! This means that you can take all your overloaded credit card debt and transfer it onto this new miracle card. Now, the trick here is to stay disciplined! For the next 15 months you will chisel away at that rock that's been holding you back. No interest, just paying down the principal. 

Stick to a budget and do your best not to put any new unnecessary expenses on the card. Do the math to figure out how much you need to pay each month to reach your goal in the time period your card offers.

Getting rid of the credit card debt will not only help improve your credit, but it will also free up some monthly cash to stash!

4. Downsize your living situation

Have you considered downsizing your living situation before you upgrade? Think about the monthly savings if you move into a rental apartment well below your comfort zone for a year or maybe two? 

Let's assume someone is currently living in a nice two bedroom rental and comfortably paying about $1500 in rent and $500 in utilities per month. They want to buy a house in the next two years, but don't have many options to build savings for their down payment. Even though it's not the most desirable option, they decide to downgrade to a 1 bedroom apartment for two years. Assume this downsized apartment costs $900 in rent and $300 in utilities per month. That's $800 a month savings! In two years, that adds up to $19,200. New home, here you come!

The trick is to be disciplined enough to take the savings and stash it away into your house savings. The best way to do this is to have it automatically move to your savings account at each pay period. If you never see it in your checking account, you won't miss it!

5. Paribus

This is cool site that I like, especially when I'm being frugal.

Do you do a lot of online shopping? With Paribus, you can make sure you got the best deal with many of your online purchases! What they do is search your email for receipts. They then watch the price for a certain period of time and if the price drops below what you paid, you may be eligible for a rebate.

My only issue with it is that I personally do a ton of shopping on Amazon. Amazon does not offer price protection, so it does not work with Paribus. Paribus will watch the guaranteed delivery date for you though. If an Amazon package does not arrive by the promised date, you may be eligible for cash back on the shipping.

Overall it's totally worth it. It's free, gives peace of mind, and gives you cash back!

6. Ebates

Try Ebates out!

This is another site to help you get the best savings when shopping. Simply sign up for Ebates, then before you do any shopping that you already planned on doing, log into Ebates first! Check if the store you are purchasing from has any cashback opportunities. Click through Ebates, shop, and earn cash back on your purchases!

You can even set it up so that you don't need to visit the site first. If you download the Cash Back Button, it will automatically search for Cash Back opportunities as you shop online. When you visit a store, a drop down will tell you if a rebate is available.

I have my Ebates account linked up to my PayPal, so as soon as I earn, the money transfers right into my account! 

7. Coupons!

Couponing can be tedious, but just think of it as free money! If you aren't into clipping them out of papers and magazines, there are so many apps out there to help you save on items you already plan to purchase. 

Checkout 51 is one that I use for saving on groceries. Before I go to the food store I open the app to check out what deals are available and add any coupons for items that I'm planning on buying. After I make my purchase, I simply scan my receipt and ta-da... I get cash back. 

Once you save up $20 you can cash out... then I invest my savings in Stash!

Also look into Honey. Honey will follow you around as you shop online and let you know whenever there are coupon codes available for what you are purchasing!


Some of these may seem like minor savings opportunities, but it's a great start and most importantly is a positive mental shift. These small changes will help you become more disciplined with your spending. Staying conscious of saving money wherever possible will help you reach that goal of purchasing a home sooner.