My View: 3 Lifestyle Hacks to Help You Start Saving for a Down Payment
When you’re joining the workforce and getting your foot in the door, the idea of buying that first house can seem like a faraway dream. But life moves quickly, and within a couple of years, you might just meet the coolest person, tie the knot, and start thinking about having kids.
That apartment that seemed roomy when you were single may start to look a little small.
I know what you’re thinking. I can’t afford a house. My parents saved five years for a 20 percent down payment.
Your hesitance is understandable. That’s a lot of money to consider. What if I told you that there are low down payment mortgages out there? No, that’s not a misprint. It’s true.
Sure, setting aside even that amount of money still isn’t easy, but it’s very attainable if you put away just a little money every month.
I’ve come up with three painless ways to make cuts to your monthly budget so you can save for that first home without eating dinosaur-shaped mac and cheese every night. It’s great, but how many pasta pterodactyls can you tolerate?
Since I have macaroni on the brain, let’s start with food. When it comes to eating out, this is one area where we can do more with less.
According to a CNBC article, Millennials dine out 13 times a month, but we spend only about $100 at restaurants in that timeframe. According to the article, this is between $20 to $40 less than our parents. Since the per-check average in those instances would be about $7.69, it doesn’t make sense to ask you to spend less when you go. But what if you didn’t go out tonight and instead ate the leftover chicken breast in the fridge?
If you skip the fast food just three times a month, you can save yourself $23. After a year, you’ve saved $276.
Food is one thing, but Millennials don’t like threats made to their caffeine intake. According to the same CNBC article, we spend $80 per month on coffee. It kind of makes sense. It’s a fast-paced world — we’re young, and sleep is overrated.
We’re not that much more coffee-addicted than the rest of the nation as a whole. The article indicates that the average American spends $67 per month on coffee. If we simply get the coffee from our own kitchen instead of the $5 daily latte, we can get down to the national average and cut $13 per month that we can instead save. Over 12 months, that’s an easy way to save $156.
If you’re not into coffee, replace this with your particular personal favorite. For me, it might be comics and audiobooks.
An informative article from CNN Money talks about the way Millennials handle their monthly budget. There are a lot of things in there that obviously can’t be cut like education and rent or housing expenses. One thing I found interesting is that Millennials reportedly spend $202 a month on entertainment. I’m going to cut $87 out of that budget right now by cutting the cord and canceling my cable TV.
If you cancel your cable television service, you can get broadcast channels for free. I don’t know about you, but if it’s free, I’ll take three.
After that, you can get mid-tier internet service for around $60 per month. That leaves $55 per month to subscribe to whatever streaming services you want. There are even some very affordable services that will let you get cable channels over the internet. You’re definitely not cut off from the world. And over the course of a year, you end up saving $1,044.
Now it’s time to kick the savings up a notch. If you’ve been following along so far, you’ve saved $1,476 over the course of a year. If you were to do this jointly with your significant other, if you’ve each been paying for cable on your own, you could save $2,952 annually. At this pace, you could make a 3 percent down payment of $5,400 on a $180,000 home in just over 22 months.
So far, we’ve talked about saving by cutting back, but you can move things forward even faster if you actively set aside $50 each per month. You can put aside an extra $1,200 per year that way.
At this pace, you really could make that first home a reality.
Kevin Graham is a writer for Quicken Loans’ Zing Blog who covers topics ranging from mortgage and personal finance to technology.
“My View” showcases views from industry participants on current topics or events. Views expressed in “My View” do not reflect the views of Fannie Mae, and Fannie Mae does not endorse or support the positions or opinions expressed herein. To submit your idea for a “My View,” contact [email protected].