Tuesday, September 13, 2011
Buying a home or any property may sound extremely expensive, but you can save up for that cost. Frugality can help you set aside enough dollars here and there to add up to a significant lump sum. In the end, you can purchase a nice piece of property just by using the money that you save by being frugal.
Saving a Percentage of your Check
Saving money for a home is not an issue if you set a savings goal that you can reach on a monthly basis. One of the ways that you can do this is by having a specific percentage of income taken out of your paycheck on a bimonthly basis. You can start your savings goal by just allocating 5% to 10% of your check for the purchase of an investment property. This money can be set up to be automatically drafted out of your checking account and placed into a special savings account for your property. When you have finally saved enough for your home purchase, you can pay cash for the house or at least have enough set aside for a healthy down payment.
Keep your Current Car Longer
Instead of trading your old car in for the latest model and buying a new one, you can hold onto it for a few more years and use frugality methods to purchase a home. You can bank the money that you would be paying for a new car and use it to pay for an investment property instead. This could easily result in helping you to save $5,000 to $6,000 a year towards a real estate purchase. This would make a serious impact on the principal payments for a home loan and give you a lower monthly payment at the same time. As long as you have an emergency fund set aside for anything that may pop up on your current car, you will be safe using new car money elsewhere.
Drop the Monthly Subscriptions
It is not only the big one time purchases that destroy a budget - consistent small monthly subscriptions can do major damage too. If you cut out the monthly expenses including cell phone bills, cable bills, movie rental subscriptions, and magazine subscriptions, you can easily save a few hundred bucks or more per month. There are plenty of free entertainment options that you can replace these paid subscription services with like borrowing DVDs from the library or watching some shows online. Doing something like this can free up your resources and get you one step closer to your property purchase.
By just following the basic lessons of frugality, you can save up more than enough for property in less time than you’d think. Remember though, before plopping down your cash on your new investment property, take the time to compare home loans and make sure that you are making the best use of your cash. It would stink to have saved so hard and then be stuck with a bad interest rate.