“Want to lose weight? Count the calories you eat. Want to save more money? Count the pennies you spend,” says David Weliver, author of Maine-based Money Under 30 Blog. David adds, “Money is nothing more than a tool that can help you reach your goals.”
Purchasing a home is perhaps the goal that requires the most forethought and consideration. From the standpoint of a first-time homebuyer, this goal may feel rather out of reach, especially in the midst of today’s many financial obligations. There is always another payment to think about, another deadline to meet or another unforeseen expense.
Securing a down payment for a new home requires creative thinking and flexibility. Flexibility, in this case, means the ability and willingness to think differently. I am not using the word “sacrifice”, because for so many of us this implies “doing without”. With flexibility, you do not worry about “losing” something in order to gain another; instead, you become more attuned to new possibilities and to the many avenues that inevitably lead to your goal.
Thus, if money is nothing more than a tool that can help you reach your goals, then there are ways to think about this tool and use it to your best advantage even before you set foot in that beautiful colonial home you see in your dreams.
- Determine when you intend to begin viewing potential new homes. Set a date in the future. You have a rough idea of your ability to secure the proper finances and a reasonable time line to get there. Choose a date and mark it down on your calendar. This is an important and exciting goal, make it stand out. Purchase a colorful calendar to display on your refrigerator and start using it to plan major steps, as well as small and large victories along the way. Seeing your progress will elevate your spirits. Use funny magnets to highlight special days.
- Now that you have a date in mind, you can begin to break down how much money you might be able to set aside on a monthly basis to meet the requirement for a down payment. This initial calculation will also help you fine tune the date you initially selected to make it even more realistic and attainable. Be patient. Keep it playful. Just the fact that you are taking these first steps is a sure sign that you are on your way.
- Out of sight, out of mind! Open a separate savings account for your down payment. Consider a high yield savings account. You know yourself. If there is any possibility you might occasionally dip in to satisfy an extra “want”, keep this account out of reach, not at your corner banking institution. However, some banks offer rebates on closing costs (yes, you will get there from here) or higher interest for first-time homebuyers, so do a bit of research to get the most advantages.
- Hands off! Set up an automatic transfer to this account. For instance, determine what specific portion of your paycheck you wish to assign to your down payment and schedule an automatic transfer.
- Improve your dept to income ratio. Try to pay off credit cards. Determine some lifestyle changes you can make that will reduce your monthly expenses. Remember, it is not about doing without so much as it is about “doing differently”. For instance, a weekly movie & dinner out could become a special monthly outing instead. You’d be surprised. This could turn a habit into a very special treat to celebrate your accomplishments.
We spend a significant amount of time readjusting our finances based on the changing cost of living and changing circumstances. However, have you noticed how you may cringe over the price tag of a new refrigerator (a necessity); yet you readily open your wallet for a coveted toy (say, a shiny, new, bright red convertible). Penny pinching is a matter of prioritizing and choice.
Ultimately, it is not so much outside circumstances that shape our financial comfort so much as our reaction to outside circumstances and the actions we take to ensure balance and materialize dreams.