The housing industry may have recovered significantly since the bubble burst almost a decade ago, but the situation is still dire for plenty of Americans. A recent report revealed that in 70 percent of counties, the median home prices were considerably above what the average American can afford. That means that it’s too expensive for people to buy homes in approximately 70 percent of the country. Even more shocking, as many as 40 million people in the United States can’t afford the house they’re living in now.
Homeownership is something you have to be prepared for, and the most crucial part is to save up enough money to buy a home in the area you want to live in. Here are five methods you can use to slowly but surely save up for your first home.
- Assess Your Finances
Whether you’re saving up for a sizable down payment on a home or simply setting up a nest egg for a reasonable home mortgage, you’ll need to have a clear grasp of your financial situation. Map out your financial status by identifying all your assets and debts.
You need to calculate how much money you make, such as from your salary or any other channels. Compare this total with the sum of all monthly payments and expenditures you have, such as rent, groceries, and car payments. The resulting number will enable you to plot out your budget.
- Set Aside a Permanent Share
Using the difference between your income and expenditures, you can calculate how much money you can permanently allocate to your savings. Remember to consider you may encounter sudden expenditures, such as medical expenses or car repair fees. You also don’t want to relegate all this money to savings. After all, you should still have resources for recreation and other expenses. Just make sure that you put enough of your budget to make a sizable contribution to your home savings.
- Downgrade Your Lifestyle
You can pare down your expenses even more by downgrading your lifestyle. You can start by trimming down the most expensive things on anyone’s budget list, which are your accommodations and your vehicle.
Rent can often take the lion’s share of your budget, but if you can switch to a cheaper place to free up more money. Unless your current living space is fantastic for its price or very convenient, explore every alternative.
If you’re leasing a vehicle, consider downgrading it. Of course, you don’t want to drive around in a bucket of bolts that will be more of a hindrance, but you should be on the lookout for more affordable options.
Cut down on all unnecessary expenses such as expensive vacations, clothes, and electronic devices. Unless it’s critically important to your life or work, look for more affordable alternatives such as secondhand electronics, thrift store clothing, and local holidays.
- Prioritize Loans
After you streamline your budget, getting rid of your loans and similar financial obligations should be your secondary objective. That means that you need to keep on top of payments every month, from student loans to auto loans. The faster you finish payment on these obligations, the less likely their interests will snowball and take up money that could be going to finance your first home.
- Set Up a Side Hustle
Finally, explore any methods of opening new sources of income. Do you have any marketable talents, such as an art and crafts hobby or skill? Find a way to monetize it. Sell your creations on the internet or take up gigs on weekends. You can also rummage through your home for any items you can sell online or through a garage sale. Set aside this money in your savings account for your first home.
Saving up for your first home isn’t going to be easy. But then again, everything that’s worth it takes hard work. Following these pointers will help you buy your first residential