Want to buy a home but don’t have a ton of cash in the bank? You’re likely not alone. Trulia research shows that saving for a down payment is one of the biggest obstacles to homeownership for first-time buyers, behind poor credit history, qualifying for a mortgage and rising home prices. Here, Trulia offers seven simple steps that can help you save for a house in just 12 months.
1. Slash your rent
Rent probably takes the biggest bite out of your monthly budget. Move in with a friend, family member or roommate to lower this expenses for the year. In terms of slashing costs, sharing expenses is a great place to start. Saving $50 per month means an extra $600 in your pocket for the year. Or go for gold and shave $100 off your rent to save $1,200 in a year. Taking care of some small things for your landlord can be a big help. For example, if the cost of raking, shoveling or mowing the lawn is part of your current rent, ask your landlord if you can take responsibility for doing these tasks in exchange for a reduction in rent.
2. Rethink the essentials
Reducing your spending each month often comes down to a simple question: Do you need something or do you want it? When it comes to budgeting, even having a car (or an extra car) should be up for debate. Can you live without your own set of wheels for a year? If you live in a city or walkable neighborhood, give public transportation or ride-sharing services a try.
3. Ditch the little expenses
Small expenses span from entertainment subscriptions such as Spotify and Netflix to clothes shopping. Try to bring ‘personal’ services in-house: Make your own coffee, color your own hair and cut your cable cord. The average cable bill costs about $100 per month. Most streaming services are less than $10 per month. This will give you a monthly savings of $90. Cut back on the number of times you eat meals out each week. If grabbing lunch at a local place costs $10, but packing your own costs only $4, a do-it-yourself approach could add up to a monthly savings of $180.
4. Get back to the basics
Your cell phone, insurance plan and credit cards: These are the cost of ‘operating’ your life. Request discounts, switch to basic plans where possible and look for reward plans. Be prepared to forgo some services altogether, but be prudent about not cutting the necessities, such as health care. Every adjustment counts, and making changes could save you close to $400 per month.
5. Earn some income on the side
In addition to saving money, many first-time home buyers may need to find a way to earn more to meet their goal. Consider developing a side job and turn that into a strong income stream. While taking on extra work or a second job might not be sustainable for years, doing so for 12 months will help give you the boost you need to save for a downpayment.
6. Embrace minimalism
It’s easier than you would think to sell new and gently-used items—from textbooks to bike racks—online through Craigslist or Facebook Marketplace. Did you splurge on something you’ve never even worn? New, unopened items such as shoes or designer perfume can go for a fair price on sites like The Real Real and Tradesy. You could earn up to $1,000, on average, by re-selling the items in your closet. Once you’ve mined that source, open a few boxes in the basement. Vintage vinyl, signed copies of books, even matchbox cars, pin collections and posters (especially those in mint condition) are worth more than the effort of posting, packing and selling.
7. Get wise about entertainment
Eliminate expensive entertainment. Even one date night to the movies per month can put a dent in your efforts. Two tickets, sodas and a large popcorn typically cost about $35. Netflix and relax? Maybe $5. If you’re used to buying a bottle of wine and a six-pack at the store each week, your alcohol tally could be up to $65 per month. Try the no-spend weekend and you could be looking at an additional monthly savings of $45. Exercising at home instead of paying for a gym membership (or finding free yoga classes in your area) can slim your budget with a monthly savings of $60 per month.