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How to Save For a House While Renting? Employ These Tips!
House play was always one of those childhood activities that made us feel like adults.
We could clean, cook, and even have “children” in a sectioned-off portion of a house or the entire room if we pretended it was our home.
The best part is that we did not pay a dime! (Well, perhaps a few bits of candy or handing over some play money.)
If only purchasing a real home were so straightforward. Unhappily, it is not.
Depending on the state, the typical price of a three-bedroom, one-bathroom home in West Virginia might be as low as $108,236 or as high as $636,451 for a two-bedroom, one-bathroom home in Hawaii. That’s quite a distance from a few candies or play money!
As expensive as home ownership is, it is hardly surprising that 36.6% of households rent.
However, rents for one-, two-, and three-bedroom units have increased over the past three years, and in some places, purchasing a home may be less expensive than renting.
There are numerous reasons why a renter might wish to buy a house, but the challenge for many renters is determining how to save for a house while renting.
Many may not even know where to begin, let alone how much they need to save for closing expenses, home inspections, etc.
If you’re having trouble saving for a house while renting and don’t know how to maximize your down payment, we have some suggestions.
1. Reduce Rent
Rent reduction is one of the first steps renters can take to save for a property. There are several ways to accomplish this.
Relocate to a Smaller or Cheaper Dwelling
It may seem contradictory because you require money to relocate (security deposit, first month’s rent, money to move and turn on utilities), but by moving, you might save hundreds of dollars per month.
Not only will you save on rent, but other goods may also become less expensive.
For instance, you could save money on your energy bill by moving into a smaller residence.
You may save money on petrol if you moved closer to your workplace. If water and trash is included in your rent, you may be able to save money. These savings add up and bring you closer to your objective.
Find a Roommate
Consider hiring a roommate to split the rent if you can’t (or don’t want to) find a new place to rent.
You might ask family and friends if they need a place to stay, post an ad in local Facebook groups, or use Craigslist (but be careful!).
Consider Offering Your Property on Airbnb on the Weekends
On the weekends, you may list your home on Airbnb or VRBO if you live in a popular region, such as a large city or near attractions.
If you are uneasy renting the entire house, you might instead hire out a single room for the weekend.
2. Attend to Existing Debt
Pay off the debts with the highest interest rate by gathering all of your credit card invoices, auto payment bills, and other interest-bearing bills.
You could investigate debt consolidation loans, but you must be cautious about your lender, he warns.
3. Reconsider the Little Luxuries in Your Life
Despite the fact that we enjoy our streaming subscriptions, food deliveries, excellent wines, and self-pampering salon visits, these activities are not necessities; rather, they are small pleasures.
Individually, these minor luxuries may appear insignificant, but if you’re not careful, they can consume a significant portion of your budget.
Examine the non-essential aspects of your life and consider what you could do without as you save for your own nest.
Entertainment
Prior to the coronavirus pandemic, going to the movies, concerts, and other events were popular pleasures among many individuals.
In 2020, people began to rely more on home entertainment to prevent them from dying of boredom.
If you subscribe to Hulu Plus, HBO Max, Netflix, and Disney+, you’ll spend $40 to $45 a month on streaming services alone!
If you have these services in addition to cable, consider whether one or the other could suffice.
Self-care
Do you have a membership to a gym? Even if you have the cheapest gym membership (Planet Fitness’ ordinary membership is only $10), you could save money by exercising at home.
If you find it difficult to exercise at home, contact a friend and ask if they would like to be your workout partner. Not only will you save money, but you may also enjoy exercise more.
Perhaps you enjoy taking a day to relax and pamper yourself by visiting a spa or hairdresser.
Although it’s pleasant to get your hair cut periodically and relax with a deep tissue massage after a stressful week, these services quickly add up.
Consider cutting back on the frequency of your massages and root touch-ups.
Consider reducing the frequency of your visits to every six to eight weeks, as opposed to monthly.
Dining
How frequently do you eat out or order in? If it’s more than once or twice every month, you’re missing out on a significant opportunity to save.
Even value meals at your preferred fast-food restaurant will cost you more than $5.
A supper for two at a typical sit-down restaurant can cost more than $50 if you each order a meal, two drinks, and a shared appetizer.
If you must have a cappuccino and a muffin for breakfast, consider preparing them at home rather than heading to your favorite coffee shop, where you could pay up to $10 (after taxes) for breakfast.
Vices
If you regularly consume alcohol or smoke cigarettes, you not only spend a great deal of money each month, but you also endanger your health.
These behaviors could cost you thousands of dollars in medical expenditures, increase your health insurance premiums, and even make it more difficult to obtain life insurance.
Travel
Who doesn’t enjoy taking a break from their normal routine and relaxing?
Unfortunately, vacations aren’t inexpensive, so until you’ve reached your down payment targets, you may want to postpone costly trips.
Staycations are an excellent way to save money while still getting some well-deserved rest and relaxation.
Weekend road trips are a fun and affordable way to spend the weekend. You could spend little more than a few hundred bucks at most.
4. Search for Methods to Save Money on Existing Essential Services
It is difficult to determine where you could save money, especially when it comes to determining which things to forego.
However, it’s equally difficult to discover methods to cut back on essential services and commodities, so make sure you’re truly prepared to make these concessions!
Automobile Costs
If your current insurance provider does not provide more affordable options, you could save money by searching around for lower car insurance if you own a car.
However, if you have access to public transit, you might use it as your primary mode of transportation and reserve your automobile for long-distance trips.
This will save you money on gas and maintenance, and your insurance company may even reduce your costs if you drive less often.
Banking
Examine your bank’s fee structure by examining your bank statements. Occasionally, banks can charge you fees for overdraft protection, which is just the automatic transfer of funds from your savings account to your checking account, so you don’t overdraw that account.
Additionally, banks will charge you ATM fees, and certain savings accounts will even tax you if you don’t make enough transactions in a given month.
If you use this service frequently, you may benefit from moving to a credit union with no ATM fees.
Household Expenses
By changing your cable and cell phone plans, you can save money on your monthly bills.
Instead of the fastest internet and every cable channel, look for a package with slower internet speeds and fewer channels.
If you have an expensive plan with unlimited data, you should switch to a cheaper plan with a reduced data allowance and watch your consumption.
Remember to connect to available nearby Wi-Fi networks by turning on your phone’s Wi-Fi.
Also, remember to turn down the heat or air conditioning when you are not at home or at night.
Ensure that electrical devices and lights are turned off when you leave a room.
In addition, do not keep your chargers plugged in when they are not in use, as they will continue to consume power!
Groceries
Instead of purchasing name-brand products for your groceries, use store-brand alternatives. They are equally delicious at a fraction of the price.
You may even want to consider shopping elsewhere. You don’t have to spend a fortune at Whole Foods or Wegmans when ShopRite and even Aldi’s offer affordable, high-quality alternatives.
5. Employ a Reliable Savings Plan
What is the balance of your savings account? If you’re like 69 percent of Americans, your savings account probably has less than $1,000.
There are high-yield savings accounts available, but they are not actually high-yield.
The nation’s largest banks appear to provide the lowest savings rates.
U.S. Bank and BB&T give a pitiful 0.01 percent annual percentage yield (APY), whereas Wells Fargo, Bank of America, Chase Bank, and TD Bank offer rates ranging from 0.01 percent to 0.65 percent.
We don’t even include the fees that some of these institutions charge you just to hold your money! What an example of adding insult to injury!
Especially when compared to internet banks with high-yield savings accounts, these low interest rates will not help you save for a house.
Business Insider has issued a list of the best banks with high-yielding savings accounts, and Varo Bank tops the list with APYs ranging from 0.81 percent to 2.80 percent.
Currently, I believe a savings account is equivalent to hiding money under your mattress.
“The returns on CDs and savings accounts are so low that you’re practically better off doing anything else,” Smith concludes.
Job Related Savings
If you are surviving on your prior pay and receive a raise, you should also save the additional funds in your check.
Alternately, if you are currently contributing to a retirement account, consider pausing your contributions for a time and redirecting the funds to your down payment savings.
You might also adjust your tax withholdings to receive a larger paycheck, which you could put toward your savings.
By all means, if you receive a tax refund, save it!
6. Consider Methods to Generate Additional Money.
Did you know that 36% of Americans (57 million) have a second job? Whether driving for Uber or Lyft or delivering for Postmates or Instacart, people are finding methods to make additional income.
If you don’t have a vehicle, there are alternative side jobs you can pursue.
You can sell your crafts and artwork on online markets if you’re creative. You can offer your abilities as a freelancer, whether they be in writing, photography, graphic design, or editing.
There are various methods to earn additional cash without jumping through hoops, all thanks to the internet and mobile devices.
Alternatively, if you have a great deal of unwanted items in your home, you may sell them on a number of online marketplaces, including Craigslist and Facebook.
You can also get money by having a yard sale or selling your stuff at a thrift store.
Note: Any income earned through gig work is taxable, so don’t forget to set aside funds for the government.
Knowing How to Save for a House While Renting is Important
Once they understand how to save for a house while renting, the main obstacle many have is sticking to a plan.
They may remain on course for a short while, but something will eventually derail them.
Keeping your objective in mind is essential, despite how difficult it may be to cut back on items, especially when you’re not hyper-aware of what you’re spending.
Once you have enough money for a down payment on your ideal home, the small sacrifices you make now will be well worth it.
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