How to Save for a House While Renting
Mastering how to save for a house while renting can seem difficult, mostly because the rent bites off a significant percentage of your monthly income. You also have to handle other monthly expenses, such as car payments, groceries, auto insurance, and more. As a result, people put off buying their first homes until their financial circumstances change for the better. Fortunately, there are a few key tips you can follow now to begin to budget to save for a house, even while renting.
5 Tips on How to Save for a House While Renting
Pay That Debt
One secret to paying debt, whether it is high-interest credit card debt or other payments, is to stop adding more debt. Most importantly: stop buying things you don’t need using your credit card. You can also negotiate with your card issuer to lower their credit card interest rate if it is too high for you to manage.
Once your credit card interest rate is lowered, focus on reducing your debt which will, in turn, lead to a better credit-to-debt-ratio. This will make it easier for you to get approved for a mortgage once you have saved up for your down payment.
Trim Unnecessary Spending
You can do this by creating a bare-bones budget, which involves cutting your expenses as much as you can, but without making your quality of life suffer. For example, you can cut back on cable, cancel your gym membership, cut back on cell phone data, and more. Other things you can do around your home to save money include shutting lights when no one is in the room and taking shorter showers. These small changes can really add up to major savings over time.
Get a Roommate
Another way to budget to save for a house is by getting a roommate who can pay a portion of the rent. No one wants to share their home with a stranger, but your roommate can be a friend or somebody you trust. You can get more than one roommate so that you can save more money quickly. If you cannot find friends or relatives to share the rent with, you can always search for roommates online.
Secure a Side Gig
A side gig could include getting into freelance photography, creating websites for small businesses, walking dogs for neighbors, and more. It is simply using your hobbies to earn extra money that you can add to your down payment savings. A second job is great if it does not interfere with your first job, because you don’t want to lose you
Main job when you are trying to save money for your first home. Never let a side hustle negatively impact your main source of income!
Set Up a Down Payment Fund
You are likely to save more money by depositing your savings into a high-interest savings account that can only be accessed once it reaches maturity. An account can reach maturity after six months but you don’t have to withdraw the money when it matures. Instead, you can deposit it into another high-interest account that you cannot access for a period. But any savings account will do if you know how to save for a house while renting with a commitment to a rigid budget.