Aspiring home owners often need to cough up tens of thousands of dollars for a down payment — all while paying for rent, utilities, car insurance, and what seems like a thousand other bills. Some people look for ways to increase their income by finding a higher paying job or even taking a second job. Others delay replacing an older car or foregoing their annual cruise in favor of a much more modest camping trip. But what sacrifices are just too big? Trulia surveyed 500 Americans in May 2014 to find out.
Giving up on a car just to save money for a down payment is a hugely unpopular choice, understandably so. A whopping 42.2% of the respondents felt that giving up their smartphones is also not worth saving money for a house. The survey also reveals differences in the way sacrifices are perceived in the short-term versus the long-term. 13% percent of the respondents would rather not save for a down payment than give up their vacations; 19.6% do not want to give up cable; and 6.4% hold a morning latte closer to their hearts than the chance to solidify a home purchase.
So, how do people save for a down payment? Utilizing existing savings, taking up a second job, and relying on state or federal programs emerge as the three most popular means.
A down payment (and saving for it) is an essential piece of the home-buying puzzle. If you are an aspiring home buyer and are looking for ways to reduce your spending, it’s important not to cut things down to the bone. Surviving on a draconian budget is never realistic. However, it would behoove you to make reasonable cuts that allow you to enjoy life while still steadily building your down payment fund — even if it means choosing between that morning latte and eating out for lunch.
It’s also important not to eliminate things that keep you healthy and help you manage stress. If you do cut your gym membership, look into buying some inexpensive workout equipment you can keep at home, or take up a hobby like running that does not require an expensive gym.
Look closely at the big-ticket items. Skipping vacations for a couple years might yield more savings than eliminating an occasional restaurant meal. But don’t forget to do the math for the little stuff, too.