Downpayment got you down?

March 2, 2016

Check out our top 10 suggestions for a smarter approach, while saving for a down payment.

 

A downpayment is the amount of money you pay up front to obtain a mortgage. The minimum down payment in Canada is 5%.  Let’s use Cornwall, Ontario as an example. The average list price of a home, as of January, 2016 is approx. $189,000. The minimum amount of money you would need toward a downpayment, to purchase a home at $189K is $9,450.00. Traditionally this seems like a lot for a lot of people, because it is.  

 

Not everyone has that kind of money floating around in a bank account somewhere.  Not having the money right away doesn’t mean it’s not possible. It means that you’ll need to be smart about how you are going to do it, how you are going to save.

 
1.If you don’t “need” it don’t buy it.

There is a difference between needing something and wanting something. The important thing to realize is how to differentiate the two and know when to draw the line.  I would suggest you create a mental list of questions so when you are ready to checkout, either on-line or in person you can run through them in your head. The questions I usually ask myself are 1. Do I need this or want this? Because there is a difference 2. Can I live without this? 3. Can I wait and get this at a later date? 4. Can I get this cheaper somewhere else? Maybe second hand? 5. Can this item be borrowed from someone else?  My husband does this often with tools or for special occasions I’ll borrow dresses or shoes. You would be amazed at the amount of stuff people buy that they don’t actually need.  Stick to the necessities.

 

2. Know when to say NO. 

Learn to steer away from temptation to spend. I’ve learned over time that I like to buy things on impulse, typically because they are on sale.  Now what I do is stay away from malls and big box stores.  I avoid them like a plague, unless I absolutely need to be there specifically for one thing.  This helps me avoid the temptation of those impulse purchases. Something else we’ll do often at times is we’ll invite friends over for dinner, instead of going out.  This helps to avoid paying extra money on a babysitter and a costly restaurant bill.  We started doing this more often, this year and we notice a huge difference in our pocketbooks.

 

3. Get everyone involved.

Buying a house is a big deal and saving for one is even bigger.  Whats the harm in involving your friends and family in a good ole’ conversation about what it is you are trying to accomplish? If your parents, friends, children knew what it is you are trying to achieve then they would probably be more encouraged to understand.  For example, the next time your friend calls and asks if you want to go for dinner and/or a movie they will understand why you’re saying no, without you having to explain yourself.

 

4.”Google it”

Research money saving idea’s and stick with one that will work for you.  There are so many neat and fun idea’s on the internet to help you save money.  Pinterest, for example has over a dozen posts on “saving for a downpayment”.  The trick will be to find one that works best for you and stick with it.  Here was an interesting suggestion, that seems very doable from @thestingysaver; https://thestingysaver.wordpress.com/

 

5. Create a vision board.

I know this one sounds tacky (get it, tacky?) but believe me it works.  People are visual, that’s a fact.  A vision board helps brings what you want and desire to life.  If you can see it then you can believe it and it makes your goal that much more believable.  So gather up those flyers, magazines and print outs and give it a try, what do you have to loose?  Check out this interesting article on vision boards from Huffington Post: http://www.huffingtonpost.com/elizabeth-rider/the-scientific-reason-why_b_6392274.html

 

6. Eliminate the small costs per day.

All the little things add up. Cutting down on them will make a huge difference to your bank account.  The visits to the coffee shops, deli’s, corner stores are wasting away your money.   Think about it a $1.50 coffee a day, equals $10.50 a week, equals $546 a year.  This doesn’t include the occasional muffin, donut or soup you could buy.   When you look at the bigger picture it put’s it in perspective.  David Bach of Live Rich, Finish Rich calls it the “latte effect”  see what he has to say about it here: http://www.finishrich.com/lattefactor/

 

7. Set a budget.

You would be surprised how creative you can get when you feel backed up against a wall.  If you created a budget for yourself then you really limit yourself to the possibility of overspending.  In my experience when you set limitations on your budget you’ll find yourself checking out the clearance sections and finding those discount codes, more often.  Gail VaxOxlade is a woman I admire. I have read several of her books and reference her FREE online tools often.  Please take the time and explore her resource section.  I promise you’ll learn something. http://www.gailvazoxlade.com/resources.html

 

8.Write your spending down, like all of it.

If you take the time to write everything down you are spending you’ll be able to monitor and track where your money is actually going. This will help you with your plan, trust me. When you are being held accountable for everything you are spending then you will want change the way you are spending.  There is an app for that called You Need A Budget (YNAB) available on your app or play store.

 

9. Plan ahead, make lists

The best thing to do, when you set a goal for yourself, is to come up with a plan. Everything is better with a plan. A plan helps you set priority and keeps you accountable in maintaining an outcome. When you take the time to think about what it is you need and plan it out, it’s easier to do.  For example, the weeks in my business are planned out by Sunday and my days are planned the night before.  I make lists of the things I need to accomplish and check them off as they get completed. At home, the meals gets planned out days in advance and I make a grocery list.  When I go to the grocery store with a list, I reference it like a hundred times so I get what I need (because I am always forgetting).  If I didn’t have lists then it would be easier for me to get off track and forget something.  Your smartphones can be your best tools for lists and reminders.  There are many apps, as simple as your calendar, that have many features that can help you plan ahead.  My favourite one is called Planner Plus (by Appxy)  and google reminders which syncs with your calendar.  Those can be found in the APP store or on google play.

 

10. Do It Yourself

With the amount of information that you can find on the internet these days, use it to your advantage.  Next time something isn’t working or broken find a way to DIY fixing it.  This will save you money by not having to replace it with something else, because that will cost you money.  Pinterest and You Tube are my go to sites when I’m trying to DIY anything.  Most posts and video’s will give you the step by step guides for almost any project.  You’d be amazed what you can find and how you can save money and time with a DIY project.

 

 

In closing I want to say that by no means am I a financial advisor. These suggestions are solely based on my own personal and client experiences. For financial advice you should seek the assistance of a financial planner. Call or visit your local bank or financial planning institution to set up an appointment.

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