How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
It was backbreaking work for a five-year-old -- but it was totally worth it. I spent six grueling hours cutting down brush in my backyard with my dad, clearing an area that would soon become a place for Mom to send us when my siblings and I were being too loud in the house. When we finished clearing the brush, he handed me a crisp five-dollar bill. It was so much money I tried giving it back to my dad, assuming that my family wouldn't be able to eat for a few days because of his immense generosity toward me. 
Of course, he made me keep the money and used it to teach me about the power of saving money. So I put that money in a bank and continued to save -- until I had $20. Then I blew it candy, comics, or some other pleasure that I'm sure felt worth it at the time. I realized then - I was terrible at saving money! Like my five-year-old self, most Americans have a hard time-saving money. An increase in income usually results in an increase in spending. In fact, according to the U.S. Federal Reserve, 47% of Americans do not have enough savings to cover a $400 emergency. Savings, however, are incredibly important, especially if you are looking to someday buy a house or get an investment property loan. RealtyTrac recently reported that the average American down payment was around 15% in 2015. With the median sales price for a house hovering around $250,000, house buyers may need to save $40,000 or more to buy a house. Even low down mortgages like an FHA loan can cost you 3.5% plus closing costs, requiring $10,000 or more.
How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
So, how can people save up the massive down payments needed to purchase a property? Rather than getting just my ideas and opinions, I asked this question to a variety of financial writers and bloggers to share their top tips, which you'll find below.
Cutler Bay Homes For Sale
How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
1. Prioritize It
"I think people need to get laser focused and remember their value system with every purchase. Every time they make a purchase (at Target), they need to realize that the foolish purchase is making their goals get pushed further and further away. They need to make their spending a reflection of their value system and put that down payment at the very top of their value list." Lauren Greutman | Author of the book The Recovering Spender, Financial Counselor, and Founder of LaurenGreutman.com
2. Automate It
"Create a separate savings account and name it 'down payment.' Automate savings deposits from your paycheck or checking account into the account each month. Start with a small amount and increase the amount over time once you get comfortable with the process. Banks require a down payment for a reason; they want to know that you are financially responsible enough to live within your means. Prove it!" Phillip Taylor, CPA | PTMoney.com, Founder of FinCon
3. Gamify It
"We had monthly challenges to raise money for our down payment. Keeping things friendly, relatively short, and competitive motivated us to build up our savings faster.One month was about recurring bills. We dug around and managed to slash our car insurance in half, get faster service with our internet (and shave some money!), and cut the cord while still catching our favorite shows." Elle Martinez | CoupleMoney.com
Palmetto Bay Homes for Sale
How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
4. Set Aside Unexpected Money
"Put any extra unexpected money into the down payment fund! I.e. Christmas money, birthday money, bonuses, tax returns. It will snowball before you know it." Tiffany Alexy | TiffanyAlexy.com, Real Estate Broker & Investor
5. Build a Side Business
"The best way to save money is to supplement your income with a small business or side hustle. Most of us work 40-50 hour weeks, which means that there's plenty of time to make some extra money on the side. For example, you could sell on eBay or freelance. With the law of compounding interest, every little bit counts."How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips Steve Chou | Bumblebee Linens and MyWifeQuitHerJob.com
6. Budget for It
"The best way to save for your down payment is to build it into your budget. Start by determining what your monthly house payment will be, then subtract your current mortgage or rent from that number (tip: don't forget to add homeowner's insurance and taxes to your expected mortgage payment!). For example, if you expect to spend $2,000 per month on your mortgage and your rent is $1,200, you will save $800 per month. Not only will this help you save for your down payment, but it will solidify your future mortgage payment in your budget. This will help you make sure you can afford your mortgage once you buy your home." How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
Ryan Guina | CashMoneyLife.com
How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
7. Increase Your Income
"When my husband and I were building up for our down payment, we did the following things:
- Looked for ways to increase income. In particular, I took on some overtime at my full-time job.
- Bumped up my rates for my freelance work. When I realized that I needed to get to $42k for our down payment, I started to increase the rates for my services since I couldn't create more time for a 'by the hour' service.
- Asked for repayment of loans that I made. When a friend or family members knows that not repaying you is literally taking you out of house and home, there's more urgency attached to repayment."How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
Kara Stevens | The Frugal Feminista
8. Live with a Roommate
"When I was saving for a down payment, I lived with roommates for a couple of years instead of getting a place of my own. I was just out of college so I didn't mind the discomfort since it was what I was used to anyway. It wasn't perfect, but allowed me to save $500 per month."
Pauline Paquin | ReachFinancialIndependence.com
9. Maximize Earnings on Your Stuff
"Perhaps you have a spare room that sits empty. You could earn income by renting that room out, on your terms, through a service like Airbnb. Got items sitting around the house that you don’t use and will never use? Sell those items on a site like eBay or take them to the consignment shop. Do you have a vehicle that is just sitting around in your driveway doing nothing? You can rent that vehicle out using a peer-to-peer car sharing service like GetAround." HHow To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
Anna Sergunina, CFP | Money-Library.com, AdviceOnly.Net
10. Rent Cheaply to Save Up
"Rent for cheap and save up! My wife couldn't find a job when the real estate market tanked. We had just moved to Texas and thought we would be staying with my in-laws for 2-3 weeks. She never found a job, and we ended up paying $430/month for one year for a bedroom at the in-laws' house. We saved up 50% for the down payment on a new house." How To Save For A Real Estate Down Payment: 20 Financial Experts Share Their Tips
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