Here’s a quick look at some of the best ways to save money on your pre-rent down payment:
1. Move To A Cheaper Apartment
Moving is never fun, especially if you’re moving from a cool place. well, one that isn’t. But what if finding cheaper rent could add thousands of dollars to your upfront savings in just one year?
Take, for example, our imaginary single friend Joel. He currently lives in Williamson County, Tennessee. He lives his best life amidst the live music scene of downtown Nashville and the quaint small-town vibe of Franklin. But he wants to buy a house and finds it difficult to save money while paying higher rent living in such a popular neighborhood.
As a result, Joel moved out of his two-bedroom apartment in Franklin and moved further south, to a less populated and rural part of Maury County. Joel increased from a median rent of $1,958 in Williamson County to $1,244 in Maury County.4 He can now save more than $700 a month, or about $8,500 a year, to meet his down payment goal!
Of course, Joel had to drive a little further to visit his favorite hangouts in Nashville. But he’s also discovered some of the things he enjoys doing in the small towns near his new apartment. Who knows, maybe he’ll meet a lucky woman in his new neighborhood, get married, and buy that house sooner than he thought!
If you’re like Joel and rent in an affordable (meaning expensive) neighborhood, consider the worthy sacrifice of leaving the limelight to live in an area with cheaper rents. Then put more of your pocket money each month into your upfront payment and watch it explode with growth!
Never rent accommodation that costs more than 25% of your monthly net salary. If you pay more than that, you are renting more than you can afford.
2. Cut Unnecessary Expenses
Another way to increase your upfront savings is to cut back on things you don’t really need. Sure, it can be a pain to overlook some crazy things. But remember, it’s only temporary. Once you’ve hit your prepayment goal, you can add these items to your budget.
Ways To Cut Costs
- Eat less at restaurants and buy generic branded groceries.
- Replace holidays with length of stay.
- Avoid buying new products and buying used and reused products.
- Pause video streaming subscriptions and borrow videos from the library.
- Exchange your gym membership for a free YouTube home workout.
3. Sell Things
Undoubtedly, there are a lot of sundries that you no longer use lying around your apartment or rental, so sell them! If you live in a high-traffic area, you can organize a garage sale. Or you can sell online using platforms like Facebook Marketplace, Craigslist, or eBay.
Ways To Sell
- Blu-ray Discs, DVDs, and CDs
- Toys and games
- home decoration
4. Initiate Secondary Agitation
If you really want to get the most out of your down payment, pick another job on the side. It’s not anything fancy. You won’t be working there forever. So choose something simple that you don’t mind doing after your day job. Here are some ideas for side activities:
- Drive for Uber or Lyft
- look after kid
- Walk the dog or let the pet sit
- Sell products on Etsy
- Become a tutor
- Teach music
- Freelance Online
- Car wash and care
- Mowing the lawn or doing garden work
- excavator alley
5. Saving Bonus And Salary Increase
Do you have bonus opportunities in your work? Maybe you are in a role where you can increase your commission if you work harder. Or you may be about to get a raise. Regardless of your employment situation, another great way to save money on buying a home while renting is to channel any extra money you make working toward your down payment goal.
6. Avoid Rent-To-Own
Before we wrap up, we have to shift gears here to warn you about rental-to-own homes. You may want to choose this option, but first, make sure you know how these deals can really wow you. Rent-to-own is a home that you rent for a few years before buying it. The goal here is to lock up a home you want even if you can’t afford it yet. The problem with rent-to-own is that it is more expensive than renting while saving separately upfront.
With rent-to-own, for example, you pay a non-refundable fee called option money. These are expenses that help you have the opportunity to buy a home in the future. In addition, your rent will likely be higher, as part of it can be used for your future purchases as part of your down payment.
Why pay a non-refundable fee and set up a mandatory deposit savings agreement instead of saving the money yourself? What if you decide you don’t want to buy that particular home after the rental period ends? All the extra money you paid for the lease will disappear. Bad idea!
Instead, stick to a traditional rental agreement, avoid rent-to-own fees, and save money on your own down payment. You will be glad you did.