How to Save for a Home While Paying Rent
It’s a growing issue in this country – people wanting to buy their own homes but spending huge portions of their wage on rent. How can you afford to pay rising rental rates while also saving for a home? Is it even possible without switching to a diet of two minute noodles and saying “no” to every night out your friends invite you to?
And even if you did those things, could you get into the property market fast enough? Every year counts when you’re investing. Between compound interest, rising property values and rising rental rates, every year you’re not a homeowner is another year you’re wasting thousands of dollars instead of growing your net worth.
But it doesn’t have to be so grim. By using a few simple tactics and learning a bit about effective budgeting, you can eat well, save for a deposit and pay the rent all at the same time.
It might seem like the most obvious place in the world to start, but that’s for good reason. Taking control of your spending week to week, month to month is key to achieving any financial goal you’re set on.
There is a maxim to be followed: Pay yourself first. It means that before you buy groceries, pay bills or anything else, you set aside a previously determined amount and place it into a savings account. Once you have a definite deposit amount and a definite date by which you want to have it saved, reverse engineer from that date and pay yourself the required amount each paycheck.
There are plenty of good books on taking control of your finances, such as The Total Money Makeover by Dave Ramsey. All it takes is some habit-building and a little discipline.
Negotiating bills and rent
Most people don’t understand how many of their regular payments are negotiable. The companies that supply your gas, water and power want you as a customer. You have more leverage than you probably realise, which means you can negotiate lower rates.
Try calling your providers and probing for cheaper deals. If they won’t go lower, call around and see if other companies will.
Alternatively, you can try negotiating your actual rent! New York Times best-selling author Ramit Sethi offers his take on negotiating rent in this short but sweet article.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.
Click here to speak to us!