How to Buy a House When You're Broke.
The key to being ready to buy a home is being ready financially.
If saving up for your down payment is your biggest obstacle to buying a home there are only two things you need to do. Earn more. And spend less. That is it. You need to have more money coming in and you need to keep more of that money so you can set it aside for your down payment. There’s no way around it, no way to avoid it and no way to make it easier. You have to make some sacrifices now for the big payoff later.
If you are having a hard time saving up for your down payment you are not alone. Most Americans are living paycheck to paycheck. How can you save up for a down payment when you barely have enough now? That’s exactly where I was at before I bought my first home so I know it’s not impossible. It wasn’t easy but owning a home is TOTALLY going to change your life so here are some ideas to help you reach that goal.
You need as much cash coming in as possible to reach your down payment goal.
EARN MORE You have to find a way to bring in more income. Period. No ifs ands or buts, you need more income. That extra income must go into your down payment savings account or be used to pay down debt. It sucks to have to change your life or work more than your friends but if that’s what you need to do, then DO it. It won’t be forever and you can always slow down after you close on that new home. How can you earn more income? Here are some ideas to help get you started.
- Find a way to make more at your current job. Can you do overtime or pick up extra shifts. Have you asked for a raise this year? You don’t know until you ask. So ask. If your current employer knows you are looking to earn more and they don’t want to lose you, they might be willing to help.
- Find a higher paying job. Maybe there is no way to get overtime or advance pay grades within your current company. If not, you have to bite the bullet and look for a higher paying job elsewhere.
- If you absolutely love your current job and don’t want to leave then add a part time job. Again, remember this is not forever. It’s a short-term boost to your income to help you save. Find a job that has some flexibility in a field you love. Don’t work retail if you have no self-control. You don’t need to spend your whole paycheck as soon as you make it.
- Sell all those things you have been meaning to sell. Old hobbies, furniture, exercise equipment that you no longer use. Get it sold now.
- Add some gig work like baby-sitting, pet sitting, lawn work or snow shoveling. Once friends know you are working hard to save for your down payment they will definitely throw some work your way. It’s easy to find side work using Nextdoor, Craigslist, or other free online marketplace sites.
- Start making money from your hobby. Is there a way to sell or make income from one of your hobbies? Can you sell crafts or teach others? Again, be mindful that you don’t add extra expenses. This is not an excuse to pay for new supplies or fancy websites. You should be using current skills or interest to help add income.
- Every extra dollar should be set aside for your home ownership goal. Bonuses, gifts, tax returns…all bonus money should be directed toward your dream of home ownership.
SPEND LESS Suck it up. If you want that house you must find a way to keep more of the money you make. You must spend less and save for that down payment. You have to be smarter about the way you manage money. You have to be frugal and stop letting your money disappear. Here are some ideas to get you started.
- Stop buying more things. Just stop. You don’t need more clothes, furniture, household knick-knacks or trinkets. You have a choice: use your money on crap you don’t need or get the house. Until you have that house: no vacations, gifts to yourself, fancy haircuts, or new hobbies. Stop buying crap. You should only be buying necessities like food, gas and toilet paper. Seriously. Stop buying crap.
- Cancel memberships. Don’t freak out... this is temporary so you can magnify your savings. Cut gym subscriptions, magazines, streaming services, gym and every other kind of membership. You are going to be working more anyway so you don’t need to pay for something you are not going to use.
- Delete your cable bill. I’m serious. If you want to buy a house and need to save there is no excuse for wasting hundreds of dollars a month on a time waster like cable. Sign up for one service like hulu or netflix and then cut the rest. Borrow DVDs from the library or friends. If your cable bill is 50 a month you could put 650 into your down payment savings account per year.
- Don’t worry; you don’t have to be totally miserable with no entertainment. You just need to be smarter and find FREE ways to have fun. Or use your time to earn more money or learn more skills to help you get a better job.
- Ditch those friends that make bad money choices and influence you to do the same. If your friends are constantly trying to encourage you to spend money, you need to find new friends. Or you need to be strong enough to suggest activities that don’t entail spending money a lot of money. Real friends will want to support your dream of home ownership. Be honest with them. Tell them you are focused on saving for your down payment and suggest activities that are free or low cost. Good friends will support you.
- Brainstorm ways to lower your current housing expenses. Can you get a roommate? Move to a smaller lower cost apartment? Rent out your parking spot? You better not be spending money on a storage unit. Sell that crap and get rid of paying for storage.
- Analyze every expenditure. How can you lower it? Can you live without it? Cut as much as possible. Remember this is short-term pain for long-term gain.
Stay focused and GET THAT HOUSE!
TAKE ACTION TODAY If you dream of owning a home YOU are the only one that will make it happen. No one is coming. No one is going to save you from your past choices and mistakes. No one is going to pay your debts. Suck it up and make a choice to change how you spend and earn so you can get what you want. Stay focused and GET THAT HOUSE!