One of the toughest obstacles that potential buyers looking to buy a Scottsdale house have is saving up enough money to put towards a down payment. The amount you need will vary based on the program that you use for your loan along with the purchase price of the Scottsdale house that you decide to buy. However, it can be tough to get that money out of your budget and set aside.
If you are exploring the process to buy a Scottsdale house and want to save up for a down payment try using the 50-30-20 rule.
The first thing you need to do is determine how much money you have to work with each month. If you are a w-2 employee this is fairly easy. Just add up the amount that you make each month after taxes are taken out. If you are an entrepreneur and don’t receive a steady paycheck look at your gross income and subtract your taxes and business expenses.
Once you have completed this step, it’s time to divide up the funds.
This category includes all the things that aren’t optional expenses. They are what you need to survive. It includes things like groceries, rent, and insurance. It also includes things like gas for your car and a car payment if you have one. If you are paying on student loans or credit cards the minimum monthly payments should also be include in this category.
If you find that your needs exceed 50% of your income start looking for ways to cut expenses. Shop around for cheaper car insurance, cut coupons for the grocery store, or find a place where you can pay less in rent.
This category includes the things that you don’t truly need to survive but things that you enjoy and want to have in your life. This includes things like the internet, a television package, new clothes, and eating out. This is the area where you can generally make the most amount of cuts in order to repurpose funds into your down payment savings.
What you do with this category depends on what your goals are. For the purpose of this article we are focusing on savings for a Scottsdale down payment. Therefore, the funds in this area are all being designated for your down payment savings.
However, other things you could do with these funds include build up your retirement, pay down on debt, or cushion your emergency fund.
This is just a guideline and it’s ok if your numbers don’t look exactly like this. In fact, if you are really focused on getting into a Scottsdale house you may find additional areas to cut so your savings increases over the amount you are spending on “wants.”
This plan is helpful when you are looking to buy a Scottsdale house because it helps you really identify your needs from your wants. For example, we often feel like the internet, the new iPhone, and a brand new car are “needs.” But, in reality, there are plenty of places where we can use free wi-fi, your old phone still works, and you can get a few more years out of your old car.
When you start to identify these areas you’ll be surprised at all the ways you can cut expenses and save more.