These days, saving money for a down payment is no easy feat. In the United States, it takes an average of six-and-a-half years to save for a 20 percent down payment. In San Jose, the country\u2019s most competitive housing market, it would take the average earner more than 30 years to set aside enough cash. Across Canada, that timeline drops to 1.7 years, but in high-priced urban centers like Vancouver, it can take upwards of 20 years to save for a home.<\/p>\n
Author and licensed mortgage broker Sean Cooper purchased his first home at 27, and paid it off just three years later. His bestselling book, Burn Your Mortgage, dispenses practical advice for those seeking financial independence. Critics have called some of Cooper\u2019s methods extreme \u2014 he chose to dine on boxes of Kraft Dinner and move in with his mom \u2014 but his frugal habits allowed him to put down $170,000 on a $425,000 three-bedroom bungalow in Toronto. Here he shares 10 expert tips on saving money for a down payment \u2014 no mac \u2018n cheese necessary.<\/p>\n
1. Use credit cards to boost your credit score<\/strong> 2. Download apps that will help you track your spending<\/strong> 3. Know the difference between a want and a need<\/strong> 4. Focus on reducing your biggest cash-grabs<\/strong> 5. ….. but don\u2019t overlook the small stuff<\/strong> 6. Learn to haggle<\/strong> 7. Review credit card statements regularly<\/strong> 8. Automate your savings<\/strong> 9. Think unconventionally<\/strong> 10. Stay motivated<\/strong>
\n\u201cUse credit cards to your benefit, which will be to build your credit score, and not to your detriment, which would be carrying a lot of high interest \u2014 that lowers your credit score.\u201d A healthy credit score is key to securing a mortgage, so be sure to make payments on time and pay of your balance in full, if possible.<\/p>\n
\n\u201cApps like Mint make it easier to track your spending, but many banks and credit unions also have their own apps and tools to help you categorize your spending,\u201d explains Cooper. \u201cIf you notice that one category is out of whack, it might be a wake-up call to spend less money on clothing or dining out.\u201d Cooper recommends checking these apps \u201cat least once a week\u201d to stay up-to-date on your spending.<\/p>\n
\n\u201cOften we convince ourselves that a want is a need,\u201d says Cooper. \u201cThere\u2019s nothing wrong with treating yourself as long as you can afford it.\u201d Cable television, concert tickets and designer clothes are all wants that we could easily live without, but grocery shopping is a non-negotiable. \u201cIf you have too many of these so-called wants, like buying your lunch every single day, that\u2019s money you could be saving. Ultimately it means you\u2019ll reach your down payment goal later.\u201d<\/p>\n
\n\u201cFor most people, the majority of their money goes toward rent, transportation and food,\u201d notes Cooper. \u201cIf you can save 10 percent from each category, that could be $100 or $150 a month that you\u2019re saving \u2014 and it\u2019s not going to be painful.\u201d While he was fortunate enough to be able to move in with his mother, Cooper also advises would-be homebuyers to rent in more affordable parts of town. \u201cInstead of a downtown condo, you could rent a basement apartment for a lot less. Think of it as short term pain for long term gain.\u201d<\/p>\n
\nContrary to popular belief, avocado toast is not the biggest monthly expenditure for most Millennials. Coffee, ridesharing services and gym memberships are the more likely culprits, says Cooper. \u201cYou should also monitor iTunes, the Starbucks app, or any other purchases you\u2019re making on your phone \u2014 apps make it as convenient as possible to spend money,\u201d he quips.<\/p>\n
\n\u201cIt doesn\u2019t hurt to haggle in as many situations as possible,\u201d notes Cooper. \u201cI always say, \u2018Is this the best price you can offer?\u2019 The worst thing they can say is no.\u201d Mastering the art of haggling can help you negotiate a lower price on a car or even a couch on Craigslist. \u201cWhen it comes to buying a home, likely the biggest purchase of your lifetime, certainly you want to negotiate on that,\u201d he says. If you\u2019ve honed your haggling skills, you may be able to secure yourself a deal.<\/p>\n
\nWe\u2019ve all fallen prey to subscription services at one point or another thanks to the lure of a free trial. \u201cIt\u2019s easy to forget about them, and then realize you\u2019ve been paying for these services for two years and never used them at all,\u201d says Cooper. \u201cAdditionally, these are non-necessities that are easy to cut out of your budget, and that\u2019s extra money you could put towards your down payment.\u201d<\/p>\n
\n\u201cPay yourself first,\u201d insists Cooper. \u201cLet\u2019s say you\u2019re saving up $50,000 for a downpayment over five years, that\u2019s $10,000 a year. Figure out how much you need to take from each paycheck and automate your savings.\u201d Instead of scraping together whatever money you have left at the end of the month, Cooper says it\u2019s wise to make saving your top priority. \u201cSet a goal for how much money you want to save, and by what date \u2014 that way you have something to work toward.\u201d<\/p>\n
\n\u201cOne unconventional way I saved was by not traveling a lot. Instead of flying everywhere, I\u2019d just go on vacations throughout Ontario or to Montreal, which is not too far away,\u201d explains Cooper. Another way he racked up savings? \u201cI\u2019m vegetarian, which helped me save money because meat is rather expensive. You don\u2019t have to go completely vegetarian, but cutting out red meat can help you save some decent money \u2014 and it\u2019s better for your health.\u201d Cycling, riding public transit or downsizing to a single car are other ways potential homebuyers can put more of their income towards savings, according to Cooper.<\/p>\n
\n\u201cEven though you\u2019re saving, it\u2019s okay to celebrate financial milestones,\u201d says Cooper. \u201cLet\u2019s say you\u2019re able to save $10,000 in a year \u2014 it doesn\u2019t hurt to make a reservation at your favorite restaurant or go away for the weekend.\u201d Cooper believes the experience can keep you from falling off the money-savings wagon, like a once-a-week cheat meal when you follow a strict diet. \u201cYou\u2019ll come back feeling even more motivated than before, it\u2019s okay to have some fun along the way.\u201d<\/p>\n