4 cost-cutting tips to help millennials save for a home
In apartments everywhere, young renters are afflicted with a common anxiety: Whether they’ll ever get off the rental treadmill to buy a home of their own.
Rising home prices, sizable student loan payments and sluggish improvements in pay combine to make it extremely tough for many young adults to break into ownership. Add to that the reality that rents are high in many communities, making it hard to amass the savings necessary for closing costs and moving expenses.
Jim Blankenship, a veteran financial planner who’s advised numerous young clients on their real estate plans, says, “To afford a home and qualify for a mortgage, sacrifice is often necessary.”
Here are a few pointers for first-time buyers: Seek to reduce your debts with extra income. According to the latest Federal Reserve statistics, overall consumer debt, including car loans, is now relatively stable.
But student loan debt continues to soar and now approaches $1 trillion. For anyone seeking to progress financially, cutting debt — including credit card balances — is an absolute must.
“The interest rates charged on most credit cards are ridiculously high. All that interest can eat you alive,” Blankenship says.
Unfortunately, many 20-somethings make only enough money to meet necessary living expenses. They’re very limited in their capacity to pay off debt or generate savings for a down payment. Given this reality, Blankenship recommends that wouldbe buyers consider augmenting their income.
“Think about taking a second job. Or try to get overtime at your regular job, assuming overtime is available,” he says. Conserve funds by limiting your wedding costs. Kristin Meador, a real estate broker who often works with young buyers, wrote a book designed to help clients save substantial amounts on their wedding costs, “How to Have a Wedding Without Spending a Dime: Or at Least Very Little.”
The book grew out of money-saving strategies Meador developed while helping relatives and friends stage their weddings. It provides pointers on how to cut costs for a range of wedding-related expenses, from invitations to rings to the reception and honeymoon.
“When you’re trying to save for a house, it makes no sense to spend $500 or more for a wedding dress,” Meador says.
The expense of an average wedding is now hovering around $26,600 — funds Meador believes would be better spent on a home.
“A lot of parents with money to help their grown kids would rather their funds go toward a home than a fancy wedding,” she