sjsmith.com.au - blog

Show Me The Money

One of the most asked questions from people when I'm talking about buying property is “How do you save for a deposit?” There's no getting around the fact that any lender is going to want to see some sort of deposit before giving you a mortgage.  When you consider that many lenders will want you to have 20% of the purchase price plus you're going to need extra for legal fees, stamp duty and government fees and charges it's quite a hefty sum.  So where do you find it?

Unless you're fortunate enough to have a rich relative you're going to have to pull that money together yourself!  The secret to saving is to do it regularly.  Even small amounts over time can build up.  Nearly everyone has at least some area of their life where they can trim the fat.  Let's look at a few examples.  Say you buy a takeaway coffee twice a week at $5 a time.  Give that up for a year and you've saved $520.  Do you buy takeaway once a week - $50 for two people - $2,600 over a year.  There's over $3,000 in a year!

Take your lunch to work with you.  If you smoke - stop.  It's the  fastest way to save not just some cash but also your health.  If you drink, cut it back or cut it out.  Push out the times between hair and nail appointments to an extra week or two.  Do your own hair colouring twice a year. Can you switch to a simpler mobile phone or Internet package. Do you have anything you can sell - clothes you don't wear, books you've already read.  Stop any magazine subscriptions and start reading online instead or use your local lending library.

Think also about bigger ticket items, can you move back home and save some rent money for a year?  Or downsize to a smaller place for a while. Do you really need a car?   Can you carpool instead or use public transport - even if it's for a year or two?  Could you downgrade your car?

Also take a look at what your ongoing expenses are.  Ask yourself honestly what are needs and what are wants.  Needs are life essentials.  Hint - Cable t.v.. is  not a need! In fact neither is Internet at home!  

Renegotiate any loans you have.  Are you getting the best credit card rate?  If you're trying to save you should not be adding any expenses to your credit card.  If you don't have any control cut the cards up.  Could you get a bank loan at a lower rate to pay out your car finance contract and save some money?   

Can you holiday at home instead of taking a trip away and save yourself some big bucks?

Any additional money you get, like birthday money or lottery wins should also go straight to your savings account.  (Why are you playing the lottery if you're supposed to be saving?)

You might also consider a second job.  Try dog walking, pet sitting or lawn mowing in your local area.  Cleaning or security companies often look for part time staff which may fit around your main bread winning.  Deliver catalogues or complete online surveys.  The ways in which you can make extra money are limited only by your imagination.

How much you save and how fast you save depends on how severe the cuts you make.  I'm not trying to tell you to make yourself miserable.  Make cuts that you can live happily with.

Till next time,

Sarah-Jane X