For First Time Homebuyers: The Latte and Lunch Savings Plan

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mason-lattes-and-lunchTired of shelling out rent? We don’t blame you. Renting feels like you’re giving your hard-earned money away every month to pad someone else’s pockets. Itching to own your very own home but don’t think it’s possible?

Well… IT IS POSSIBLE.

You can pay down debt, you can improve your credit and you can save money for a down payment on a home. And it doesn’t have to hurt. You can do it one day, and one small choice at a time.

How?

First and foremost, you have to DECIDE. That means if you want to buy your first home, you have to make the decision to do whatever it takes to achieve your goal. It’s as simple as that. That means watching your dollars and potentially shifting your budget and spending.

Small changes in your daily spending can add up to big savings over time. Several years ago a very smart guy named David Bach wrote a book that shook the world with a giant realization about our tiny daily spending habits. He called it the “Latte Factor,” and it’s the main point was this: If you trim out a few small pieces of your daily routine (like your morning latte), you can save a huge amount of money over time.

Here’s how it adds up:

Americans spend $4 on average every weekday morning on their favorite breakfast coffee drink. Its only 4 bucks right? What can $4 possibly do to help me with a home? Let’s look at the bigger picture. If you were to take the $4.25 you typically spend every morning for your latte and drop it into a savings account or use it to pay down your debt instead, you will have saved $1,020 in a year. Do this for 5 years and you’ve socked away $5,100. Some FHA loans require 3.5 percent down payments. 3.5% of a $150,000 home is $5,250. By saving only your daily latte money, you’ve nearly saved enough for a down payment for a home.

Save another $6 per day by packing your lunch rather than eating out at a fast food restaurant and you’ve saved another $7,200. Pay off those credit card bills! Or even better, start an investment account! Put ONLY that $120 you’ll save a week by packing a lunch into an investment account with a 6% average return and in 20 years you will have accrued $20,119!

Small. Amounts. Add. Up.

I mean… pumpkin spiced lattes are delicious and all, but if you had to choose between them and owning your very own home?? That’s a pretty easy decision to make, right?

Here’s the thing. Life isn’t always a bed of roses, so if your latte puts you in your happy place then by all means, enjoy some of life’s deliciousness. Our point really isn’t about lattes anyway. It’s about how being mindful of our money can make a real difference… even if it means “minding” a few dollars a day.

We have a lot of first-time homebuyers reach out to us thinking they’ll NEVER be able to qualify for a home loan. Either they have credit card debt that is keeping their FICO score low or they feel so financially strapped that they think saving is impossible. That’s simply not true.

The truth is… you can have a down payment for a house saved in 5 years by making small lifestyle changes that cost you $10.25 a day. It’s all about making mindful choices.

So. What’s your “latte?” What little changes can you make in your budget to move you closer to becoming a homeowner?

Make a promise to yourself and keep it. You’re worth it. Then reach out to us, and we can help you find a way.