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Mastering Debt, Saving Your Down Payment and Enjoying a Budget-Friendly Summer

Mastering Debt, Saving Your Down Payment and Enjoying a Budget-Friendly Summer

saving a mortgage down payment

 saving a mortgage down payment

Now that the long, cold winter is finally behind us, it can be tempting to forget about our carefully crafted budgets and indulge in the pleasant weather. However, it’s essential to remember that our financial plans remain just as relevant during the summer months, even though sticking to them may feel more challenging. Fortunately, there are a few steps you can take to prepare your finances for summer and create some extra flexibility for those enjoyable yet pricey activities on your to-do list. Let’s delve into the top five financial actions you can take before the end of the month which will allow you to enhance your economic well-being this summer.

1. Give yourself a reality check

A little tough love from yourself can go a long way when it comes to your finances. Sure you could use credit. Sure you could go into overdraft but, those aren’t the habits of the person you want to become. I recommend you review your bank statements and credit card statements and count up all the money you’ve spent in the last month. Note where, and what you spent it on so that you can see exactly how much money you are spending and where you might need to make a few adjustments. It takes a bit of time to do so but, it also helps you get back on track if you’re spending outside of your income level. Alternatively, it can also show you how much extra you have weekly that you could be putting away into savings for that down payment which will help make your mortgage pre-approval dreams come true.

2. Tackle any lingering small debts that may be holding you back

Taking the time to evaluate your net worth is crucial during this season. The ultimate objective is to witness an upward trajectory in your net worth over time, whether through debt reduction, increased savings, or the growth of your investments. By encapsulating your progress in a single figure, it becomes simpler to assess your overall financial health and avoid getting overwhelmed by intricate details. 

To calculate your net worth, follow these steps:

  • List your assets: Include the value of your savings accounts, investments, retirement accounts, real estate, vehicles, and any other valuable possessions you own. Assign an estimated value to each asset.
  • List your liabilities: Include your outstanding debts such as mortgages, student loans, credit card balances, personal loans, and any other debts you owe.
  • Calculate your total assets: Add up the estimated value of all your assets.
  • Calculate your total liabilities: Add up the outstanding balances of all your debts
  • Subtract liabilities from assets: Subtract your total liabilities from your total assets. The resulting number is your net worth.

For example: 

Total Assets: $500,000
Total Liabilities: $200,000
Net Worth: $500,000 – $200,000 = $300,000

Remember that net worth is a snapshot of your financial situation at a specific point in time and can change as your assets and liabilities fluctuate. This is why regularly reviewing and tracking your net worth helps you monitor your financial progress over time.

3. Make a “No Questions Asked” budget section

When it comes to living life and adulting as some might call it, making a budget isn’t likely at the top of the “I Can’t Wait To Do This” list. It’s crucial to do so that you stay on track with your spending especially if you are looking to buy a home this summer but, having a budget doesn’t mean you can’t do anything fun. In fact, if you have a “No Questions Asked” budget column you’re more likely to stick to the budget knowing you have fun money allocated that is just for you to spend however you like. It might not be a huge amount but, make sure there is something there for you to take care of yourself.

4. Nip & Tuck

No, not in the reality tv show kind of way, I mean in relation to your spending. Saving a few dollars here and there can really add up over time. Or if you spent less on one area of life maybe that would allow you to invest it in another area that would better align with your financial goals. For example, if you didn’t have that daily Starbucks coffee it’s not going to make your down payment magically appear in a month. However, that savings repurposed might allow you to buy that online course you’ve been eyeing. And, in that course, you would learn the skills you need to get your dream job. And, that dream job has a better salary that would help you buy your first home more easily. 

5. Take control of your finances by proactively planning and budgeting for EVERY activity

While spontaneity can be exciting, it often poses a threat to your budget. This doesn’t mean you have to abandon all spontaneity but rather focus on loosely planning for activities to prevent going overboard. Establishing guidelines helps us avoid the shift from thinking, “Spending $400 on this weekend trip seems reasonable!” to realize, “Oops, I just charged a whopping $1,000 to my credit card! Oh well, it’s vacation time!”

You might even maintain a running list of enjoyable things you want to experience this summer and put that list somewhere you will see often. Include all the various things you like to do from trying out new restaurants and ice cream shops, to exploring trails for walks and hikes, visiting nearby towns for day trips or overnight stays, and attending concerts or events. Then put your best-estimated cost next to each item on the list. When you’re ready to do something fun on the spot, consult the list as to which fits the budget and your financial situation at that point in time.

BONUS TIP: Put a specific amount of money aside every week to go towards your down payment.

It’s easy enough to say you will put money aside but, it’s even easier to “forget” to do that. If you setup an automatic transfer from your chequing account to your savings account that happens for a set amount — no matter how big or small — this system allows you to accumulate that money into your savings account. It’s like putting your savings plan on autopilot really. 

$10 a week x 52 weeks is $520 a year

$20 a week x 52 weeks is $1040 a year

$50 a week x 52 weeks is $2600 year

If you and your partner partake in this type of savings you’ll have the down payment tucked away in no time.

 Once you’ve reaped the rewards of your hard work, and have your down payment set aside reach out to me, Darren Robinson, and together we will find you the best mortgage rates and options available! Or if you’d like to discuss first how much money you should save for your down payment based on the house you want to buy feel free to contact me at 705-315-0516 or book an appointment with me online

Beyond securing a mortgage rate for your dream home, I’m also here to guide you toward achieving your financial goals. Helping clients like you is my passion and I truly enjoy the work. Let’s collaborate and create a solid plan that turns your dream of owning a home into a reality.

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