12 ways to save for a new home while renting

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When a good majority of your take-home pay goes to your landlord, it becomes a challenge to muster up the cash for a mortgage and down payment.

The general recommendation is to spend no more than 30% of your income on rent — a challenge unto itself — because one-quarter of renters put at least half of their earnings toward housing. 

So how does a renter turn home ownership from a mere pipe dream to the American dream? Follow some of these helpful pointers to get started.

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1. Dive into your debt

High-interest credit card debt can keep you stuck in a cycle of payments and no way to save money for a down payment. One way to tackle it and free up some cash is to get more organized, find a way to lower your payments and use the extra proceeds toward a down payment. 

Reducing your debt can also raise your credit score and balance out your credit-to-debt ratio, improving your chances of being approved for a mortgage once you’ve saved up for your down payment. 

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2. Get a roommate

Unless you’ve got a cat or dog who can find a way to pay a portion of the rent, having a roommate or two (or three or four) is a proactive way to save money; split two or three ways, you could easily save thousands of dollars a year by rooming with other people.

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3. Reduce spending on utilities

You might save a lot of money on your utilities by going without heating during the winter, until you realize that saving for a mortgage down payment isn’t worth freezing or boiling to death over. It’s too extreme to sit and the dark and freeze/simmer. Simply reduce your energy usage. Shut lights and appliances off when not in use, opt for energy efficient light bulbs and take shorter showers.

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4. Cut back on cable

The average monthly cable bill costs more than $100. For a fraction of the cost, you could subscribe to a streaming service and pay in one year what you’d shell out for one month of cable.

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5. Modify your cellphone package

Do you really need all that data capacity on your mobile device? Check how much data you’re paying for versus what you’re actually using; you could be wasting potential dough on something you don’t need.

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6. Eat out less, cook in more

That daily coffee run and dining out with friends can really add up after a while. For the cost of eating out every night for a week, you could buy almost month’s worth of groceries. That doesn’t mean giving up dinner, drinks or a night on the town forever, just limit it to once a week. Having wine at home with friends or ordering an appetizer instead of a full meal when you go out are other easy ways to save money. When shopping at the supermarket, carefully consider if going generic versus name brand is worth the savings.

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7. Work out for free

Opt for low-cost or no-cost ways to exercise, like jogging with friends, taking up free yoga sessions in the park, or buying some affordable free weights and resistance bands for your apartment.

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8. Reboot your insurance

Just like you’re comparing your cell phone and other utility bills, you can do the same with insurance. Not sure where to start? Try this free insurance checkup tool to find out what insurance you need and what you could do without.

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9. Negotiate your rent

Ask your landlord for a rent reduction and don’t always assume it’s a long shot. Even $5 or $10 a month can add up to $60 to $120 saved over one year. You can also ask to have your utilities or parking fees included in your rent. If they’re not willing to budge, you might try moving to another, more affordable apartment.

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10. Get a side hustle

A side gig isn’t just for college students —it’s is an easy way to generate some income for a down payment fund. Become a tutor, participate in surveys and clinical tests, pet sit or babysit, rent out your car or apartment (when you’re not using either) or sell some swag online. Use every cent you earn on the side toward your mortgage fund.

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11. Decorate your place on the cheap

It’s awfully tempting to start buying some good furniture now; that way, once you have your own house, you can start populating it with pieces you already own. But the furniture you buy today might not fit the style of your future home, or be out of style in a few years, necessitating you to sell them and buy from scratch anyway. In the meantime, stick to cheaper wares (or previously used items) and hold off on furnishing a future home in advance.

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12. Set up a mortgage down payment fund

One way to take your savings far is to deposit it into a high-interest savings account — preferably one that can’t be accessed, like a certificate of deposit. Generally, a 12-to-24-month CD offers the most value.

While renting can have its benefits, that monthly rent payment can really hamper your efforts to save for a down payment. The smartest way to save up for such a major expense is to diversify all the ways you can get to that dollar figure the fastest. The quicker you can build your mortgage fund, the sooner you can reach your goal — and you’ve got your time as a renter to thank for it.

This article originally appeared on Policygenius and was syndicated by MediaFeed.org.

Image Credit: DepositPhotos.com.

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