Whenever you want to make a large purchase, like a car or a house, it’s a good idea to plan ahead and start saving for a down payment. The more you are able to put down on the thing you are buying, the lower your monthly payments will be and the smaller the amount you’ll need to have financed. In other words, the more money you can save and put down up front, the better.
Determine How Much You Need
The amount of money you need to save will depend on the total amount that you need to spend. Some auto loan or home loan providers require a certain percentage in order to get you the best possible rates or to get the total price into a range that you can afford.
If you have never purchased a car or a home before, speak with your New Bedford credit union representative to find out how much you will need to have for a down payment. Once you know how much you need you can move on to the next step.
Figure Out How Long It Will Take to Save
In some cases you might need to save money toward your down payment for a year or more in advance. The amount that you need to save, plus the amount of discretionary income you have after paying your monthly bills that can be feasibly set aside, will determine how long it will actually take.
Speak with your New Bedford credit union representative about savings plans, such as money market accounts and certificate of deposits. A minimum deposit amount is required for some of these plans and a minimum balance is required for the term of the investment. The type of credit union savings plan you choose will depend on how much money you need to save and the amount of time you can afford to have your money invested.
Every Little Bit Counts
Some people think that the only way to save is to take a chunk of money from every paycheck and sock it away. Unfortunately, most people can’t afford to do it that way, so they get discouraged and end up not saving anything at all. You need to be more committed when it comes to saving for a down payment.
Instead of looking at saving money as a big investment, consider saving money in little ways and putting it all away toward your down payment. Ask your New Bedford credit union representative about automatic savings plans that take a set amount out of your deposit each month. Even if it’s just a small amount, it will build up over time.
Cut Unnecessary Expenses
Reduce your daily expenses and eliminate unnecessary expenses completely. If you spend $10 a day on coffee shop lattes, consider putting that money away instead. You will save $50-70 a week and as much as $300 in a month. Bringing your lunch just once or twice a week instead of going out with your colleagues at work could bring another $10-20 a week in savings.
Take all of the change you collect at the end of each day and put it in a jar. At the end of month take it all in to your New Bedford credit union and deposit it straight into your savings account. There are lots of tiny little ways that you can save money and make a difference. Adding these extra savings to your regular monthly deposits will help you to reach your goal faster.
When you are saving for a down payment to buy a house or a car, you sometimes have to make sacrifices. If your plans involve saving for a year or two, consider cutting out your annual vacation or getaway and put the money you would have spent on your trip into your savings account.
Consider getting a part-time job to make extra money so you can boost your savings. It can be difficult to juggle two different schedules, but as long as you remember that it is just a temporary situation, a means to an end, it will be a lot easier to handle. Just make sure to put all of the money you make from your extra job directly into your savings. Find out more about direct deposit options that can help you build your savings without being tempted to spend it.
Save a Little Extra
Once you reach your goal, make sure to take some time to save some extra money. You don’t want to take your entire credit union savings plan and be left without anything. You might need to have some extra cash on hand to pay for repairs at the new place, decorating costs or moving expenses.
Having extra money on hand will also give confidence to your lender. When you go to your New Bedford credit union to apply for a home loan, it will definitely help if they can see that you spent some time saving for a down payment and that you have money above and beyond what you plan to invest.
Get Started Today at St. Anne Credit Union
Before you start saving for a down payment, contact your representative at your local New Bedford credit union to find out more about money market accounts, certificates of deposits and other credit union savings plans. St. Anne Credit Union can help you make a plan that will help you start on a savings plan that will get you the home or car that you have always wanted.