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How to Budget When Buying a Home

3 March 2020 No Comment

Decide On Your Budget

Tally up your expenses. This is all the money you payout on a monthly basis. Be accurate about how much you spend, as this will dictate what you can reasonably afford. Use an online house payment calculator which is designed to help you figure monthly payments, based on your budget. Smart calculation options include tax, HOA fees and more. Find out how much you could be paying on your mortgage within minutes.

Pay Down Your Debts

Debt can feel overwhelming, especially when you have debt on multiple credit cards. With these strategies you can take control, to know you’re making progress in paying off your debt and save money on interest. Start by figuring out what you owe, then decide whether to use the “debt avalanche” or “debt snowball” method to chip away at those revolving loans. The avalanche method lists your debts from highest to lowest by interest rate. That way you pay off the debts that rack up the most in interest first. With debt snowball every month, put the extra money you budgeted for getting rid of debt toward your smallest debt, even if you are paying more interest on a different one. Once the smallest debt is repaid, take the entire amount you were paying toward it (monthly minimum plus your extra money) and target the next-smallest debt. Keep knocking off debts and then diverting all the freed-up money toward the next debt in line.

Pay Yourself First

Many people wait until the end of the month to see how much money they have leftover before putting any money into a savings account. This is not the best way to go about it because most of the time, you’ll find you don’t have any money left over. If you want to get serious about saving, you need to calculate how much money you can put into savings first. It might take some getting used to, but once you start putting the money away, you start to adapt to it. If you’re tempted to dip into your savings account, keep your savings account in a different bank from your checking account. 

Reduce Your Expenses

You’re ready to tackle your debt. You need to save more. You want extra money to invest. Whatever your money goal, you want to find the best ways to cut expenses so you can reduce spending today. Deciding on the optimal place to start can be a challenge. First figure out where your money is going. Take an honest look at your monthly spending to see where you can cut back. Cutting monthly expenses and reducing spending. Cut housing costs rent/mortgage. Reduce utility expenses, cable, internet, cell phone, and monthly subscriptions. 

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