Saving For a House.
In 12 months I want to be kickin’ it in my own house. In the meantime I am hoping to be able to save up a reasonable down-payment. My strategy is far from mind blowing, but it goes like this:
I hope to be able to save, on average, $1000 a month for a house. How am I going to get that cash without selling my kidneys? Like this:
FIRST, get and idea of your spending habits by entering the past 4 months into a budget tracking software like PearBudget. Make sure you create a column, or category for Eating out, and Random Garbage. Then have your mind blown when you find 50% of your income goes to those categories (at least that was my case). By tracking your spending you become far more aware of the impact of spending $5 at 7-11. Whenever I feel like dropping some bills on random shit like bottled water, I just think *house*. It has become my mantra. Let it become yours.
SECOND, stop eating out. Go onto allrecipes.com , then pick out some meals you want to eat, and make a list. Then go shopping. Since my girlfriend moved in, we have been cooking almost every meal at home. Our total food cost (2 People) is HALF what I was spending when I lived alone. If you are to lazy to make a sandwich for lunch, then take a can of soup. Anyways taket that extra money…Straight into savings. (added benefit: you will lose wieght without trying.)
I recently got a raise which translates to an additional $250 a month after taxes. This goes straight into savings.
I will be recieving a 3% bonus in January, which will go straight into savings.
The company I work for also allows you to sell extra vacation days for cash, which I plan on doing (not all my vacation, but I think I can suffer with only 2 weeks instead of 3).
Any extra windfalls…Straight into savings.
Also, living with another person has cut rent and bills in half…Straight into savings.
So far saving hasn’t taken much effort. All I did, was take any money that I would have normally spent on junk, and put it to savings.
Now that you have this surplus of cash lying around, don’t just put it in your banks savings account. Open a high interest account with ING (3.75%), Presidents Choice (4% if you have $1000), or an equivalent. The benefit of this is that it takes a day to get money in or out of these things. It is a pain in the ass. In this case it is just added incentive.
I have taken it up a notch. ING has short term GICs available with 4.25% interest if you lock your money in for 9 months. So my plan is to put HALF of my savings into GICs to get the extra interest, the other half will stay in my savings to maintain some liquidity if an emergency pops up. As I get closer to next September, I will lock my money away in a shorter and shorter termed GICs. This way I maximize my interest, while basically taking my risk to zero.
What about the market?
I thought about putting my money in low MER index fund for about 2 minutes, but since I want at LEAST the principle, I need a guaranteed savings vehicle. If you use the market for short term savings, you could just lay your monthly deposit on BLACK and let it ride.
So that’s my plan. It may be flawed (tell me why), there may be better ways (hook me up), but I am as new to this shit as you, and this is the best I came up with.
-S!