Saving for Your First Home

Posted by Gurpreet Ghatehora on Monday, September 8th, 2014 at 9:46am.

Some people are great with their money, it comes naturally to them, while others require discipline and perseverance just to save a little bit. Between student loans, car loans, and paying rent, it can be very difficult to stuff a little away each month – let’s not even get started on credit card debt. But if you do have these sorts of debts and payments, like most do, there is a method you can try that will help you save enough money to buy your first home.
The Snowball Method
This popular method of debt management and saving, begins with two very important principals. Firstly, you need to write down all your debts, from largest to smallest, along with the monthly payment you make on it. Secondly, you need to save $1000 in separate account for emergencies. To do this, make only your minimum interest payments on your current debts, per month. Once you have saved your emergency money, the snowballing for your first home can begin.
How to Snowball
Look at your debts in order from smallest to largest. Your first task will be to eliminate your smallest debt. To do this you make the monthly minimum payment on it, plus whatever extra you can afford to put against it. For all your other debts, simply make the monthly minimum payments only. Continue to do this until your smallest debt is paid. Once paid, take the monthly minimum you were putting against it, plus that little extra and apply that to your next largest debt – on top of the monthly minimum payment you were already making against it. See what’s happening? As you continue to eliminate each debt, you are snowballing your payments against the next debt, effectively paying it off way ahead of schedule. Once you eliminate a good portion of your debts, you can begin funneling a little bit of money into your savings account, which already has a healthy $1000 in it, if you didn’t need to spend it. This os one sure-fire way to accumulate a healthy down payment for your first home.

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