How To Save Up The $80k Down Payment On A Decent House In 3 Years

The Biggest Payment Of Your Life

Conservatively speaking, you need to put down around 20% of a home’s price in order to buy it using a mortgage loan.

That means 20% of the price is coming directly out of your pocket.

And with the median price of a home in the USA currently at $412,000, you’re looking at paying around $82,000 just to get a new home.

So what do we do as Millennials and Get Z?

Well, over 51% of all Millennials and Get Z currently live paycheck to paycheck.

So obviously we don’t have $80k to shell out on a house. But are we forced to buy crappy hand-me-down houses filled with termites and old plumbing?

No way. Here’s how you can start saving up that hellish number of $80,000 and buy a house in the next 3 years.

Why Waiting 3 Years to Buy a House is Beneficial In 2024

First of all, don’t get discouraged by the insane housing prices. Look at it as an opportunity to save for a few more years and get a better deal.

That’s because the current market is a buyer’s nightmare, with astronomically high prices and low inventory making it nearly impossible to find a good deal.

Interest rates are also volatile, potentially increasing your mortgage payments significantly if you buy now.

By waiting three years, you give yourself time to save a substantial down payment, reducing the amount you need to borrow and potentially securing better loan terms.

Additionally, the housing market may stabilize, providing more options and better prices.

Historically, markets go through cycles, and waiting can put you in a better position to buy when conditions are more favorable.

Moreover, the time spent saving and planning allows you to improve your financial situation, boost your credit score, and make informed decisions about your future home.

Patience can pay off, both in terms of financial stability and finding the right property at the right price.

Leverage High Interest Savings Accounts

Do this immediately if you’re ready to dedicate a bunch of money to a house and not touch it until you need it.

One of the easiest ways to grow your savings is by leveraging high-interest savings accounts. 

Unlike regular savings accounts, high-interest accounts offer significantly better interest rates, which means your money grows faster without any extra effort on your part.

Look for accounts with no or low fees and competitive interest rates.

Here’s a little secret…online banks often offer higher interest rates compared to traditional brick-and-mortar banks due to lower overhead costs.

Once you’ve found a suitable account, set up automatic transfers from your checking account to your high-interest savings account.

Even small, regular contributions can add up over time thanks to compound interest.

For example, if you deposit $200 a month into an account with a 2% annual interest rate, you’ll have saved over $5,000 in just two years, including interest earned.

By simply shifting your savings to a high-interest account and automating your contributions, you can make your money work harder for you, bringing you one step closer to your down payment goal.

Monetize Your Hobbies

Turning your hobbies into a source of income is a great way to boost your savings without feeling like you’re doing extra work.

Many hobbies have the potential to generate money, and with the right approach, you can significantly contribute to your down payment fund.

First, identify a hobby you’re passionate about and consider how it can be monetized.

For example, if you enjoy photography, you can sell prints, offer photo sessions, or license your images to stock photo websites.

If you’re skilled in crafting, platforms like Etsy allow you to sell handmade items to a global audience.

Writers can freelance for blogs, websites, or even self-publish books on Amazon.

You may also need to do something less fun but more lucrative, like renting power washing equipment and charging $300 per house, or buying and flipping old furniture at your local flea market.

Dedicate a few hours each week to your side hustle. Consistency is key. Even if you’re only making a few hundred dollars a month initially, this additional income can add up quickly.

For instance, earning an extra $500 a month from your hobby translates to $6,000 a year, which is a substantial contribution toward your $27K annual savings goal.

That’s like power washing 2-3 houses per month or selling a few pieces of furniture each month. It’s extra work, but money doesn’t fall off trees.

Rent Out Unused Space

One of the most effective ways to generate extra income is by renting out unused space in your home.

Whether it’s a spare bedroom, a basement, or even a parking spot, there are plenty of opportunities to monetize these areas and boost your savings.

Platforms like Airbnb make it easy to list and rent out a spare room to travelers. Depending on your location and the demand, you can earn a significant amount of money each month.

For example, renting out a room for $50 a night can bring in over $1,500 a month if you have a steady stream of guests.

If you have unused parking space, consider renting it out through apps like SpotHero.

This is particularly lucrative if you live in a busy city or near an event venue where parking is scarce. Even renting out your driveway for $100 a month adds up to $1,200 a year.

Before you start, make sure to check local regulations and any rules set by your homeowners’ association. Ensure the space is clean and welcoming to attract more renters and positive reviews.

Cut Subscription Services and Become a Super Saver

You don’t have to make a lot of money in order to save a lot of money.

Those little elderly couples who save all their change and are annoyingly frugal with their money? That’s why they’re all secretly loaded. Shit adds up.

Achieving your savings goal of $80K for a down payment in three years requires a disciplined approach to spending.

One effective strategy is to adopt a super saver mindset, which involves cutting unnecessary expenses and making deliberate choices to maximize your savings.

Start by evaluating your current expenses, particularly subscription services.

Streaming platforms, magazine subscriptions, gym memberships, and other recurring charges can add up quickly.

Canceling subscriptions you don’t use or need can free up a significant amount of money each month. For instance, cutting $100 in monthly subscriptions saves you $1,200 a year.

Here’s another pro tip. If you haven’t in years, go get a new debit card. You’ll automatically be free of all hidden subscriptions.

Next, look at other areas where you can reduce spending. Cooking at home instead of dining out, using public transportation instead of driving, and buying generic brands instead of name brands are practical ways to save money.

Small changes in daily habits can lead to substantial savings over time. For example, saving $5 a day on coffee and lunches adds up to $1,825 a year.

Additionally, consider implementing a strict budget to track your spending and identify areas where you can cut back further.

Use budgeting apps or spreadsheets to monitor your progress and ensure you’re staying on track.

By adopting a super saver mentality, you can potentially save an extra $500 a month, or $6,000 a year.

Combined with other savings strategies, this approach significantly boosts your ability to reach your $80K down payment goal within three years.

Let’s Do The Math: Piece By Piece To $80K

Let’s break down the calculations to illustrate how you can save $80K for a down payment over three years. By using a combination of the strategies outlined, you can see how achievable this goal is.

High-Interest Savings Account:

- Monthly Contribution: $750

- Annual Contribution: $9,000

- Interest Earned at 2% per year: Approximately $180

- Total Savings in 3 Years: $27,540

Monetize Your Hobbies:

- Extra Monthly Income: $500

- Annual Income: $6,000

- Total Savings in 3 Years: $18,000

Rent Out Unused Space:

- Monthly Income: $500 (e.g., renting a room or parking space)

- Annual Income: $6,000

- Total Savings in 3 Years: $18,000

Take Advantage of Employer Benefits:

- Annual Contribution to ESPP or Bonuses: $2,000

- Total Savings in 3 Years: $6,000

Cut Subscription Services and Become a Super Saver:

- Monthly Savings: $500 (cutting subscriptions and other unnecessary expenses)

- Annual Savings: $6,000

- Total Savings in 3 Years: $18,000

Total Savings Calculation:

1. High-Interest Savings Account: $27,540

2. Monetize Your Hobbies: $18,000

3. Rent Out Unused Space: $18,000

4. Employer Benefits: $6,000

5. Super Saver Mentality: $18,000

Grand Total in 3 Years: $87,540

By combining these strategies, you can even exceed your $80K down payment goal, providing a buffer for any unexpected expenses or additional investments.

What’s most enlightening is how much you can save up simply by cutting back and exposing hidden costs and subscriptions you’ve been paying.

The BMM Takeaway

If you buy a house right now in August 2024, you could be overpaying by up to 20% because of the market.

So instead of buying now, grind it out a little longer and make your entire personality about saving money.

You’ll be the most annoying person when the check comes around at dinner, but you WILL get that house goddammit.

Don’t give up. You deserve a nice, new house, just like the generations before us got to have, so just beat the odds and make the money.