Where can I get money for a down payment?
Saving for a down payment is a rewarding goal that relies on strategy and motivation. You will need to prioritize both your spending and your saving.
Listed below are a few tricks that will help you save some coin for the deposit while simultaneously managing your savings.
Decrease your Debt
Before you start focusing on your down payment, you should try and tackle your current consumer debt.
When paying off a credit card, line of credit or an overdraft, you will have to keep in mind that there are two ways you can narrow down your debt efficiently and with speed.
The Snowball Method
You will make minimum payments on all your credit items EXCEPT for the product with the lowest balance. You will put extra money onto that card, line of credit, overdraft, etc. in order to pay it off first. Once it is completely paid off, repeat the pattern by paying off the lowest and paying minimum to the others. This method evidently shows how fast you can get one debt out of the way with strategic spending habits.
The Avalanche Method
You will make minimum payments on all your credit items EXCEPT for the product with the highest interest. After it is paid off, you will continue to target the next product with the highest interest while paying minimum on the others until you are debt-free!
Downsize Anyway You Can
When it comes to downsizing , you have to think about realistic ways you are able to cut back in order to save money. This could include:
- Canceling subscriptions/memberships you don't use much (gym, meal kit delivery, streaming service, etc.)
- Decreasing your mobile phone/internet plan
- Cutting back on your utility usage (heat, A/C and gas)
- Getting rid of a vehicle in exchange for a transit pass
- Limit your leisure spending (eating at restaurants, going to movies, shopping, vacations, etc.)
Utilize Your Bank Accounts
Dig Into Your RRSP
When purchasing your first Home, you are allowed to take $25,000 from your RRSP. This money can be used for your down payment. If you want to take this route, you will have to repay that money within the next 15 years.
Tax-Free Savings Account (TFSA)
Any money you add into this account will be completely tax-free with no obligation to pay income tax. If you store your down payment in your TFSA, you can take it out and use it anytime with no restrictions.
Talk to your financial advisor about placing a percentage of your earnings, bonuses, commissions or tax refunds into your TFSA automatically with online banking.
Earn Extra Cash
There are different ways to receive fast cash on the side such as:
- Trading in worn clothes to a consignment shop
- Selling miscellaneous items on online platforms (Kijiji, Facebook Marketplace, eBay, etc.)
- Listing yourself as a local dog walker
- Apply to a food-delivery service like Skip the Dishes or DoorDash
- Become an Uber driver
With determination, there are tons of ways to earn a steady income with a side hustle.
Have any creative ways to save on a down payment? Let us know in the comments!