Forking over enough cash to pay for an entire home may seem impossible if you are not a home buying company, and many people are trying to save for emergencies and paying off debts. However, it’s not impossible, and you can follow these three steps to achieve paying in cash for your dream home.
Step #1: Make Sure Your Income is Freed Up
Saving to buy a house is definitely difficult, and that’s a fact. You’ll absolutely need every dollar you can spare in order to pay in cash, and your biggest tool for building your wealth is your income. To free your income, you need to take care of all your debt. Once you’ve erased your debt, save up three to six months’ worth of expenses as fast as possible; you don’t want an unexpected emergency or repair to throw you off course. A full emergency fund will ensure your home is within reach.
Step #2: Lock in Your Target
You won’t keep being motivated to pay in cash if you don’t have a goal to attain. It’s very important that you figure out how much you’ll be able to save, and when you can achieve the number. For example, if you want to save $100,000 to pay for a home, divide that by how much you can realistically save each month to see how long it’ll take. Can you save $1,000 per month? It’ll take you eight years to hit that $100,000 mark. $2,500 per month? About three years. You’ll have to really crack down on your budget. Then, meet with a real estate agent to see which homes you’ll be able to buy with your cash. When you think you have a date and an amount, write these numbers down and stick it up as a reminder of your goal.
Step #3: Have an Adventure
The buying process will be different for everyone. You should enjoy the process; keep in mind that you’re very in control of your own path. For example, some people start small. You might buy something that needs some renovating but is really cheap. You can purchase it at a low price, take several years of renovation, and put it back on the market for three times the price. Or, you can size down from living large. Big homes are great, but they come with high costs of maintenance and large mortgages. You can sell your big home and use what you earn to pay for a smaller house or condo in cash. A smaller place may give you freedom you didn’t realize you needed.
There are other options available, as well. You can make your way up; maybe you couldn’t pay 100% in cash your first time, but you can always try again. For some people it takes three or four home ownerships before they’re able to finally pay in cash. In the end, you might also have to put a pause on a lavish lifestyle and live below your means for several years. Some people work multiple jobs or live on only one income while they save the other income. Other people stick to a very strict budget or live with their parents or other roommates for several years as they save. No matter what you choose, it’ll be worth it in the end.