Buying a home is an extremely important step in life, for a variety of reasons.  When we buy a new home we actually decide where we want to raise our families, and where we want to live for an extended period of time.  Most people tend to feel pressured once they make the decision to buy a new house.  Some can be even more stressed if they have the monthly income required to pay the mortgage but do not have the money for the down payment needed to get a loan.

Luckily, there are ways to raise the required money for the down payment and avoid the stressful situations that appear when considering to buy a new home.  Below, you will find ways to raise $50,000, but you can always double this amount if you work hard enough.  The strategy can be scaled however you see fit in order to suit your situation.

Now, before moving forwards, it is important to understand that you need to have the right bank account in order to be able to save money effectively.  A lot of people tend to hold on to their traditional bank account instead of opening an online one and this restricts their ability to save money.  Look for ways to open an account with high interest and low fees.  Once you do this, you can move on to actually putting the strategy into practice.

1. You need total commitment from your spouse

As you might have expected, both you and your spouse need to be on the same page if you are going to raise the money that you need.  Talk to him or her and make sure that you are both working together on this and that you support each other.  Doing so will not only help you achieve your objective but also help you keep stressful situations under control.

Commitment is essential, as both of you will need to make certain financial sacrifices and alter your shopping habits in order to reach your goal.  If you are the only one trying, then it may be more difficult (if not impossible) to save any money, and you may reach a point when you will consider that it is easier to give up.

Talk about how this change would affect you and what you should give up.  Once you’re on the same page, then you can move forward with the plan.

2. Set Monthly Goals

If you want to raise $50,000 over the course of two years, then you will need to save $2,084 each month.  Do the math and be as exact as you can.  Setting monthly goals is extremely important due to the fact that it will enable you to track your progress and to correct any problems that may appear in your plan.  You can do this by using a free online service such as Personal Capital, which allows you to link your bank and investment accounts and then gives you a full picture of all your finances.  It will also give you the option to analyze how much you save each month or what is preventing you from doing so.

While $50,000 may appear to be too much money to actually save up over the course of two years, $2,084 per month will be more manageable.  Keep in mind that you always need to split difficult tasks into small, easier objectives.  The smaller the steps you have to take, the easier the overall task will seem to be.  If things still seem to be too difficult, don’t worry, there are a lot of things that you can do in order to feel more comfortable with this objective.

3. Identify what resources you can use.

• This next step is vital.  Take some time to brainstorm together and think of how you can actually accumulate the $2084 each month.  If you’re not sure where to begin, here are a few ideas:
• Try to cut the amount of money that you spend;
• Consider taking a side job, or a part-time job;
• Think about the possibility of suspending your retirement plan contributions until you achieve your objective;
• Look at ways to refinance and reduce the cost of debt;

There are a lot more ways in which you can reach your monthly goal.  You just have to take the time needed to make a plan.  Now, let’s take a look at the most obvious method of saving money: cutting the amount of money that you spend on a monthly basis.  Start by making a list of all your expenses for the last 3-4 months.  This includes everything from groceries and clothes to office supplies and magazine subscriptions.

Now highlight all the expenses that you feel that could be eliminated.  Be aggressive and keep in mind that the more you cut, the more you save.  However, don’t cut the money that you spend on medication or any other items that are vital to your well-being.

It is important to look at the expenses from the last 3-4 months because some bills don’t come every month, and you should include them into your plan.  As you review your past expenses, you will understand how you spend your money.  The best part of this process is that it will also help you better manage your finances after you buy the new house.  Any amount of money that you can save is good.

Now let’s look at the possibility of a side job.  Having multiple streams of income is something extremely useful regardless of the fact that you need to raise money or not.  Also, if you start now, it will prove to be useful even after you will have bought the house.

You can try this with a weekend side gig, and grow it over time into a proper source of income.  For example, if you start a business on the side and it brings you $500 per month, the profits earned from it will increase as time passes.  However, what if it does not generate any profit?

In this case, you are left with two possible courses of action.  The first is to delay launching the business and get a second job, or you can work on building it in order to generate income and also encourage your spouse to get a second job.  Finding easy jobs that pay $500 per month shouldn’t be hard, and if you both get side jobs, you will have reached $1000 that you can save, without too much trouble.

Now let’s think about debt.  If you are stuck with an expensive credit card debt or student loans, you could try to get the bank to refinance it and free up money that you can then use for the down payment.

If you, for example, owe $15,000 and are paying 12% on this money, you may be able to refinance the debt and drop your cost to 6%.  This means that you would be able to save $900 every year.  It may not seem like a lot, but in situations such as this one, every bit counts.

The last thing that you should consider is your retirement plan contributions.  While it is generally useful to make the payments regardless of the situation, in this case, an exception could be made, for the greater good.

Keep in mind that your end goal is to save $50,000 over the course of two years in order to buy a house, however, it is more important to stay focused on your immediate goals of saving $2084 per month.  This can be achieved by spending less and/or getting a side job, but if you also stop paying your retirement fund contribution for a while, you will be able to recover.

Having said that, you should also keep in mind that your credit score is extremely important in determining what your mortgage rate will be.  Check your report and determine if your credit score is OK.  If not, then you may want to consider fixing it or outsourcing the project.  Either way, it is important to keep an eye on this score and to keep things under control.

Luckily, the two years that you have to save the money needed to buy a house, also give you time to work on your credit history and make sure that your mortgage won’t be through the roof.

If you do this over the course of the two years, you will be able to keep your score high without much work.  This may even turn into needing less money for the down payment, which would reduce the money that you need to raise.

• 4. Automate as much as humanly possible

Moving on from the monthly savings goals that you need to have and identifying the resources that you can use, let’s talk about the need to automate things.  First, go to your bank and ask them to take out $2084 out of your bank account and deposit it in a special savings account.  This way you won’t miss any months, and you will be able to relax, knowing that the money will practically be saved automatically.

You should also consider automating all of your bills.  This will force you to think about how you are spending rather then spend and do everything that you can to come up with the money needed to pay your bills.  This may not seem like much, but it’s a very effective strategy to help you save money.

Now, some of the people who do this, still spend a lot of money and then use their savings account in order to pay the bills.  This defeats the purpose and will take you back where you started.  Try to spend less in order to save more. This means that you should force yourself by whatever means possible to keep your expenses under control.

5. Evaluate and do the necessary adjustments

The next step is to look at how you implemented these changes and to keep an eye on any unexpected events that might occur and affect your money saving strategy.  If you ever come to the conclusion that something is not working as it should, or that you are having a hard time keeping up with all of these things, then take a moment to relax, and re-adjust your plan.  It’s not the end of the world if you have to work for a little longer in order to raise the money that you need, or if you have to buy a slightly smaller home because you only raised $40,000.  Either way, raising this amount of money is an awesome feat and it’s better than doing nothing at all!

While two years may seem to be a long period of time, the months will pass in the blink of an eye, and many of the practices that you get used to now will prove to be extremely useful even after you have your own home.