Thankfully, our automated finances force us to put the money away, so we don't have to wait until the end of the month to see what we have left over to contribute.
MSN Money has a new article up, "How to come up with a down payment," that offers 12 ways to save money for house purchase.
- Set up an automatic saving plan.
- Get a gift from your parents, grandparents, other relatives or friends.
- Sell a car, boat, motorcycle, collectibles or other assets.
- Liquidate stocks, mutual funds, savings bonds or other investments.
- Allocate your income tax refund.
- Take a loan from your 401(k) retirement plan and repay yourself with interest.
- Withdraw funds from your 401(k) plan, subject to taxes and penalties.
- Collect on a loan that you made to someone else.
- Get a bonus from your employer.
- Explore homebuyer programs for public servants if you qualify.
- Apply for a state or local government down-payment program.
- Use a private down-payment assistance program.
While some of these make great sense — an automatic savings plan, setting aside a bonus and allocating your income tax refund — do they really expect someone looking for a downpayment to have a boat to sell?
I'd also warn against taking money from your 401(k); not only will you have to pay taxes or interest on what you take out, but you'll be losing out on any compound interest you'd otherwise be making.
What tips do you have for saving for a down payment?