No magic bullet when saving for a deposit

Bank

Don’t you wish there was some hidden secret that you didn’t know about that will magically stockpile your money so you can buy that ever elusive home. The sad fact is that it doesn’t exist. I know, I’ve looked everywhere J

Throughout my blog here you would have read many stories about saving and paying off debt and the closest thing I can find to ‘the secret’ is SACRIFICE. If you earn $1,000 and you spend $1,000 you will never move forward without sacrificing something.

Unlike newbies to the property market I am not eligible for the First Home Buyers Grant, so no free money for me. Instead I am faced with the gruesome task of living within my means and putting that little something aside for the future goal of breaking out of the rent cycle. AND not only is it about saving for a deposit, the legal fees that come with purchasing property can add a substantial brake on your efforts, not to mention the council rates on your new purchase. Okay, I did mention that!

If the deposit you are planning on is less than 20% of the property value then you would also expect to add roughly another $10,000 to cover the legal costs including stamp duty (varies from state to state), mortgage insurance (that protects your bank if you don’t pay your mortgage, yes you pay their insurance), search fees, bank fees etc.

How much you are willing to sacrifice in the short term will determine your long term gain. Short term pain for long term gain, as it’s known. Let’s say you made the ultimate sacrifice to remove the sports channel from your pay TV account and can now save $60 per week. Will it be enough to save for your home?

Weekly Saver

The question is: How soon do you want your home?

Deposit calc

I am guessing you don’t want to wait ten years or more. So the trick is to sacrifice a little more. Sacrifice can come in many forms. It might mean giving up some comforts but it also might mean taking on more responsibility like working an Overtime shift or taking on a second job for the short term. How much you’re willing to sacrifice means ‘time saved’. Looking at the scale above, on a $200,000 property, if you can double your sixty dollars and save one hundred and twenty; you halve your time to five years.

Check out my FREE download section for your own copy of my Saver Chart.