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Coming out of college and getting my first full-time job, I am following these 5 rules to save up for a down payment on a condominium or house. My down payment goal is approximately $50,000-$55,000. I will total up the savings for each of my rules and give a grand total of how much money I save a year. To provide some context, I began my savings plan with about $10,000 of debt coming out of school. My full-time work started in August of 2011 and by November I was debt free and on my way to a down payment.
Think of the Bigger Picture
This rule is primarily about self-discipline. I would love to own the latest toy available, whether it’s a new phone, laptop or car part. However, I try to be more practical and look at the big picture. For example, I don’t need to purchase new shoes if I bought some less than a month ago or splurge for a new phone if mine is less than a year old. Abiding by these rules saves me about $2,000 a year.
Carpool
I wish I could do this more often, but I only carpool once a week. My commute is about 50 miles round trip with a vehicle that gets 25mpg. This is a total of 2 gallons per trip and 8 gallons a month. Combining this with a rough estimate of $4.00/gallon for the price of gas, I save $32 a month or almost $400 a year. If I carpool two or three times a week, this figure would grow significantly!
Brown Bagging
Very simple – I bring my lunch from home four times a week. I find this to be not only more cost efficient, but also healthier. On average, every lunch costs around $6-7 per meal, if not more. This means that I am saving around $28 a week on food alone, or around $120 a month. This totals to $1,440 a year.
Optimizing Credit Card Perks
I try to use credit cards that provide the best rewards. I don’t use frequent flier miles or gift certificates very often. However, I do have a need for cash. This is why I use the Chase Freedom card for most of my purchases, as it provides high cash back rates. After using it for four months, I accumulated nearly $120 worth of rewards. Over the course of a year, this totals to $360.
Got Coin?
This may seem like a very low source of savings, but I use cash quite often, so this adds up quickly. I often see people throw change away or not take it at all. Instead of taking this route, I put all my change into a jar and take it to my bank every 6 months. The reason I do this is to avoid any fees or percentages that local coin-exchange machines may charge. I have been able to generate about $300 worth of savings a year this way.
My grand total in savings is $4,500 a year. This may not be a huge sum of money, but this is almost 10% of my savings goal! So far, from the start of November 2011 to present day, I have saved almost $12,000. I have approximately $38,000 to go and if I can save about a seventh of this amount simply from following the rules above, I would be more than satisfied. I plan to continue abiding by this plan until I reach my savings goal of $50,000-$55,000.