Debt Advice: How to Make Home Ownership AchievableApr 23, 2019
A word of advice: your debt is holding you back. Not just in your day-to-day life, it’s also keeping you from achieving those medium and long-term money goals. You know, like saving up a down-payment, starting a family or adding to your rainy-day fund. I know, it can be a tough pill to swallow, but the sooner you address your debt, the sooner you can take steps to move forward on those goals.
Step 1: Identify your priorities
Is home ownership in your five-year plan? Do you have a five-year plan? Write out a list of your short, medium and long-term goals using this financial goal calculator, along with how much each one might cost. For example, if you’d like to buy a home in the next few years, how much will you need to save for a down payment? Have you compared homes in your area to see what’s affordable? Will you be starting a family in the next five years? Include any significant life goal, then take these goals into account when outlining your priorities.
Step 2: Create a budget to achieve your goals
Once you have an idea of how much your goals will cost, you need to figure out how much you can put toward those goals each month. This is also the time to address any outstanding debts that are eating up your monthly cash flow and snowballing. Here are a few ways to deal with it:
- Learn about debt consolidation. This form of debt combines your high-interest credit cards in a lower-interest consolidation loan. You’ll pay less interest and make one monthly payment.
- Seek debt advice. Speak to a reputable non-profit credit counselling agency or book a free information session with a Licensed Insolvency Trustee to go over all your debt relief options.
- Compare your options on your own with our online repayment options calculator.
Ok, back to budgets. Make it easier on yourself by downloading a budgeting app or jot down your budget using our worksheet. Once you see your monthly expenses in front of you, you may find unnecessary expenses to eliminate so you can pump up your savings.
Step 3: Get creative
When you’re ready to buy a home, be choosy. And, remember that you don’t need to buy a home at the high end of your qualification limit. Take a look at different neighbourhoods that offer cheaper sale prices that are still close to the amenities you need. Consider sharing a residence or renting out rooms to bring in some more money per month while living your home ownership dreams. You might also be able to qualify for an income property such as a duplex and live in one half while collecting rent from tenants. Condos are also a good way to get in on home ownership while keeping prices more affordable and enjoying a few perks such as snow removal and lawn maintenance — just keep an eye on those condo fees.
Step 4: Stay motivated
It’s easy to lose steam, especially when progress is slow. That’s when you need to rally your support system and remind yourself exactly what you’re working toward. Do this by creating some visual reminders, such as a dream board that outlines your goals. Or, follow social media accounts that inspire you to pursue your dreams without breaking the bank such as Give Me Back My Five Bucks. The point is, everyone has setbacks, but the important part is not to lose sight of your goals and keep on moving!
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