Top 5 Ways to Stop Paying Rent
Ever-increasing house prices and soaring rents are making it harder for people to save for their first home. But if you’re yet to break out of the rental cycle and enter the owner-occupied property market, here are five key steps to stop paying rent and start paying off your own home.
1. Save like it’s going out of fashion!
It may seem like obvious advice, but many people simply fail to begin saving soon enough, or fall into the trap of spending too much on unnecessary things. They get used to a spendy lifestyle, and end up with new clothes and cafe venti lattes coming out their ears! Set up an automatic savings plan so that as soon as you get paid, a portion (around 50% would be ideal) goes into a high interest term deposit or online savings account. Then you can use the remaining 50% to pay the bills.
Remember that while you’re renting, you will have far less expenses as compared to if you owned a home. Not only is rent substantially cheaper than mortgage repayments, but you are also free of other home ownership expenses such as quarterly rates, body corporate fees, maintenance and other costs. Make the most of this by putting your extra cash into savings. Once you own a home, there is no turning back and you’ll have many extra bills, so save now while you still can!
2. Minimise your taxable income.
When tax time rolls around, be sure you’re making all the deductions you can. There is no point in giving your money to the government if you don’t have to. Find out what you’re legally able to deduct, if anything, and investigate other ways to reduce your taxable income, such as salary sacrificing a laptop or even a car.
3. Clear debts, budget and get your act together!
If you’re in debt, you need to focus all your financial energy on paying off those debts as soon as possible. Debt is a huge burden on your financial ability to save. Put simply, there is no point saving money and earning 8% interest if you’ve got debts which are costing you 18% interest. Pay off debts first, then put all the money you’re now saving into investments. Getting out of debt and getting your act together could be the best decision you ever make, and will set you on the path to owning your own home.
4. Move back in with your parents
If this is even remotely possible, it is probably the best way to save for a house deposit - assuming your parents won’t charge you too much rent! Living at home can help reduce your bills, and depending on the generosity of your parents you may not have to pay any rent at all. Also, it’s a great incentive to save as quickly as possible for your own piece of turf!
5. Get a second job
If you’re having trouble saving for a house deposit, the only way to reach your goals might be to increase your earnings. Assuming your day job is paying you a reasonable rate, you may not be able to get a pay rise, so looking for a second job to do on the side could be a great way to really boost your income. Doing work on the weekends, and if possible, from home, is a great way to get some extra cash without it affecting your lifestyle too much.
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