However, it's not impossible — it just takes a bit of dedication, a little sacrifice, and frequent reminders of the goal you wish to achieve.
These days, it's highly uncommon for anyone to not have a credit card or two. After all, it's the number one reason Canadians are in debt. These cards are wonderfully convenient and help us through tough times, but they also can create even tougher times if the debt load gets too high. Credit cards are generally high interest, thus making it difficult to pay down or pay off.
However, saving for a down payment is even harder if you have any credit card debt. Given the high-interest rates, it's ideal to pay your credit card debt off first so you can then focus on putting money towards your savings.
If you're unable or unwilling to start your savings after paying off credit card debt, then perhaps negotiating your interest rate down will help free up some extra cash. A 22% credit card can often be negotiated down to 12% if you pay a small annual fee. Despite the annual fee, you'll save hundreds — perhaps even thousands in interest each year depending on your spending habits.
This one may be obvious, but when we're financially comfortable we tend to spend more on entertainment and hobbies. We lose track of how much we're spending because it isn't something we're used to worrying about, but those expenses can add up over time.
Do you eat out more than once a week? Cut back to maybe dinner out only on Fridays. Do you buy your coffee every morning? Limit yourself to a treat coffee on Monday morning and make your coffee to go at home for the rest of the week. Maybe even skip your vacation this year and go with a staycation instead.
These little things may seem like small sacrifices, but when you add them all up, they can equate to a decent contribution to your down payment savings.
If you get bonuses, extra sales commissions, or even a salary increase this year, consider taking that extra money and putting it straight into your savings. If your base salary is enough to live on, there's no reason to spend that extra cash.
Alternatively, if you're comfortable investing this extra cash, consider placing it into a moderate to high risk TFSA (tax-free savings account). The rate of return is usually very decent over a short period of time (many of these investments are for one year), and due to the tax-free status of these investments, you won't lose any money when you withdraw. In fact, you'll gain quite a bit and add to your savings quickly.
Slightly related to reducing your expenses, you can also change how you spend your money on a regular basis. Many of the daily lifestyle things you do can be done in a much less expensive manner, freeing up some cash for savings.
If you love music, consider purchasing a subscription to a streaming service instead of buying entire albums. Do you love to read? Visit the library instead of buying books. The library also offers digital books so you can read them right on your tablet or smartphone instead of leaving the house to pick up a paper book. Do you buy new clothing regularly? Perhaps purchase pieces that are more mix-and-match friendly and accessorize instead.
If your spending habits are a bit stubborn, take cash out and limit yourself by leaving debit and credit cards at home. This will ensure you can't overspend.
One common household habit that creates an overspending spiral is smartphone data plans. Does anyone in your family tend to go over in data each month? Try to create new habits by using home WiFi instead, and turning off cellphone data for several hours a day.
Every small change helps save extra money for your down payment. It may seem difficult at first, but as you get into new habits, you'll see the reward in the bank and it will reinforce the changes you're making. Remind yourself often of the goal at hand, and it doesn't hurt to visit your favourite show home to help reinvigorate the dream.