In order to receive the best possible interest rates and to avoid private mortgage insurance, it is smart to have the biggest down payment possible before taking the plunge. However, this is much easier said than done! At our age we already have student loan debt, car payments, monthly rent, credit card bills and living expenses with not much room to save thousands of dollars each month. How can you save thousands of dollars for this next purchase when you have other expenses and bills?

A lot of my friends are at the age where they are starting to weigh the pros and cons of renting vs buying. For most of them the down payment is what holds them back to making a house buying purchase. Jake and I would like to buy a house in the Spring of 2017 when our lease is up at our condo.

To get started with your goal of saving for a 20% down payment you will first need to set a timeline. Once you have decided on the estimated amount you need to save, you can gauge when you might be ready to buy. Determine how much you can set aside each month, then figure out how long it will take for your savings to add up to a down payment. To save $20,000 in two years which will buy you the median priced house of $100,000, you’ll need to save $833 a month for the next 24 months.

After you set a timeline you should create a savings account that will hold only savings designated for your new home. You should already have a 6 month emergency fund established before thinking about a down payment. I talked about this in a previous post about creating separate savings accounts through CapitalOne360 in order to help keep you organized and help you track your progress. Jake and I have each created an emergency fund and a house down payment account and hope to both be debt free while meeting our goal for a 20% down payment and 6 month emergency fund by the beginning of 2017 before we decide to purchase our first home.

After designating a separate savings account and figuring out how much you will need to save each month you might have to make a few lifestyle changes in order to save the right amount each month. Here is a few suggestions that will help you add to your savings:

1) Going from a two-bedroom to a one-bedroom apartment can drop your rent by 25 to 30 percent, depending on where you live. By downsizing and downgrading your living situation you will be closer to your goal

2) Another possible lifestyle change is to bring in more income by working overtime if possible or taking on another job. Even a weekend job making $10 an hour for 8 hours can add up to $320 extra dollars towards your down payment in one month. That’s almost an extra $4,000 dollars in a year!

3) Also consider cost-cutting such as selling your current car and trading down to a lower-cost vehicle depending on how much you are paying for your car payment a month.

4) Some of the easier expenses to reduce or eliminate include new clothes, shoes, and other fun items that are tempting to buy; by cutting out your daily expenses like your morning specialty coffee at Starbucks you can save $84 extra dollars a week if you purchase a $3 coffee 7 days a week; cutting back on driving can save on normal wear and tear purchases and cut down on your gas and parking expenses

5) Canceling or downgrading amenities you don’t need, like cable TV, can help you save (and many shows are available for free online plus a Netflix subscription is only $10 a month).

6) Monitor your spending online. You can save a lot by tracking your finances and cutting down on random spending. I always wondered where all of my money was going and had no idea how much I was actually spending a month until I signed up for Mint.com.