The first step to getting yourself into financial shape to buy a home is to know what you make and what you can spend. Seems simple enough but there are items we spend on weekly, monthly, semi-annually & annually that some items may be left off the list of expenses.
First, sit down and write down all of your household income. This to include, Current take-home pay for all family members, child support or alimony, pension and/or social security, disability income, interest / dividend & any other income you are aware of. Total up the monthly income and write it down.
Next, write down all of your expenses that you can think of. Most of us have the same expenses but there may be variations from household to household.
Here are a few to get you started: rent/mortgage, electric, water, gas, groceries, health insurance, disability insurance, life insurance, car insurance, homeowners / rental insurance, car payments, other loan payments, student loans, credit card payments, average maintenance on vehicles, clothing, personal care products, dining out, medical bills, household goods, recreation / entertainment, pool care, hair cuts / salon, child care, pet care & food, education, charitable donations & miscellaneous expenses.
Total up what each item cost you per month. You will have to average your annual expenses and divide by 12 months.
If you have money left over at the end of each month, you can allocate those funds to savings if you do plan to purchase a home in the future. If you do not have funds left over at the end of each month and you still have expenses to pay, you will need to trim your spending starting with the not-so-necessary items first.
This is also a great way to see how much money you can apply to credit card debt or car loans each month without worrying about paying down too much or too little.
It is always a good idea to get control of your money, manage it & manage it well!
For more information regarding obtaining a mortgage, buying a home or budget basics, call JoAnn Young 321-243-4917 or email me.
