Smart Moves by Ellen James Martin


In many parts of the country, home sales are rising, the supply of available properties is shrinking and the market is again tilting toward sellers. That's a source of frustration for aspiring homeowners who are tight on cash.

"Cash is king when it comes to home-buying, and that's always been so," says Mary Kuehn, a long-time real estate agent affiliated with the Council of Residential Specialists (

Before she'll take any buyers on a property shopping tour, Kuehn insists they first see a mortgage lender to assess their readiness to make a purchase. This is what's known as the mortgage "pre-approval" process. Often, first-time buyers emerge from such a meeting with the realization that they lack sufficient savings for a down payment and closing costs, not to mention moving expenses.

Making an all-cash offer -- the ultimate competitive bid -- is beyond the reach of most first-time buyers. But saving for a down payment and related costs is possible for many who have steady jobs and a systematic approach to savings.

Here are a few pointers for buyers:

-- Evaluate your attitudes about spending.

Financial planners say there are many parallels between the struggles of dieters trying to cut calories and the struggles of savers. In both cases, emotional impediments are often to blame for lapses.

Shawn Koch, a planner affiliated with the Garrett Planning Network ( says many home-buying aspirants "come to financial planners hoping for a miracle. But we're not miracle workers."

One approach to helping overcome emotional barriers to saving is by reading up on the topic. A good place to start is "Money Harmony" and other books about financial psychology that are co-authored by Olivia Mellan and Sherry Christie.

"The reality is that most people have to get into 'hunker down' mode before they can become serious savers, and that means an adjustment in attitudes," Koch says.

-- Begin with an inventory of your current financial situation.

A major impediment to saving is uncontrolled everyday spending. But before you can decide how to reallocate your funds, Koch says you need to review where all your money has gone for at least one to three months. This can be done either with pen and paper or with such online personal finance tools as Mint ( or Quicken (

An exhaustive review can bring surprises. For example, Koch says many of her clients are shocked to see how much they're spending on restaurant meals, coffee breaks and takeout food.

"Over time, those small sums really add up," she says.

Doing an inventory of spending is laborious because you must sift through both credit card and checking account statements. And for cash expenditures, you'll probably need to make estimates, a taxing exercise. But although the entire process can take the better part of a weekend, Koch says it's an essential element in your search for potential areas of savings.

-- Create a spending plan that lets you save for your home-buying goal.

Because cost-of-living increases continue to outpace income gains, it's tough to trim expenses. Still, Koch urges savers to examine their largest outlays, including regular spending on food.

"My clients know that restaurant meals are expensive. But grocery store food can also add up fast," says Koch, who recommends that clients buy fewer processed foods, do more home cooking, monitor food waste closely and consider taking bag lunches to work.

Commuting costs also put a big dent in many budgets. So Koch advises savers to challenge long-held assumptions about car ownership. For instance, she recommends they ask themselves if they could get by with public transportation, if only until their savings goal has been met.

"To meet your home-buying objective, you may need to cut out a car," she says.

Those willing to surrender ownership of a car might wish to join one of the car-sharing services now available in an increasing number of U.S. towns and cities. Such companies -- which include Zipcar, Enterprise CarShare and Car2Go -- allow members to reserve a vehicle from their smartphone. They're designed to serve those who need only occasional use of a vehicle, which is often sufficient for people who rely primarily on public transportation.

Koch also recommends that savers examine cellphone bills.

"Phone charges are one of the fastest-growing items in the budgets of many young people. And many people think they need the newest phone upgrade as soon as it comes out," Koch says.

For those who could use some guidance in this process, Koch recommends the latest edition of "The Budget Kit: The Common Cents Money Management Workbook" by Judy Lawrence.

-- Enroll in an automatic savings plan.

Are you one of the millions of Americans who live paycheck to paycheck? If so, you might think it's impossible to get by if a chunk of money is taken out every time you get paid.

But financial planners say automatic withdrawals are the answer for many who aren't methodical savers. And surprisingly, they say those who have direct debits taken from their pay rarely miss the money. Meanwhile, their savings accounts grow quickly.

"The idea of an automatic savings plan is that the money rolls in without any proactive steps on your part. That's a huge advantage for anyone trying to save for a house," Koch says.

EDITOR'S NOTE: In last week's column, the website of real-estate author and blogger Michael Connerly was incorrect. It is We regret the error.

(To contact Ellen James Martin, email her at