Smart Moves by Ellen James Martin

Saving For a House Doesn't Have to Be Hard

Some longtime renters have tried unsuccessfully for years to save money toward their dream of homeownership. What stops them? In many cases the problem is out-of-control spending.

"If your goal is to buy a house, compulsive spending can stop you from ever reaching that goal," says Judith Briles, the author of "Money Smarts For Turbulent Times."

Carried to an extreme, overspending can impoverish you and lead to broken relationships.

"Watch for red flags that you have a serious problem -- such as that you can no longer make your rent or minimum payments on your credit cards," Briles says.

In such severe cases, she says you may need to consult a therapist to help resolve your issues or join a support group such as Debtors Anonymous.

"In spite of economic problems in this country, a nice home is still a dream for people at all income levels. People still want the freedom and autonomy of owning a place that suits their lifestyle," says Judy Lawrence, a budget coach and author of "The Money Tracker: Find the Cash to Get What You Really Want."

Here are a few pointers for buyers:

-- Document your spending and then trim expenses where possible.

The technique of doing a budget, often called a "spending plan," isn't difficult, but requires close attention to detail, Lawrence says.

Before deciding where you can and can't curb your spending, you must first see clearly where your money is now going. You don't need an elaborate software program for this. Personal finance specialists say a pencil-and-paper system is often your best bet when creating a budget, especially if you're a novice at the process.

"Look at your recent checking account and credit card statements and then write down what you've spent for the last three months, breaking your expenses into two broad groupings: mandatory and discretionary," Lawrence says.

Mandatory costs include items like car payments and childcare expenses. Discretionary items include restaurant tabs and clothing outlays. After tracking your prior spending, search within the discretionary section for low-priority items that could be cut.

A couple who dreamed of buying a small but elegant 1920s-era bungalow found a number of expenses they could cut with little pain. The wife, a marketing administrator, slashed her clothing bills and her husband, a therapist, gave up his season baseball tickets. The couple also canceled their membership in a wine-tasting club and drastically reduced their restaurant spending.

The savings soon piled up, ultimately allowing the couple in this true story to replace a series of small spending pleasures with the much larger reward of owning their ideal city home, located near a verdant city park.

"A budget is simply a way to control small expenses now so you can savor bigger pleasures later," says Lawrence, who offers money management tips on her website,

-- Bypass budget busters on the way to your money goal.

Of course, it's not enough to create a spending plan if you don't stay on track and remain faithful to it. That means depositing money in savings every time you get paid and avoiding temptations to veer off-course.

Lawrence recommends that people trying to stay on a tight budget jot down all their expenditures as they make them. This should increase your awareness of where your money is going. Then make sure you enter all these expenses in your budget book.

Are you a shopaholic who gets a high from making purchases, but later wonders why you bought all that non-essential stuff? If so, Lawrence urges you to follow the "24-hour rule." When going shopping (for anything but food), leave your cash and credit cards at home. Make your selections, but allow yourself at least one full day to decide what items are truly essential and then return to the store to purchase only these.

-- Limit eating-out costs both small and large.

It's no secret that many people overspend due to frequent visits to coffee shops like Starbucks, a realization that prompted the chain to offer brews for frugal folks. But many people still remain unaware of how much they're spending for weekday lunches and fine dining.

Nearly every financial adviser recommends that clients take a close look at their "eating out" expenses. As Lawrence says, many people find this a black hole and realize, upon reflection, that more cooking at home could dramatically reduce their food expenses.

-- Contain your generosity, at least until you reach your savings goal.

Lawrence, who does one-on-one money coaching, also urges clients to be extremely watchful about another group of expenses known as "gifts." Birthdays and holidays cause many to let go of their purse strings for emotional reasons.

Before you buy any gifts, Lawrence suggests you write down what you intend to spend and then use the "24-hour rule" to stay within your shopping limits. Also, watch out for emotional reactions that could undermine your gift-giving plans.

"Many people give big gifts because they want to feel loved or appreciated, or maybe to gain attention. But this practice could seriously hamper your savings plans. Also, large gifts can make the receivers uncomfortable --especially if they can't afford to reciprocate," Lawrence says.

(To contact Ellen James Martin, email her at