If you want to be smart with your money, staying out of debt is critical. Debt comes with interest attached, and paying interest is like paying for the money itself. This is redundant spending.

The conventional home mortgage is the most dramatic example of redundant spending as a result of interest. In a 30 year mortgage, at a 5% interest rate, you’ll likely pay for your home in full almost three times before the end of the loan term. That’s steep.

There are three ways to reduce this redundancy and save money.

Take out a mortgage with a shorter term or a lower interest rate.
• Pay off your mortgage early by making extra payments.
• Pay more up front with a higher down payment.

These solutions are intuitive. But better mortgage rates and terms aren’t available to everyone, and if you’re taking out a mortgage, your income may not allow for extra payments. The third option—starting off with a higher down payment—is the most effective one. It’s tricky, though. In order to make it work, you’ll need to save up a large sum of money before you even consider looking for a house to buy. Keep the following tips in mind as you save for your down payment.

  1. Identify your goals. Be intentional about your savings plan. Cut unnecessary spending from your budget. Remember, your goal is to buy a home. You won’t be saving up for this forever. During this chapter of your life, eliminate needless spending—such as excessive entertainment or shopping sprees—and put that money toward your future home.
  2. Open a separate savings account. Keep all your down payment money in a single account, separate from your other funds. This will help you avoid spending the money inadvertently, and it will help you track your progress as you save.
  3. Get a second job. Again, saving for a down payment is just a short chapter of your life. It may be draining to take on a second job, but if you’re able to put all your newfound income into your down payment account, you’ll have the amount you need in no time.
  4. Skip vacation for a year or two. A vacation typically costs a family several thousand dollars. Skip vacation for two years or so, and you’ll likely save a sizable amount of money—possibly even 2%5 or 50% of your total down payment.
  5. Start now. Saving money is a slow, steady process. Start as soon as possible, even if you’re only putting away a small amount at a time. Every little bit helps. If you wait until you’re “ready to start saving,” you never will.

About the author: This guest post was provided by Kyle, a content specialist at Lender411.com. Lender411.com helps homebuyers compare mortgage rates, find local lenders, and locate the best mortgage packages available.