Question: What do lottery tickets, cigarettes and restaurant tabs have to do with buying your first home? Answer: Absolutely everything.
Over time, seemingly inconsequential cash outlays for such items can add up so high as to prove a real impediment to amassing the upfront cash for a home purchase, financial planners point out.
You may be loath to give up the pleasure of eating out two or three times a week. You may believe you're preordained to become a multimillionaire, if only you buy lottery tickets on a regular basis. And you may see breaking your two-pack-a-day smoker's habit as the hardest step imaginable. But doing all three could put you hundreds of dollars, if not thousands, ahead toward your home-savings goal.
"Being a homeowner adds so much to your financial life that it's well worth the minor sacrifices it might engender," says Jonathan D. Pond, a financial planner and author of several books on the art of cutting personal expenses.
Time and again, financial planners witness their clients' surprise when they realize how little expenditures, made repeatedly, can mount. You don't need to be a math whiz to see how the numbers multiply. All you need is an ordinary calculator.
Take smoking for example. Suppose you and your spouse each smoke a pack a day and that you're paying, on average, $2.25 a pack. That's $1,642.50 a year. Continuing to smoke could not only impair your health; it could also mean you have to stay several months longer in your rental unit.
Another eyepopper is restaurant tabs. "Many people don't think anything about the kind of money they spend at restaurants," says Mr. Pond, author of "1001 Ways to Cut Your Expenses," a Dell paperback. But if you and your spouse both work and each spend $5 a day on lunch, your lunch tabs could easily top $2,000 a year. Add to that a couple of evening or weekend restaurant tabs each week and you're into serious money. By brown-bagging and cutting down to one restaurant dinner each week, you could reach your home purchase goal months sooner, Mr. Pond says.
If you're a serious lottery player, you could also expect hundreds of dollars in savings if you reduce your habit to a dollar or two a week. Mr. Pond challenges you to look realistically at the odds relative to your desire to have a home. "Lotteries are a tax on the stupid," he says, "because you're just throwing your money away."
Here are other ideas for small savings that can add up to a big advantage for the prospective homebuyer:
* Reduce cable television expenses.
A cable subscriber who also pays add-on fees for such services as Home Team Sports or the Disney Channel can pay $50 a month.
Donald Lebowitz, a financial planner in practice for himself at the Rotunda in North Baltimore, suggests that home savers cut the cable frills -- or possibly even the basic cable service itself -- to save a few hundred dollars each year.
* Stop buying snacks on the fly.
There can be an astounding difference in the profit margin on snack foods bought in bulk from a supermarket or discount store compared with those purchased from vending machines, snack shops or concessions at recreation, entertainment or sporting events, Mr. Lebowitz notes.
Buy your soda, chips, popcorn, peanuts, candy, gum and other snack foods in quantity at low prices and carry them with you.
* Save on vacations by taking day trips rather than overnight jaunts.
It's remarkable how far you can go in a day if you plan ahead, get organized and start early in the morning, Mr. Lebowitz says. "You don't have to pay for a hotel or motel. And your only cost of transportation is your own car -- you don't have to rent one." Your savings will be especially great if you bring along your own food and picnic.
You might favor an exotic, faraway adventure to a trip to see the Washington monuments, Maryland's Eastern Shore or the West Virginia mountains. But, again, the longer-term pleasure of being a property owner could outweigh your near-term sense of loss.
* Think about your home goal on holidays, birthdays and weddings.
"Don't indulge people at holidays. Tell them you're saving for a house this year and they'll understand," Mr. Pond suggests.
Keep your eye on your house goal, as well, when people ask what you'd like for birthday or wedding gifts. "Tell them CASH," Mr. Pond says.
* Cut your car and commuting costs.
"Driving to work alone is a huge expense. And, while some people cannot avoid it by the nature of their jobs, an awful lot of people can," Mr. Pond says. Car pooling or taking mass transit for just a year or two could save you thousands in gas, parking, auto insurance and repair costs.
Even if you must have a car and commute solo to work, make it a secondhand car, Mr. Pond recommends. "The quickest way to lose $2,000 is to drive a new car off the dealer's lot," he says.
* Buy clothes at bargain prices.
If you can bypass pricey department stores or shopping mall boutiques, you will be rewarded, says John Andrew, a planner with the Financial Resources Group in Gaithersburg. Substantial savings await you if you buy at off-price centers that often sell merchandise of equal quality, he says.
You could save even more if you're willing to buy clothes secondhand. "If you can get past the social stigma, you'll have a lot of money to show for it," Mr. Andrew says.
* Butter up a rich relative.
You can save as hard as possible and still need to turn to an affluent relative for help, Mr. Pond says. Forty percent of first-time home purchases in this country are assisted by a family member, he says.
"If all else fails, you can send your rich aunt a Whitman's Sampler on her birthday," he says.