Do you dream of owning a vacation home? What’s your ideal setup? A quiet place in the serene mountains, a lakeside cottage or a beach house?

Owning a vacation home allows you to escape the madness of the city for some relaxation, without the hassles of finding and booking accommodation. When you decide to retire, you can sell up your primary residence, and move to your vacation spot.

However, a vacation home may seem like a fantasy for many Americans. Most people are dealing with paying down their existing mortgage on their family home or apartment. The thought of taking a second mortgage for a family home may leave you wondering how you could ever afford to find the money for this lifestyle upgrade.

It may surprise you to learn that you may already be able to afford a vacation home. Every year, we spend thousands of dollars on unnecessary items that we don’t need. By readjusting your finances and spending habits, you could have the down payment for a vacation home in less time than you think.

Read: How to Save Up for Big Purchases: Complete Guide

Here are the eight best ways to save up for a vacation home. In a few months, you could be closing the deal on your new real estate.

1. Invest in a Mutual Fund

In some cases, it may take you a few years to save enough money to cover the down payment on your new vacation property. You can structure your savings, and receive the best return on your money, by investing in a mutual fund.

A mutual fund will pool money from multiple investors. An account manager has sole control over how the fund invests the money. The manager then uses the funds to invest in a portfolio of stocks and bonds. Some mutual funds may also invest in other asset classes, such as currencies, commodities, and property. However, for the most part, mutual funds prefer equities and bonds as the primary asset classes to build a portfolio.

You have no control over how the fund manager invests the money, and it’s their job to make sure your money grows every year. Most mutual funds make a net return of between 6 to 11-percent per annum, and this money grows exponentially as long as you leave it in your investment account with the firm.

By pooling investors’ money into one account, the fund manager gets the advantage of increasing their buying power. This strategy minimizes risk while allowing the manager to diversify the assets in the portfolio to further reduce risk.

Read: What is a Mutual Fund? And Should You Invest in One

2. Cutback Your Expenses

Where are you spending money, and what are you spending your money on every month? Reviewing your financial behavior may lead to some surprises. Try to cut back on any unnecessary purchases, and ask yourself if you want your vacation home, or the item your holding in your hand at the checkout line. If you save money wherever you can, it helps you reach your goal of a down payment faster.

Examine your spending habits and reduce your expenses as much as possible. If you always eat your lunch at a local fast-food restaurant, consider packing your lunch or skipping the meal. If you’re spending $10 on lunch every day, that’s $300 per month or $3,600 per year.

With this example, it’s easy to see how small amounts of money spent frequently, add up to significant expenses over the year. Think of how much money you could save if you practiced the same strategy in other areas of your life.

Do you need that second or third Starbucks in the morning? Are you paying for two streaming services when you only use one most of the time? Eat out less with the family, tell them you’re saving for a vacation home, and the kids will gladly sit out the occasional pizza night.

Read: The Complete Guide to Living Below Your Means

3. Stick to Your Monthly Budget

Every American family should have a budget. A budget controls your cash flow and expenses over the month, and it’s a guideline to ensure that you are meeting your financial goals. When you’re saving for a vacation home, your budget is more critical than ever.

Sit down with your partner and examine every area of your budget. Trim as many expenses as you can until you have enough savings to start to put money aside for your vacation home. You need to account for every dollar you spend during the month. Your budget can help you identify if you are on track to meeting your savings goals.

A budget is a useful tool in controlling your monthly expenses to meet your financial goals. However, it’s only as effective as its implementation. If you draw up a budget, stick to it, regardless of the financial setbacks that occur in your day-to-day life. By remaining diligent with your spending, and adhering to your budget, you’ll have the money for your down payment in no time.

Read: How to Make a Budget: Complete Guide for Beginners

4. Downsize Your Cars

What kind of car do you drive? If you’re getting behind the wheel of a gas-guzzler every morning, it costs you your vacation home. While oil prices are low and have been for the past 4-years, rising geopolitical tensions could see oil double in price. Owning an SUV will end up tripling your gas bill if economic pressures start to affect the oil price.

A car is a status symbol in America, and many people what the best car that they can afford. There’s nothing wrong with owning a new SUV; it looks great on the road and turns heads. However, if your goal is to save for a vacation home, then reconsider buying an expensive vehicle.

If you own an uneconomical vehicle like an SUV, you’re pouring money into your gas tank every time you fill up at the gas station. Why use twice the amount of fuel when you can sell your car and lease something more affordable and consumes less gas? If you implement this tip, you could save yourself thousands of dollars on your gas bill over a year.

If your household has more than one car, consider selling the second car to increase your vacation home savings fund. If you don’t use two vehicles very often, then why pay for the maintenance and gas bill for two cars? Consider carpooling with friends or colleagues to get to work, and save yourself the lease and fuel costs of using your vehicle.

Read: The Minimalist Living Lifestyle: Complete Guide

5. Ask Your Insurer and Bank to Adjust Your Rates

If you own cars and a home, then you’re paying insurance premiums every month. If you have a long-standing relationship with your current insurance company, then you might be eligible for a discount on your monthly premiums.

Insurance companies will often reward long-standing clients for their support by reducing their rates. If you remain accident-free for 5-years, most insurance companies will lower your premiums to retain your business. If you are a good driver, and your insurance company refuses to budge on your premiums, look around for other insurers.

If you start to compare quotes, you’ll probably find that you can get a cheaper policy from other companies. Saving a few hundred dollars on your insurance premiums adds up over the year,m and puts you one step closer to buying your vacation home.

Another area where you can save money on rates is with your credit card company. If you have a good payment history with the lender, and a good credit score, you could negotiate your current APR with the lender. Banks like to know that you are responsible with credit, and they may reduce your APR to keep your business.

6. Make More Money

The best way to save for your new vacation home is to earn more money. By increasing your income, you skyrocket your savings rate, and you’ll be closing on that piece of real estate in no time at all. Parents with kids don’t want to spend too much time away from their family. If you have to work all day, and then head to a night shift, you’ll never see your kids.

When children have no adults around to provide them guidance in life, they start to lose their way. Kids without any adult around may end up dabbling in self-destructive behaviors like drinking, smoking, and using drugs. If you and your partner leave the kids to go to work in the evenings, it may end up costing you dearly.

Instead, make use of the internet to earn a secondary income. There are countless opportunities online to make a few hundred dollars extra each month. Register for a site like Fiverr or Freelancer, and you’ll find thousands of “gig economy” jobs available at your fingertips.

By working online, you get to stay around your family and work from the comfort of home. You could proofread or write articles, edit videos, or create designs. By earning more money, your dreams of a vacation home will materialize faster than you expect.

Read our Making Money Guides:

7. Review the Equity in Your Home

You may already be able to afford your vacation home, and you don’t realize that you have the money available. If you have a mortgage over your current property, then it may have equity available that you can borrow.

If you take a $300,000 mortgage on your primary residence and pay off $50,000 over the first five years, then you now have $50,000 of equity in your home. Banks and mortgage lenders allow you to refinance this equity to a new term with a new interest rate.

You can then take the $50,000 in equity, and use it as a down payment on your vacation home. The lender adjusts your mortgage term so that you don’t experience any change in your monthly mortgage payments.

Buying a second piece of real estate is the best way to leverage the equity in your home, and expand your property portfolio. Banks are more likely to approve your refinancing deal if you tell them you are using the money to buy another piece of real estate. Refinancing transactions are available from numerous banks and private lenders, so shop around for the best deal you can find.

Some lenders may even offer you a lower APR on the new loan than you had with your previous mortgage. This reduction in APR gives you more free cash flow at the end of the month to put toward paying off your new mortgage early.

8. Stay Motivated

It could take you a few years to save enough money to afford a down payment on your new vacation home. With your goal so far away, it’s easy to lose motivation as to why you are saving your money. The vacation home may sound like a good idea now, but six-months into your savings goal, you may have a change of heart.

Keep yourself motivated while you are saving towards your goal. Take a few family trips to places where you want to purchase your house and check out the neighborhoods. Ask realtors to take you on a tour of the properties available in the area, and take plenty of pictures.

Spend time with your family looking at the pictures. Print them out and make a collage of your favorite vacation homes. Place the collage on the fridge, and it’ll remind you of what you’re saving toward every month.

The Final Word – Remember to Include the Closing Costs

Receiving approval for your mortgage is an exciting experience. Most people are so overwhelmed by the deal that they forget about the other costs involved with real estate transactions.

When you sign the paperwork for your vacation home, the lender requires you to cover the closing costs. These expenses could cost you anywhere between two and five percent of the value of the deal.

Make sure that you save up enough money to cover the down payment and the closing costs on your vacation home. It may take you a few months longer to reach your financial goal, but you won’t have to make a compromise.

Settling for a cheaper home because you don’t have the money to cover the closing costs could crush your dreams.

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