For most people, housing takes a significant portion of their income. No matter how costly, the rule of thumb is you should never spend more than 30% of your income on housing. So, here are some tips on how to save money on housing expenses and keep them below 30%.
General tips on how to save money on your housing expenses
1. Move back home and live for FREE
Moving back with your parents might sound extreme. I’m assuming, however, that saving money is very important to you and that you’re willing to take any necessary steps to achieve your goal.
If moving back home is possible and reasonable, I would highly recommend taking this bold step, at least for a couple of months.
Living at home will save you 100% of your housing costs and will enable you to save more money fast. For instance, if your rent is $1000 a month, you’ll be in a position to save $12,000 in a year.
Saving such an amount is unfathomable to a lot of people. So consider yourself lucky to have wonderful and capable parents who would love to see you succeed.
Living at home is the fastest way to save a significant amount of money fast.
2. Live as close to work as possible
There’s nothing better than living within walking distance to your place of work.
Commuting is stressful, expensive, time-consuming, and annoying, especially if you live in traffic-prone areas.
When you live close to work, you can get more sleep and have more free time, not to mention the amount of money you can save. It’s even possible to go home for lunch.
3. Live with a relative/friend to save money on your housing expenses
If moving back home is not an option, move in with a friend or a relative.
However, unlike home, where accommodation is entirely free (wink wink), moving in with a friend will require you to contribute to some of the housing and utility costs.
The costs will, nonetheless, be nothing compared to living alone.
If you’re already renting an apartment of your own, rent it out and let the tenant take care of the costs.
You’ll then be free to live cheaply with a friend or a relative.
4. Move further away from the city
The further away you go from the city, the lower the rents and home prices.
However, moving this far will only be beneficial if it doesn’t increase your commuting costs.
If moving further away from the city saves you on housing but equally increases your commute expenses, it’s probably not worth it.
On the other hand, if you can still save a substantial amount of money by moving and still keep your commute expenses low, then go for it.
It’s, therefore, crucial to do your calculations right.
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How to save money on housing expenses if you’re renting
5. Negotiate your rent
It is a general assumption that rents are fixed. Your rent is not written in stone.
If you’re looking to rent in a particular area, find out about the rents befitting the location and see if you can negotiate down the rent with your future landlord.
Lease renewal dates also offer excellent opportunities to negotiate rent increases. If you’ve been an exemplary tenant, the landlord wouldn’t want to lose you. Additionally, finding a new tenant is costly and time-consuming.
6. Get a roommate
This tip is similar to tip #3, only that you’re the owner of the house/apartment and you’re looking to invite a friend, relative, or roommate to live with you and share in the costs.
If you don’t have a friend or relative to live with, consider finding a roommate yourself. Thanks to technology, finding one is now easier than ever.
A roommate will help pay a portion of your rent/mortgage and share in utility costs.
You’ll get to save about 50% of your housing costs with just this one move.
7. Move to a cheaper house/apartment.
If your monthly payments towards rent (or mortgage) are too high, then housing takes a massive bite out of your income.
Living in an expensive house means you have less money left to save towards a more significant financial goal and causes stagnation in life.
Don’t stifle progress in your life by living in a house that costs too much. Instead, move to a less expensive home or apartment complex.
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How to save money on housing expenses if you’re a homeowner
8. Buy less house
Getting a bigger house will result in a bigger mortgage, expensive insurance, higher utility bills, higher taxes, and increased maintenance costs.
Buying a smaller house will make everything cheaper. In addition to requiring less downpayment, a smaller home will save you so much more on monthly payments.
9. Refinance your mortgage
A lot of people think their mortgage rates can never be changed.
Mortgage rates keep changing. And you can negotiate for a better rate.
Getting a lower interest rate can significantly reduce your monthly payments and help you save money on your housing expenses.
Shop around and ask at least three lenders for quotes.
If you get a better deal than the one you currently have with your bank, go back to your bank and ask them to beat it or at least match it.
Remember, it’s important to maintain a good relationship with your banker. It’s especially crucial if you have plans to borrow more money in the future – for an investment property, for instance.
So while negotiating for a better interest rate, be aware of your future goals and plans.
If you don’t have any special relationship with your banker, you can burn bridges and move to the bank with the best offer.
10. Rent out spare rooms to save money on housing expenses
If you have any spare bedrooms, rent them out.
You might be surprised to find that the money you receive from tenants could cover most of your housing costs, if not all of them.
Short-term rentals such as Airbnb services are a great option too. While they require a bit more work, their earnings potential is higher than long-term rentals.
11. Review your property taxes
If you’re looking to buy a house, the cost of property tax is an important factor to consider before buying. Be sure to check how much in property taxes you’ll need to pay every year.
And also, check your property records at your local real estate assessor’s office to ensure that the details are correct. i.e., the size, number of rooms, and all other information.
If you’re a homeowner, you’ll receive your tax assessment every year. Always review it to check whether the calculations have been done right based on the details of your property. You have the right to appeal to get your assessment lowered.
The savings you could get from lowering your tax property can be significant.
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