Good morning everyone! This article is contributed by Tina Roth a personal finance blogger at PROFinance blog. She is commerce graduate and form Florida, USA. She loves to write about money and finance management. To know more about her click here. Let me know if you would like to guest post on RFI..
In a recent discussion with one of my friends, I came to know that he pays more than a thousand dollar as rent. I was almost electrified! That was nearly half of my monthly earning. I live in a suburb and pay only $500 and for the sum my friend is spending every month, I would have rented a mini mansion.
Paying too much on renting definitely puts middle-class people in a serious money crunch.
If your renting cost eats up lion’s share of your income, here are a few simple tips to guide you about how to save on housing expenses.
Share your room
The easiest way to trim your housing expenses is to share your room with someone else. However, it is not most suitable as an option always. If you are living in an area where there is high demand for renting, it’s definitely a sensible option.
It is important to know about your potential roommate. Good friends are the best persons to share your room with.
You must read: Planning Your Monthly Household Budget
Move to suburb
Living in a metro city is more expensive. That’s why I have consciously moved to a suburb. You can save a fortune by settling in a country/suburb. Don’t pull a long face as it is a temporary solution and will be in place until you regain your financial stability.
Adjust to small space
A little adjustment will save you more! As a full-time professional, I had no problem to pay for a spacious accommodation but things were not same when I switched to a part-time job to continue my studies.
Move to a flat that has smaller carpet area than what you have at present. It would be much better if you are ready to adjust yourself to a smaller flat in a low-cost locality.
Reassess your insurance and tax
See to it that refinancing fees never use up a larger part of your savings. If you are a homeowner and property tax is pretty high, assessor’s property valuation can be challenged. Contact the country auditor for the process to get started. When you are working on it, make sure to ask about discount offers that you have a chance to qualify for.
Think about mortgage refinancing
Interest rate is affordable. If mortgage has not been refinanced in the last five years, think about it.
You could save a larger amount over your mortgage life just by dropping a few points off your mortgage interest rate. Housing cost can be effectively lowered if you have ways to save on property insurance and tax.
We moved to a new home that was half the square footage of our previous home and love it. Our monthly payments went from around $2,400 (15-year mortgage) to ~$731 (30-year mortgage). What’s not to love about that!?!?!?!?
Derek, thanks for sharing your story.
I share room with my two best buddies. Glad that I have them to share room with. It’s like more than saving money because it’s nice to be with people whom you have close relationship with.
Jayson,
Absolutely, nice people always bring us nice things? Money saving an added advantage 🙂
We have very reasonable housing expenses, but would love to save more. The main problem is that we have done the room mate thing before… and will never again! Instead, we saved about $300-400 per month through refinancing to a much lower interest rate. Still, the ultimate plan is to leave this part of the country and move somewhere cheaper. 🙂
Roommates are a great idea and can be a lot of fun too – although there are certainly times when that backfires.
I’d add “Choose Your Neighborhood Carefully” too. I used to live in NYC and by paying attention to which neighborhoods I was searching in, I was able to find (slightly) more affordable housing by going to some of the further neighborhoods. I wound up living in Inwood which was way cheaper than say the Lower East Side or even Harlem.
Our home is a bit smaller than what we would have liked, but it fit our budget perfectly. We got a great mortgage rate to begin with, and then refinanced when rates went even lower. Although we live in an expensive area overall, we were able to find a neighborhood that suited us well.
I think too many people don’t take into account taxes when looking at housing. That expense stays with you for as long as you own the home and in many cases will go up every year. It can easily determine if you have to keep working or can afford to retire.
thanks for sharing the most useful tips to reduce the housing expenses