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Ways to Reduce Your Housing Budget
Mortgage or rent (and all of the associated costs that go along with housing) eats up the largest percentage of most budgets… up to 30%! If putting a roof over your head is costing too much, here are some tips to explore:
If You Have a Mortgage
- Refinance. You may be able to lower your monthly payments by changing the type of mortgage you have (fixed rate, adjustable rate, balloon) or finding a lower interest rate. Do some comparison shopping to see if refinancing can save you some money.
- Rent a room. If you have extra living space, why not rent it out? For example, if your home is near a college, consider renting a room to a student.
- Move to a smaller place. If you don't need all of the space, downsize.
- Move further from the city. Home prices are usually higher in metropolitan areas than in suburban and rural areas. Moving away from where the action is can add up to big bucks in savings.
- Find a place with lower taxes. Property (and school) taxes can vary by neighborhood. Rates can range from as low as 0.2% to as high as 4% of the value of your home. That's a huge difference on your wallet.
- Raise your insurance deductible. A higher deductible means lower monthly payments. But keep in mind that if you ever file a claim, you'll pay more out of pocket.
If You Rent
- Get a roommate. Having a roommate not only saves you money on your rent, you can split the costs of your utility payments, too!
- Move to a more-affordable place. Rents can vary tremendously depending on the age and location of the rental property. Shop around. Most neighborhoods have lots of rental options.
- Negotiate. Rent is negotiable. If you've always paid on time and you are responsible, your landlord may be willing to lower your rent to keep you as a tenant. Call your landlord today.
Helpful Tips
- Pay yourself first by putting a portion of your paycheck directly into the bank. This is the most effective way to save money. If you never see the money, you won't miss it.
- Your emergency fund should consist of at least 3–6 months of living expenses.