Budgeting / Credit Cards and Debt / Personal Finance

Fix Your Finances in 30 Days

Day 21: Evaluating Your Expenses – Housing

Most people, once they’re locked into a home mortgage or have moved into an apartment, feel as though that is an amount that they are simply down each month, with no real way to reduce that amount. It’s simply not true; it’s just a psychological trick within your mind. The real truth is that there are ways to effectively reduce that amount each month without adding any significant risk to your situation.

Here are five avenues to explore in terms of reducing your monthly housing bill. Spend some time considering each one and actually ask yourself whether or not these things are feasible for you.

Rent out a room. Some people feel very uncomfortable doing this, but it is definitely a great way to reduce your monthly housing costs. If you have a close friend or relative who is in need of inexpensive housing, offer to rent them a room at your home for a good rate; you could even offer to give them board as well for a higher rent rate. When I was in college, a friend of mine used to pay $500 a month to one of his parents’ friends in order to have space in their basement and free meals. We are also considering renting out a room in our own home after we make the big purchase.

Consider a home downgrade. If you’re a married couple with no children left in the nest but a lot of bills to pay, it might be worth considering buying a smaller home or an equal sized one in a less expensive area. This is especially true if you can sell your current home and move into a smaller one that’s already paid off; it puts you in great position for the final push to retirement.

Negotiate. If you’re living in a rental situation, negotiate with your landlord. Offer to sign a longer lease in exchange for lower rent if you know you’re going to live there for a while. If you have a bit of money in the bank, you can also offer to pay several months of rent at once in exchange for a discounted rate. A close friend of mine was able to write a check for a year’s worth of rent at once and her landlord gave her a 40% reduction in the rent level, simply because there was no risk on the landlord’s part.

Practice preventive maintenance. Here’s an excellent checklist for basic home preventive maintenance. It can seem like a lot of work, but it’s a great way to save money. Set aside a few hours each month for these routine tasks and things will be much less likely to break down or cause major unexpected expenses.

Refinance. This is a carrot dropped in front of many people – and some jump for it without thinking about it. Spend some time and run the numbers to see whether a refinancing might improve your month-to-month financial situation. Don’t just jump on a refinance because it offers lower rates now, though; only get into a fixed rate refinancing.

Ready? Let’s continue on to the next day.