During a recent money discussion, a couple of my online friends pointed out that their rent is half of my monthly income.
Since I live in rural Ohio (and wouldn’t have it any other way), I always get sticker shock when I hear how much money other people have to pay for housing.
In my hometown, rent averages $550 a month and mortgage payments aren’t much higher. One thousand dollars a month for rent would get you a mini mansion.
Sadly, having to pay a thousand dollars or more in rent puts many people in a real money crunch, which then prevents them from taking charge of their personal finances.
If you’re in a situation where your housing costs are more than you can handle, here are five ways to bring them back down:
How to Lower Your Housing Costs
1. Get a roommate
One of the easiest ways to save money on housing — without making any major sacrifices — is to get a roommate.
Yes, it’s not always the most convenient option, but if you love where you live then it’s definitely viable. This is especially true if you’ve bought a home and don’t have the luxury of moving to a less expensive place like renters can.
Make sure to properly screen potential roommates; the best place to look is with friends and family. After all, you’ll be sharing living quarters with this person!
2. Downgrade on space
This is what I was forced to do after getting divorced, and it worked out perfectly.
Move to a place in your area that’s smaller than what you currently have — or better yet, move to a smaller place in a lower-cost area. If possible, have your children share bedrooms.
3. Move to the suburbs/country
Living in the suburbs is much cheaper than living in a big city. If you’re currently renting, you can save a substantial amount of money by moving farther away. And remember that this doesn’t have to be a permanent solution; it can just be until you’re financially stable.
4. Refinance your mortgage
Interest rates are still low. If you haven’t refinanced your mortgage in the past five years, you should definitely look into it.
By knocking a couple points off your interest rate, you could save thousands of dollars over the life of your mortgage, as well as walk away with a lower monthly payment.
Just make sure the refinancing fees don’t eat up your savings.
5. Reassess your taxes & insurance
If you own your home and think your property taxes are too high, you can challenge the assessor’s valuation of your property. You’ll need to contact your county auditor’s office to get the process started. While you’re at it, don’t forget to ask about other discounts you may qualify for.
Now: homeowners insurance. As an ex-insurance agent, I can confidently say that if you haven’t filed a claim or switched insurance companies in the past three years, you’re probably paying too much.
I’ve worked with several insurance companies and most are the same: They raise your rates every year. So a good rule of thumb is to check on prices every three years.
If you can find ways to save on both your property taxes and homeowner’s insurance, you can lower your housing costs quite a bit.
Have you reassessed your taxes or insurance lately? Do you think $1,000/month rent is a lot?
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