Widespread spending commitments such as groceries, credit card payments, and other bills define most families' budgets, but some obligations stand out more than others.
In particular, housing costs are among the most substantial monthly expenses faced by millennial homeowners and renters alike.
For homeowners, the cost of a home is only the beginning, setting the stage for further spending on homeowner expenses such as updates such as bathroom remodels, repairs, taxes, and other residential expenses.
And renting a home also carries costs beyond monthly rent charges, including money spent on homeowners insurance and utilities.
With so many individual expenses pulling at your monthly budget, the following savings strategies provide welcomed relief, leading to lower overall housing costs.
Reducing Your Major Housing Costs
Here is a list of ways to trim spending with lower housing costs.
1. Buy Right
There are many costs associated with homeownership, but your first major concern as a would-be buyer relates to the asking price.
Paying a fair price for property establishes an affordable cost foundation, on which to build equity in your home.
For the best results in potentially volatile housing markets, study trends in desirable neighborhoods.
Ask yourself the following questions:
- How long do homes stay on the market before selling?
- What is the average sale price for the style of home you're looking for?
- Are prices moving up or down?
Answering these and other questions about prospective purchases gives you the tools needed to make informed buying decisions.
Related: 14 Things to Consider When Buying a House
2. Create Affordable Conditions
Sometimes creative solutions are required, in order to make your financial dreams come true.
If you are committed to homeownership, but can't afford a conventional arrangement, there are several cost-saving measures to consider, for example:
- Multi-unit property – In some cases, becoming a landlord leads to lower housing costs. Owning a duplex, triplex or another type of multi-unit residential rental property enables you to lease part of the building to offset your own expenses. Although it can save you money, serving as a landlord and caretaker are not passive roles. On the contrary, be prepared to earn the money you save on house payments, administering to the needs of the property.
- House hacking – Renting out portions or your primary residence with a roommate(s) can dramatically reduce living expenses when compared to living alone. Not only is it possible to share the cost of rent or mortgage payments, but utilities, insurance, and even food costs can be equitably divided among residents, reducing everyone's financial burden. If you don't have a particular individual in mind, turn to online resources that match roommates with affordable spaces.
Related: How Millennials Can Affordably Build Their First Home
3. Watch Out for Vampire Energy
There are monsters lurking within our homes. They are not under our beds or in our closets, but rather sitting in plain view within many of our rooms. They come in all shapes and sizes but are most commonly known by another name. Electronic devices.
While they may seem harmless enough, there is something going on every time we power them down but fail to unplug them. During this time, devices will actually use energy and run up our bill, even though we believe they are no longer able to use electricity.
This occurrence is known by many names including standby power and the phantom load, but most commonly it is called vampire energy. Vampires take many forms like televisions, microwaves, and desktop computers. They come in less obvious forms too, including electric toothbrushes, coffeemakers, gas ranges, and even the household furnace.
With all of these devices using energy without our knowledge, it is no surprise that the phantom load totals to over $19 billion in energy costs. In terms of overall household energy usage, vampire energy is believed to account for over twenty percent of the electricity consumed in the home. This number is only expected to increase, as more and more smart appliances are being used within homes now.
But as is the case with all monsters, there are ways to get rid of vampire energy to lower your housing costs and save $200 to $400 per household every year. One method that requires a little upfront investment in energy-saving appliances. There are many of these out on the market and some of the best will have an Energy Star label.
These will use less energy than non-efficient devices and will reduce the total amount of electricity sucked. An even simpler method to stopping vampire energy is unplugging electronic devices when they are not in use. This will completely cut them off from draining energy. By thwarting vampire energy, you’ll ensure yourself greater monthly savings and a monster-free home.
4. Find Favorable Financing
There are many ways to get money for a down payment on a house.
And since market conditions continually evolve, you may be able to secure better terms today, than you did when you bought your home by refinancing.
In an environment where interest rates are high, securing favorable refinancing terms requires strategic planning and due diligence.
Start by diligently shopping around, as different lenders might still offer competitive rates based on their lending criteria, operational costs, and target customer base. Engage with multiple financial institutions, including smaller local banks, credit unions, and online lenders, as they can sometimes provide more favorable terms than larger banks.
Next, bolstering your personal financial profile can be a game-changer. Aim to improve your credit score, maintain a consistent income, reduce other debts, and demonstrate a history of timely payments, as these factors can position you more favorably in the eyes of lenders.
By combining these strategies and maintaining a keen understanding of the broader economic environment, one can navigate the refinancing landscape more effectively, even in a high-interest scenario.
5. Downsize for Savings
There comes a point in one's family life when the nest empties and residential needs change. If you find yourself living in more home than you need, there is no sense in continuing to pay the cost of occupying and maintaining it.
Downsizing may have other financial benefits, such as tax breaks, but you can definitely lower housing costs immediately by reducing your payment and associated residential expenses.
Depending on your home's size and layout, renting a room may present a viable alternative to selling; enabling you to generate the supplemental income you can use to pay housing costs.
In some cases, turning your home into a rental property and hiring a property management company may also be feasible, allowing you to downsize to a smaller home while building rental income from your original residence.
The Final Take
In conclusion, managing housing costs is crucial for financial well-being, especially in today's ever-evolving economic landscape.
By exploring a myriad of strategies, from downsizing and negotiating rent to considering alternative living arrangements and prioritizing energy efficiency, individuals can significantly reduce their monthly expenses.
It's essential to view housing not just as a fundamental need, but also as an area where savvy decisions can lead to substantial savings. Regularly reassessing one's housing situation, staying informed about local market trends, and being proactive in seeking cost-cutting opportunities are paramount.
With thoughtful planning and informed choices, a comfortable home doesn't have to come with a hefty price tag
