This post is from our regular Wednesday contributor, Erin.
When you pay the bills, do you ever wish your rent or mortgage was a bit more affordable?
I’m willing to bet the thought has crossed your mind at least once.
Living expenses always seem to take up the biggest chunk of our budget, don’t they? Unfortunately, our living situation can also be one of the most difficult to change.
It can be easy to start bringing lunch to work, to stop browsing your favorite stores, or to cut down on the number of nights you spend out with friends.
But when it comes to lowering your household related expenses, things get a little tricky, especially if you’re a homeowner.
The following suggestions I’m about to make regarding your living situation might not work for you, but my intention is simple: to get you to re-think the choices you’ve made so that you can make better ones in the future.
Let’s take a look at what you can do to make your living situation more affordable.
Share Your Space
I’m going to admit that getting a roommate would be last on my list because I’m not used to sharing my space with anyone other than my partner. I grew up as an only child and was subsequently spoiled. =)
However, if you’re truly struggling to afford your rent or mortgage payment, think about how much money you could potentially get if you rented a room out.
If you’re paying $950 a month, but could rent out a room for $400, that cuts your annual rent/mortgage expense from $11,400 to $6,600. Not bad!
Don’t think you could deal with having a permanent roommate? You could try renting your space out on sites like Airbnb.
If you’re close to a popular tourist or business area and are adventurous, don’t mind possibly playing tour guide, and want to meet new and interesting people, it could be a great solution. You can choose when to rent out a room so that it doesn’t conflict with your schedule.
Sharing your space with others isn’t the most popular method of decreasing what you pay for housing, but it does work for many people. The key is finding responsible roommates, which surprisingly may not be friends or family!
Consider Downsizing to a Smaller Space
Last week I shared with you all that I’m happy with living in a space that’s around 800-1,000 sq. ft., and a few of you agreed that your current living space was a bit too large for you.
Typically, larger homes are more costly, and not just in price. You’ll likely pay more for utilities, there’s more upkeep and maintenance involved (which means more hours spent on cleaning and yard work), and you might be tempted to spend more to furnish a bigger space.
If you have no use for the extra space you currently have, would downsizing make sense for you?
This doesn’t just apply to homeowners, either – my fiance and I are currently in a 2 bedroom, 2 bathroom apartment, because the deal offered was close to what we would be paying for a 1 bedroom, 1 bathroom apartment here.
However, about halfway through our lease, I decided all the “extras” that came with our apartment weren’t worth what we were paying.
While we did get a great deal, the reality was there were older apartments nearby that could have saved us $100 or more on rent.
Personally, I’d rather downgrade and downsize if it means being able to put more money toward our student loans, but the math ended up not working out in our favor. (Paying for a moving truck, the security deposit, the application fee, etc. wasn’t worth it.)
If you’re currently renting, you have much more flexibility than homeowners. Use that to your advantage and make sure you’re happy with what you’re paying. If not, have a look around your area to see if there are better deals to be had, or try and negotiate your rent!
Yep – negotiate your rent. That’s what we did when we had to renew our lease. They wanted an extra $40, so we politely asked if they could do better in light of the issues we’ve had in our year here. They were able to lower the increase by $20, and it didn’t cost us anything to ask!
Relocate Somewhere Less Expensive
I already covered this twice, both when I spoke about my decision to relocate due to my fiance’s job, and when I posed the question if it’s worth living in an expensive city.
Great discussion was had in the comments, and in the end, we all agreed it comes down to what’s right for you.
I used to live in a rather pricey part of NY (not the city) that was recently rated as the most expensive place to live in the US.
As a result, I’ve heard many, many stories from friends and family about how they can’t afford to live there. Between property taxes, utility bills, and the prices of homes, money is being drained left and right.
It saddens me to hear that. Relocating is not an easy decision – uprooting your life is never easy! However, I’m glad we were able to escape and can live somewhere that doesn’t put a strain on our budget.
Relentlessly worrying about your bills and whether or not you’ll be able to afford them isn’t worth the stress.
Bonus: Consider Living Closer to Work
A few bloggers suggest living closer to work makes for an easier life all around. Wouldn’t it be awesome to be able to walk to work and not have to deal with traffic?
The tradeoff, of course, is likely to be a higher mortgage or rent. Isn’t that what we’re trying to avoid?
Yes, but moving closer to your job can cut your living expenses in other ways, making it worthwhile to do some calculations.
If you work in the city and can get rid of your car, that means no more car insurance payments, no more worrying about gas prices, not having to pay for tolls or parking, and more time to spend on things that actually matter. Remember, time is valuable, too!
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Overall, moving is a huge process and certainly not a decision you can make overnight, but you should take the time to evaluate whether or not your current living situation makes sense for you – both in the present, and future.
If it’s not sustainable, then figure out a way to change it, even if it means taking small steps like saving money on your utility bills for now.
How have you been able to decrease your mortgage or rent payment? Have you ever struggled to afford either?
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I rarely work far from work for i hate long commutes. For me long commute times equate to losing precious time that I could be spending with my family. I was raised in New Jersey and it can be just as expensive as New York unless you live in way out in the country. The homes are expensive and you spend millions for broke down huts so I understand about the hardships of living in an expensive city. I don’t have any intentions of living in a really expensive city again for its just not worth it to me. Yet I agree that it is a personal decision.
I hate commuting- always have. My old job had a ten minute commute and that was about all I could handle. Now my commute is 5 minutes down the stairs!
Great tips Erin! Thankfully we work from home so we can’t get any closer. ;) Seriously though, we moved from San Diego for this very reason. It was just too expensive at the time for us. Our money goes much farther in Omaha. We don’t have an ocean, but at least we have some good options when it comes to housing.
Awesome suggestions, Erin. Our mortgage payment is bigger than it should be, and we are considering options to lower it. It’s just not worth it to have your mortgage or rent payment sucking up a big portion of your income.
Currently my rent is extremely low and I’m grateful for that. But I had to move back in September in order to save $400/month and get my rent that low so it was definitely worth it and I only moved down the street. Now the commute to work is killing me and I’m looking for something closer to my job that’s still affordable. I just don’t believe in paying an arm and leg for rent and all those glamorous amenities. I’d rather keep it simple, pay off my debt and save up for a house.
Petrish @ Debt Free Martini I can’t deal with long commutes, either. I have too much of a tendency to think about what I could be doing instead of sitting in traffic! Yes, NJ is unfortunately really expensive as well. Property taxes are horrendous!
holly3 Having an in-house commute is the best. =) My last job was 5 minutes away, so admittedly it wasn’t horrible, but I like not having to deal with people on the road.
FrugalRules The price of housing is such a big factor. I was blown away by the prices down here – beautiful, huge homes going for at least $200k less than what they would have gone for back home!
Laurie TheFrugalFarmer It’s an awful feeling to be paying more than you think your living situation is truly worth. I’m pretty frustrated with our rent, but hopefully we can lower it later this year. Good luck on lowering your mortgage payment!
Chonce I love that you mentioned amenities, Chonce. This was my first experience living in an apartment complex, and they really do try and sell you on all the amenities offered, such as the pool, club house, and gym. We haven’t made use of any of them! So I’m with you there – next time, we’re renting a house, or an apartment with less amenities that we’re probably paying for in rent prices.
Erin @ Journey to Saving holly3 That must be one heck of a staircase…5 minutes? : P
Housing is the one cost which is difficult to make affordable here in NYC. If I was young/single, roommates would be fine, but not married and with a kid. Relocating was never really something we thought about, mainly because all our friends and family are here. But I sometimes question whether we should reconsider it. Maybe somewhere that has nicer weather too!
Andrew LivingRichCheaply I’ve seen married couples make roommates work, but not with kids, which would make it much harder I imagine. Growing up, my family technically cohabited with my aunt, uncle, and cousin. We had the upstairs, and they had the downstairs, and it worked out for 6 years! It helped they were two completely separate living areas, though – and we shared the basement.
We did a little bit of these. We bought a place and rented out the remaining units in the building, it’s close to work so we take the Train/Bus. We also bought a place just far enough out of the city and away from the lake that is was far less expensive, so right on point.
We’ve been fortunate that we never struggled to pay our mortgage. But I also calculate carefully what we can truly afford and STILL be able to do other things that we love too. One of the frequent problems I run into with clients is they buy more home than they can afford but assumed they could afford it because the bank was willing to give them the money. They may technically be able to pay the mortgage but have nothing left to do anything else. We were able to refinance our mortgage which saved us a lot of money.
We got very lucky. We bought a foreclosure in Phoenix before the market rebounded. We got it for $60,000, but paid about $85,000 after renovations. We recently refinanced to get rid of our PMI and lower the interest rate a bit. So our total house payment is $565 a month.
Of course, in Phoenix we pay a lot more for utilities. In the summer, the on-peak rates nearly double — and we have 4 people home all day every day. Still, I know we were fortunate in our timing (our house is now estimated at $125,000 just four years later).
EvenStevenMoney Sounds like you guys did your research beforehand and ended up in a really good situation!
Hey Erin, interesting to hear you’re an only child there :), funnily enough I am as well and agreed initially in life I struggled with sharing with others haha.. Have learned to adjust on this though
Good points here, in my situation the best way has been to share house with others!
ShannonRyan I do think that’s a common mistake, Shannon. People assume too easily they can run with the amount they’re approved for and set about spending it. I’d rather figure out the payment I can afford and work from there! It’s not fun to be spending all your money on your home.
AbigailP Nice! Utilities are definitely important to take into consideration; even though it gets hotter down here than it does back home, our electric is much cheaper. I hope it at least it balances out throughout the year!
mycareercrusade Yep, I am! I looked at dorms in college and couldn’t see myself sharing such a tiny space with someone else. It doesn’t help that I tend to be a private person who likes her alone time. =) Sharing a house at least means more space!
As a landlord, I would never lose a good tenants over a few bucks, so I think it’s really smart to try and negotiate. All they can say is no. We’ve never had a hard time affording our housing costs, but I look forward to the day when our mortgage is paid off and we have all the extra money to invest.
Eyesonthedollar Good to hear that from a landlord! And you’re right – “no” is going to be the worst thing that can happen in most negotiating scenarios. I feel the same way about my student loan debt!
Unfortunately, we’ve done pretty much the opposite to these – we’ve bought a new house which has seriously increased our mortgage, and in a reasonably expensive location (although we sold our old house in a similar location). But we couldn’t be happier with it, and plan to be here forever – and I’m counting on it becoming more and more affordable as the years go on :)
We still rent out a room in our house. Easiest $6k we earn every year, and it comes with someone to watch our dogs and drive us to the airport whenever we take a vacation.
I think it’s an underutilized strategy. People typically have too much house. When someone’s complaining about not being able to achieve their financial goals quickly enough, but they have a spare bedroom…I tune them out. They’re not ready to even get the easy, big wins.
I wish my mortgage was less, as you know I live in NY and it’s quite expensive, but we pay more for the school district which we love. As soon as my son graduates from high school, though, we absolutely intend to downsize and possibly look for different areas to live. I love where I live now, but only tolerate the expenses because I mostly love it for my son.
Jason@Islands of Investing At the end of the day, if you can afford it right now, and are really happy with your situation, I think that’s what matters the most. We all have different priorities. =)
DonebyForty I had you in mind when writing that section. =) I love that extra perk, too – getting someone to house sit/pet sit can be expensive! And you’re right, I do think there’s a lot of people who have too much house. It’s important not to get caught in the allure of having such a grand home. I admire them from afar, but I personally wouldn’t want to pay the price for it!
blonde_finance My parents were in a similar situation – we moved when I was in 2nd grade, and I really wanted to stay in the same school district I started in. Unfortunately, it was one of the biggest on the island and thus much more expensive, but I did get a great education out of it.
We used to rent out a room in our house and that was always helpful. My sister may be moving back in with us again so that she can travel the world and not worry about her stuff, so that will bring in some extra income again as well.
Erin @ Journey to Saving DonebyForty Renting out part of our house has been a big win for sure. In fact, a big reason we bought the house we did was because of the studio apartment in the basement.
SenseofCents That’s awesome Michelle, both for you and your sister! Sometimes I wish I wasn’t an only child. =)
How about relocate your job? I currently have a 26 mile one way commute so I’d be lying if I said it never crossed my mind! ;)
brightcents Oh wow! I have to say, I was pretty happy when I switched jobs, and my new job happened to be 2 miles away. I can’t do long commutes at all.
Erin @ Journey to Saving Two miles sounds amazing! I don’t really mind the commute that much, it’s about 35-40 minutes each way, and is my podcast listening time. :) What I do mind is the gas money, oil changes, etc.
We live pretty close to our jobs, which has been a wonderful aspect of city life for us. Mr. FW bikes to work and I have a short drive, so we’re pretty happy with that arrangement. Our biggest shortcoming is that we don’t want to share our house… we have extra bedrooms and could have roommates or AirBnB guests, but we just don’t want to. I realize we’re leaving money on the table, but it’s a choice we’ve made. Ahh well, it’s all a balance.
Mrs. Frugalwoods I think you guys are in decent enough shape as it is with your savings rate! It is a really personal decision to share your living space with others. If I was 3 years away from FI, I probably wouldn’t be willing to make the sacrifice either. =)
I think it’s wonderful how open and trusting some people are to renting out space to strangers and all. God bless those people. I’m definitely not one of them! : Moving was terribly expensive. The deposits and the fees, like on EVERYTHING, were so excessive. I don’t know how people do it that are strapped for cash. I guess they end up living wherever they can. We looked at everything that was available when we got here. One place looked really nice from the outside. Then I stepped over a giant dead cockroach. Okay, this is Florida, I kind of expected a few bugs, so to speak. When we left my son told me he saw 3 dead cockroaches and kicked each aside, so I wouldn’t freak out, He said by the time he got to the 4th, he just gave up. Thank God we didn’t have to settle. I wish everyone could be so fortunate. Great points, all of them, Erin. :)
kay ~ lifestylevoices.com Eek! I have to say I was a little scared of the bugs down here, too. My dad lived in FL a long time ago when he was in the Navy, and loves recounting all the gross encounters he had with huge bugs while he was there. No thanks! That’s another reason I wanted a third floor apartment, though we’ve still seen a few bugs.
And yes, you’re right – moving adds up quickly with deposits and fees. That’s the main reason the math didn’t work out for us to move again.
Everything about this article is true!
Back in May I decided to relocate to be closer to my job. I’ve been saving the money I would have spent on gas for the 25 mile drive, and it adds up fast!!!
Thanks Erin!
Brandi_P Glad to hear relocating worked out for you, Brandi!
I’ve always had a hard time managing my living expenses, but I always make sure the necessities are covered. It would be nice to start putting a little be extra money towards my student loans and car loan to get them paid off. I think not going to Starbucks almost every day will help with that. haha…
KerstinStokes Most definitely! I’m not one to tell people what they should or shouldn’t spend on, but the simple fact is small spending on a daily basis does add up – $5 every weekday is $1,300 a year, which is a little crazy to think about.
Erin @ Journey to Saving KerstinStokes Wow yeah, I didn’t even think about that. That’s essentially 3 of my car loan payments! It’s incredibly crazy to think about, especially when you think of how cheap it is to make something similar at home, but for a fraction of the cost.
Erin @ Journey to Saving Thank you! It was definitely tough at first, but it was well worth it! Thanks again for the great article, Erin! :D
All great suggestions. Staying on top of renting/housing costs every month and adjusting savings and goals accordingly can help, too!
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