The cost of living in some places is out of control. Major cities like San Fransico and Los Angeles can seem impossible to afford on only one household salary.
If you’re single and want to reduce your housing costs, there are hacks to stretch your budget. Check out these 7 ways you can reduce your housing costs today.
1. House Hacking
One of the top ways you can reduce your housing costs in places where real estate is scarce is through house hacking. House hacking is when you rent out space in your home to someone else and the amount covers your total rent or mortgage expenses.
It’s typically easier to do house hacking when you have a home with multiple bedrooms, but you can also attract renters who might be interested in sleeping on a couch bed if you live in a desirable neighborhood. The goal is to price the rent correctly so that you’re left with little to know housing expenses at the end of the month.
Check out this guide to gaining your financial independence by FIbyREI to find out how house hacking can help you gain wealth.
Get creative with the spaces you have available to rent. Consider transforming your garage or shed into apartment space. Turn the attic into a loft. The possibilities are endless as long as the space is safe, accessible, and clean.
2. Sublet Your Home
If you’re constantly traveling work, it makes little sense to maintain a home you’re never in. Consider subletting your apartment while you’re away on business.
The added income can be used to stack up emergency savings or as a down payment on a home. If you’re renting, just be sure to check with the landlord to make sure it’s not a violation of your lease agreement.
Whoever you rent to should have the same respect for your lease as you would if you were living in the home yourself.
3. Move Outside City Centers
Everyone wants to be close to great restaurants, shopping, and entertainment. This is why city centers are often far more expensive than the cost of living on the outskirts of town.
Find a safe, less trendy neighborhood if you need a way to cut back on housing costs. You might even be able to afford more house for less money giving you the chance to house hack.
4. Get a Tiny House
How much square footage can you occupy at once? For tiny house owners, the answer is: not much. Because so much square footage in a single-family home goes unused, many singles and couples are choosing tiny homes instead.
They’re much cheaper to build and maintain over the long term. Smaller housing means lower utility bills at the end of each month. If you’re living completely off the grid, you won’t have to pay a utility bill at all.
Tiny homes are perfect for the handy homeowner who loves doing their own repairs. Be sure to design your home with self-repair in mind to keep maintenance costs low.
5. Close the Doors
Why are your closets hogging all the heat? One simple hack for lowering your utility bills each month is to simply close the closet and bedroom doors in your home.
The air conditioning and heating system will thank you for not having to spread into pantries and coat closets where it’s not needed. The same goes for sliding patio doors. It’s nice to have a gentle breeze from outside, but you really should choose a side before opening up your sliding doors.
Do you want fresh air or A/C? If you’re going back and forth between the two, just make sure you give your A/C at least a few hours of rest before turning it back on so you aren’t wasting more energy than you save.
6. Refinance Your Mortgage
When interest rates drop, it’s time to consider refinancing your mortgage. A change in interest rates can equal hundreds of dollars off your mortgage each month.
But not everyone qualifies for a mortgage refinance. First, your home needs to be worth more than the amount of your mortgage.
Next, you’ll need cash on hand for closing and a decent credit rating to get a good deal. The higher your credit score, the lower your interest rate. Lenders will verify your employment and income just like they did when you went through your first closing on the home.
Always verify the potential savings before starting the underwriting process. Sometimes the amount you pay in closing costs exceeds the amount you’ll save on your home in the next couple of years.
Choose to refinance only if you plan on being in your home for at least another 3 years to make the process worth the added effort. If you need to sell soon, a higher mortgage balance takes away from your ability to negotiate with buyers for a fast sale.
7. Downsize Your Housing Costs
When the real estate market is booming, it’s a prime time for homeowners to take their equity and run. Consider selling your home and using the profits to downsize into a smaller home.
It’s a win-win situation in that you’ll have a smaller mortgage payment along with a smaller mortgage balance. The smaller mortgage balance means being able to pay your house off faster.
With no mortgage balance, the possibilities are endless in how you can invest your money for more income.
Lowering the Cost of Housing
Your housing costs can be a little or as much as you need it to be. The key is to remain flexible. You’ll have to make sacrifices in order to reach your target monthly budget.
If you’re not a homeowner yet, it’s much easier to find rooms for rent until you’re ready to step out on your own. For more information and lifestyle tips, visit our blog for updates.
