There are many ways to save money on your monthly expenses and you do not need to be a rocket scientist to figure them out. One of the best ways to start is by looking at your budget and figuring out which of the expenses in there can be used to help boost your monthly savings. To be more specific, you may want to look at the biggest expense that you make – which is your house.
If you think that it is cheaper to rent than to buy a house – think again. According to the article published on Livestrong.com, this is one of the big expenses that Americans have on a monthly basis. The data from Visual Economics (as cited in the article) revealed that families spend up to 30% of their income on rent. It is actually at par with mortgage payments. Unfortunately for renters, the money that you are spending on rent only makes your landlord rich. If you were paying the same amount to your mortgage, that would contribute to the growth of your home equity – which is in essence, a part of your personal net worth.
You may be thinking that you do not have enough money to buy your house. Well that is exactly why we will try to save money on your rent. If you do not have another financial goal in mind, you can probably use the savings to build up the down payment for your future home.
6 tips to help you lower your rental costs each month
An article from NYTimes.com discussed how more and more people are renting now. Homeownership rate is down from 69% in 2004 to 63.7% in the first quarter of 2015. You can probably blame the Great Recession and the housing market crash that happened a few years ago. Because of that economic event, a lot of people had to foreclose their homes and settle to live in smaller rental spaces.
While there is nothing wrong with renting, a lot of consumers have no idea that they can save a lot on their rental costs – if they only know how to do it. Here are 6 ways that you can accomplish this so you can save money each month to eventually buy your own house.
Don’t be afraid to negotiate.
All financial transactions, if permitted, should be negotiated. This includes your rental price. Do not be too proud to negotiate the terms of your lease. If you can lower the price even by $100, that is already $1,200 worth of savings in one year. You will never find out if your rent can be lowered down if you don’t ask.
It is not like your landlord would voluntarily give you a discount without you asking for it. It might happen if you know the person or you are related to them but otherwise, you need to ask if there is a discount on it. The worst thing that can happen is that they tell you that there is no further reduction on the rent. That’s it.
One tip to remember when asking for a discount is to half the price on your first asking price. Try it first with shops and see how well you can get them to lower the price down. If that antique looking vase is at $100, try bargaining for $50. If you are really lucky then you get the item at half the published amount but if not, it at least gives you a lot of room to go back and forth with the price.
Consider slow season when renting
Winter and early spring are slow seasons in renting meaning there are not a lot of people looking for a place to stay in. This is a good time to go look for a place because owners might be more than willing to agree on your terms just to get the place rented. You might even be able to lower down the price because there are not a lot of people who are looking to rent.
The downside of this is that because there are not a lot of people moving out and around looking for a place to rent, it is a little tougher to look for an ideal place to stay in. A lot of them are occupied already and the ones that might be available might not be the one you want. You need to pound the pavement to look for an ideal place to stay in.
Consider taking out insurance
The homeowner you are renting from might have insurance but that is on the property itself and might not include your stuff. One unfortunate fire and you can lose everything you own and worked hard for. It will surely be an additional cost but that insurance premium gives you peace of mind knowing that your things are protected. USNews.com shares that it will cost you about the same price as you would pay for pizza a month.
Improve your credit score
Your credit score is not something that is often used to determine if you can rent or not because that is usually reserved for taking out mortgage loans. But when there are a lot of you wanting to rent the same place, there might be a chance that your score would determine if you get to rent the place because the owners are more comfortable with people who knows how to pay their financial obligations.
You might also want to keep improving on your score so when the time comes that you are done renting and want to get a place of your own, there is big chance you get favorable rates from lenders. The interest rates and your credit score are two unique numbers and they are actually inversely proportional to each other. As one goes up, the other comes down.
Consider a roommate
If you are trying to look for ways to save on cost with your rent, one option is looking for another person who is in the same cost-cutting situation. It is easier to split the rent and even the utilities in two rather than shouldering everything by yourself. But you need to know the person and not just ask any random individual if they need a place to stay in. You will be surprised how living alone can affect finances.
Keep your security deposit receipt safe
Your security deposit is meant to cover any unexpected damages and repairs and even unpaid bills on the house when you decide to leave. It is a good idea to keep that receipt in a safe place because as time goes by, you might not remember how much you shelled out for that deposit. You might not even remember giving one after a few years.
You can actually use amount to fund another security deposit when you move to another place. Or it can be used to tide you through as you transfer from one place to another. But you need to remember that you should not ask your landlord to use your security deposit as a monthly payment. Apart from most landlords will not allow it, this can put you in a bind towards the end of your rent contract.
There are a lot of ways to be able to save money even if you are renting out a place. Of course the objective is to have a house of your own but saving up for even a downpayment for a mortgage loan can take a while. One thing to do is to try and save as much as you can while you are still renting so you can have enough for a house of your own.