Among the various monthly expenses faced by Americans, housing remains the most significant. Research conducted by The Motley Fool Ascent reveals that, as of 2023, Americans spend an average of $2,120 monthly on housing, translating to $25,436 annually. This marks a 5% increase from 2022.
For individuals struggling to adhere to a budget due to the substantial portion of income consumed by housing costs, it may be necessary to explore strategies for reducing these expenses. The viable options depend on whether one owns a home or rents.
### For Homeowners
Homeowners may find it challenging to relocate to a more affordable area, yet they can potentially lower costs within the current home. Initially, homeowners should consider whether refinancing their mortgage could benefit them. For those who secured loans in 2020 or 2021, when mortgage rates were at historic lows, refinancing might not currently offer savings. However, for those who took out a mortgage in 2023 and locked into higher rates, such as above 7%, the situation may differ. As of October 10, the average 30-year loan rate stands at 6.32%, offering a possible opportunity for savings if previously locked in at a higher rate.
Homeowners might also explore generating income from their property. Renting out a finished but unused basement could be a possibility, although it is imperative to confirm its legality with local zoning authorities. Alternatively, owners could consider short-term rentals, particularly when away from home, leveraging platforms like Airbnb or Vrbo to facilitate the process.
### For Renters
Renters encountering difficulty with housing payments might consider relocating once their lease expires, provided moving costs do not outweigh potential rent savings. Alternatively, sharing living space with a roommate can help divide rent and utility expenses.
Negotiating with the landlord is another possible strategy, particularly for tenants with a reliable payment history. Since landlords typically prefer avoiding vacancies that are financially draining, a tenant can request a rent reduction by highlighting the potential savings for the landlord. For instance, if the rent is $1,500 and a tenant aims to negotiate it down to $1,400, the landlord might find the steady income from a reliable tenant more attractive than facing a vacant property.
The rise in housing expenses from 2022 to 2023 is not unexpected, as costs generally trend upward annually. For individuals struggling with managing bills due to housing costs, exploring ways to reduce these expenses might prove beneficial.
