Housing is generally one of the largest expenses we have some influence over (alongside food and transportation). As usual, I find that most people don’t believe they have any control over this part of their lives and spending or believe their options are extremely limited. What if you had more control over this part of your life than you thought? Let’s descend into a hypothetical dream world together where you have control over your housing decisions and can make an impact on how much you spend…
Taking stock
Let’s look at a situation that is likely extremely familiar for most of my readers. Bob and Susie Foil work downtown but live far away in the suburbs. Each has a 20 mile commute, which takes them 30 minutes or more each way.* They “have” to drive to get to work every day, to take their kids to school, to get groceries, or pretty much anything.
Despite only having one child (Junior), our hypothetical Foils live in a four or five bedroom house with a pool, because they plan on having at least one more child in the future and need a guest room for the rare case that their parents stay over. They took out a mortgage to purchase the house because they didn’t want to “waste money renting”, and utility bills are high because that’s “just a fact of life.”
After getting home from a long day of work and fighting traffic for over an hour, the Foils are often stressed out and short with one another. Because they spend so much time working, they hire a maid to clean the house, someone to mow the lawn, a pool guy, and eat out often. The family isn’t saving much (at all?), but that’s “okay” because they have a lifestyle to uphold. They’ll have time to think about, plan, and save for retirement later… Or something.
Seems normal to me.
Oof.
Let’s look at some ways the Foils could cut back on their housing expenses so they can begin saving and breathing a little easier. Maybe we can even find some ways to save them some time or enjoy life more! Wouldn’t that be grand.
The house
Let’s tackle the elephant in the room. The Foils have way too much house. Spending so much time commuting isn’t leaving a whole lot of time for the pool, and half the house never gets used, perennially waiting for hypothetical future children and guests.
By downsizing to a house that meets their current needs (two bedrooms unless Mrs. Foil is currently pregnant or their parents stay over every weekend), the Foils could cut back dramatically on all related expenses: mortgage/rent, utilities, upkeep, etc. While they could still look for a house with a pool, pools are expensive both in the cost they add to a house as well as in upkeep. It’s usually possible to find access to a place to swim for free or cheap, which is also a good way to meet people.
The Foils should also consider whether to continue with homeownership or switch to renting. While the idea that renting is just throwing money away is an appealing one, it depends heavily on the context of your situation. In many cities, you will end up far better off financially by renting than by homeownership (assuming you invest the difference, of course). Homeownership is often far more expensive than renting. As always, it’s important to understand the trade-offs you’re making.
Speaking of trade-offs, the Foils should strongly consider finding a home closer to where they work and possibly even taking public transportation or biking to work. Bonus points if it’s right by a grocery store, library, or anything else they use regularly. The savings this will provide in time and money are considerable, especially when combined with a more reasonably sized house.
Monetizing your space
Whether the Foils move to a three bedroom house or keep their existing one, the option exists to monetize some of their unused space. Airbnb makes it extremely easy and safe to rent out rooms in your home on a short-term basis. Especially if you’re near a large city, you’re likely to get a lot of business travelers who will most likely only be there to sleep. This is an easy way to make some money and offset your cost of living.
Even in the case that the Foils move to a two bedroom, their home could easily be rented out when they’re away visiting family or on vacation. If there is a large event going on in their city, it’s even possible the rental could totally offset their housing expenses for the month or more. This doesn’t cost the Foils almost anything to do.
Utilities
Regardless of the size of their home, it’s likely the Foils can save on utilities in a few different areas. Some of these are based on changing behavior and some involve one-off or periodic changes that are more about the efficiency of your home and appliances.
One strategy that is effective across all utilities is to simply build awareness by paying attention to your usage. In today’s world, most companies provide your usage information right at your fingertips. What gets measured gets improved, so simply looking at this information may help. If you combine this with a little more awareness of how and when you’re consuming each of your utilities, you’ll likely be a good way along in reducing your consumption.
Electricity
Electricity is mostly used to heat or cool your home, unless you live in a part of the world where temperature is perennially perfect. However, it also powers all the electrical amenities and newfangled gadgets and devices we have come to know and love.
Depending on where you live, you may or may not have a choice about who your power bill comes from, known as a deregulated market. If you do, you should shop around for an electricity plan. In order to evaluate between plans, you’ll need to know about how much electricity you use per month in a given year. As with anything else, there will be cheap options and expensive ones. You know what to do. Don’t forego looking at this, as some people live in a deregulated market and don’t realize it, which usually means they’re paying more than they have to. Do your research and don’t be afraid to shop around again when your contract expires.
After the easy win of shopping for a plan if you have that option, what are some big wins you could take without having to change your behavior much (if you rent you can skip the next several paragraphs to the behavioral stuff)? If you live in an area that gets hot or cold (or both), there’s a good chance your HVAC system accounts for a large portion of your energy consumption. If you’re on electric heat, this is true for the cold as well as the heat.
Probably the most cost-effective change you can make to your house is to insulate it well if it isn’t already. You don’t have to go overboard here: getting insulation with a decent R-value (a measure of insulating power) and filling what’s easily accessible, like your attic, can make a big difference and is inexpensive. If there are any other obvious inefficiencies such as a door or window that has a draft due to not being fully sealed you can patch that up cheaply and easily.
Obviously, if your HVAC system is very old, it may be worth exploring replacement with a more efficient model at some point. However, regardless of whether your model is brand new or extremely old, regular checkups and maintenance can make a big difference. Many utilities (either electricity or gas companies) offer free checkups or tuneups for your AC, which you should take advantage of, especially if you think there’s a problem or it’s older. Making sure there aren’t debris such as leaves clogging the system and your air filters are replaced regularly can also help reduce load and keep your system running well.
Behavioral changes can also make a big difference, especially if you use your system inefficiently, which most people do. Do you leave your AC running all day while no one’s home, making sure your cat is comfortable in your 70 degree icebox in the middle of summer? Cats were born to survive in all kinds of conditions and probably won’t even be bothered with some more reasonable temperatures.
Your HVAC should only be keeping your house within reasonable temperatures during the day if you have animals, otherwise it probably shouldn’t be running at all. You are not going to die, melt, or be harmed in any way by having to wait a few minutes for your house to heat up or cool down when you get home, I promise. If you’re adamantly opposed to this, try setting your thermostat on a schedule so that it raises several degrees after you’ve left the house each day and drops back down in time for the house to be comfortable by the time you get home.
What temperature you set your HVAC to while you’re home will also directly impact your usage. Turning your thermometer up or down a couple to a few degrees can have a big impact over time as your system doesn’t have to work so hard to fight the environment. Luckily for us, humans are highly adaptable beings, so if you slowly change your thermometer setting, say one degree every few days to a week, you’ll hardly notice the difference. You can also bundle up more, do push-ups, or wear less clothing and run fans in the proper direction to reduce your need for air conditioning.
When you consume electricity can also impact how much you use. For example, if it’s the middle of summer and your AC is already working hard to cool down your house, running your washer and dryer or running your stove and oven, which will produce a good deal of heat, may not be the best idea. Not only will this add to your load and make your AC work harder, it puts extra strain on the overall grid, which eventually translates to higher prices for you. Running these devices at night can help quite a bit.
While the bulk of your load may come from heating and cooling, this isn’t true for everyone, and you can still do something about the remainder of your load. This mostly boils down to common sense rules. Don’t leave lights on in rooms you’re not using. Don’t run needlessly small loads in the laundry. Unplug or turn off power strips for devices you’re not using or that don’t need to be on all the time. While these changes will make a smaller difference, they do make a difference, and this blog is all about the compounding power of small decisions and actions.
While you can install smart thermostats and devices to help automate or simplify cutting back on your use, this isn’t necessary. It’s easy to overspend on these initiatives, so be careful and have a solid grasp of the numbers. It’s not hard to change your thermostat yourself, turn off power strips, or install mechanical timers, all of which are cheap and easy.
Gas
Depending on whether you have gas or electric heat, you may or may not be paying the gas company for heating. If this is the case, follow some of the tips for electricity above to curtail that usage. Most people don’t have an option of who they get their gas from due to the nature of the infrastructure, so no easy wins there.
Beyond heating, gas may be used for your dryer and for cooking. As I stated above, be aware of how and when you’re consuming. Don’t run your oven, washer, or dryer during the heat of the day if you can help it and wait till you have a decent load of laundry to run it.
Water
Similarly to gas, it’s unlikely you have a choice in your water provider; it’s geographically determined. There are a few things you can do to curtail your usage, however. Energy efficient washers (for both clothes and dishes) and toilets will do quite a bit. A cheaper option is to replace the heads on your sinks and showers. By increasing the pressure of the water and other means, some heads can save you quite a bit of water. You can also look up DIY hacks like offsetting some of the water in your toilet by placing a brick in the tank.
Once again, the key is being aware of where you’re using water and considering how you could alter that behavior. If you spend a lot of water on your lawn or garden, perhaps there’s a more efficient system or method. The internet and YouTube will serve as your guides to anything you want to know or do.
Other Utilities
As I’ve discussed previously, you should be extremely wary of any recurring expenses. Some can easily be eliminated or replaced with cheaper options, like getting rid of cable altogether or replacing it with Netflix or Hulu. Others, like internet may not offer the option to go without, but you can shop between companies and plans. Often I see people paying for the highest bandwidth plans when they only use a fraction of what they’re paying for and would be better off with a cheaper plan. Do you really need home security? Only you can makes these determinations for yourself.
Credit Cards
Some credit cards offer rewards on utilities! This card, for example, offers extra points on some utilities, like internet, cable, and phone services. Do your research, as offers change over time and there may be something better out there. The signup bonus alone on this card is worth at least $1,000 as well, as of this writing.
The Lowdown on Housing
I hope some of these tips were helpful to you. If nothing else, I hope you appreciate that you have the power and authority to make decisions about your housing and impact your expenses and cost of living.
Did I miss some tips or home hacks? How do you save money on housing?
Love,
(Your) Wallet
*The average commute for the latest year with data (2017) was 26.9 minutes, but you’re probably not reading this if you live in a rural area. Only examining the mean can also be misleading as many people have very short commutes or very long commutes.
This post is part of a series on saving money on “The Big Three”: food, housing, and transportation.
