Owning a home can be costly. Making your mortgage payments, dealing with sudden maintenance expenses, utilities—a lot of bills come your way if you’re a proud homeowner. It’ll come as no surprise to you that the average US citizen spends most of their income on housing.
In fact, a recent survey from the US Bureau of Labor Statistics shows that the average US citizen spends 33.3% of their yearly income on housing. This is followed by transportation expenses, which make up 16.8% of total expenses in a typical year.
There’s a good chance that, if you’re a homeowner, your home is your largest expense each month, too. That’s why if you want to save money, this is the first category you want to look at. While most people see their total housing expenditure as a fixed cost, there may be more wiggle room than you think!
And that’s exactly why today we want to give you a few easy and powerful ways in which you could save money if you own a home. The ways we’ll go over below range from negotiating with your service providers to taking full advantage of your tax benefits as a homeowner; all have the potential to save you a significant amount of money. Let’s get started and save some of your hard-earned cash!
Budget and Track Your Expenses
First, it’s important that you know where your money flows. We’ve said it before, and we say it again: Make a budget and track your expenses. Even more so when you’re in the process of buying your first home or are moving into a new place, it can be smart to create a budget that allocates funds to utilities, property taxes, home insurance, and maintenance costs. That way you get an idea of what you can comfortably spend on your home each month. And if you already own a home, by tracking your expenses, you might find areas where you’re overspending and can potentially cut costs.
If you need some assistance getting started with creating a budget, there are plenty of free resources out there to help you. Credit Karma is a great example!
Shop around for home services–and don’t be afraid to pick up the phone!
When you’re looking for services like cable, internet, energy, and internet, don’t just go with the first provider you find. Get quotes from multiple providers and diligently compare them on costs, length of the contract, and in what other areas their offers might differ. Getting multiple quotes and assessing them side-by-side allows you to sign the contract that suits you best in terms of what they offer and whether you can afford them based on your budget.
If you currently have a contract that’s up for renewal, consider switching providers. Here’s a pro tip: If you call your current provider and hint at the fact that you might switch to another provider, they may offer you a nice discount to keep you as a customer. Though, if you’re planning on making such a call, make sure you’re prepared and don’t be afraid to walk away. Keep in mind that they want to keep YOU as a customer, not the other way around. It may sound a bit scary, but for these companies getting these types of phone calls is standard practice.
Even if you’re not planning on switching providers and are not in the market for a new house, calling your service providers now and then to renegotiate your bills can be a fruitful practice. If you come on the call prepared and have a good reason to get a lower rate (such as being a loyal customer for multiple years or having multiple service contracts with the same provider), you’d be surprised how much wiggle room there may be.
DIY Whenever You Can, But Be Careful
Another way you can potentially save money is by doing minor home repairs and upgrades yourself. Nowadays, there’s a vast database of online resources that you can take advantage of to help you get going, like looking for free YouTube videos on the topic (there probably are tons!) or checking websites like familyhandyman.com. Minor repairs or upgrades like getting a new paint job or fixing a leaky faucet by yourself can save you a lot of money over time by not having to hire a professional.
Small caveat: while it’s good to challenge yourself every now and then, do not try to DIY something that can be dangerous or can do more harm than good if it goes belly up. Doing repairs in your fuse box, fixing your own electronics, or installing a new dishwasher may be things better done by a professional for the sake of safety… While I’m all for fixing things yourself when you can, it’s better to stay away from the possibility of electrocuting yourself or turning your basement into an indoor swimming pool…
Be Mindful of Your Water, Gas, and Electricity Usage
Here’s yet another way to save some of your hard-earned money: B mindful of your utility bill. You may be paying more than necessary. You don’t want to pay for water, gas, or electricity you don’t even use, of course—which is truly a waste of money. Hence, if you’re out for the day or go on a trip, make sure your home’s heating or cooling is off. You could even do this automatically, by using a programmable thermostat to regulate the heating and cooling in your home. To add to that, if you’re not in a room, try to make it a habit to turn off the lights. And when the weather permits it, air-dry your clothes instead of mindlessly throwing them in the dryer—a true electricity vampire. (The Spruce did the math: Regularly using an electric dryer adds about $100 per year to your energy bill.)
Be mindful of the time of day you use electricity too, as there are utility providers that offer lower prices for electricity during off-peak hours. If you have such a contract, you could potentially save yourself quite some money over time by running your washing machine and dryer in the night, rather than during the day.
Another way you can save money on your utility bill is by making simple energy-saving upgrades, like installing LED light bulbs instead of more electricity-heavy alternatives or upgrading your appliances to more energy-efficient ones. You could even make your initial investment back in savings on your energy bill!
Review Your Mortgage Periodically
Depending on the state of the housing market and your financial situation, you could potentially refinance your mortgage to get a lower interest rate. This could save you thousands of dollars in interest over time! However, you must keep in mind that refinancing often involves a closing fee that you’d have to factor in.
According to Investopedia, a good rule of thumb is that an interest rate reduction of 1% is necessary for the whole refinancing process to be worthwhile. Or, in other words, when you’re considering refinancing your mortgage, check whether the monthly savings on your mortgage bill will make enough of a positive impact on your overall financial situation.
The loan terms you get offered by the bank or financier always depend on your credit score. Hence, if your credit score is not that great, refinancing may not be an option for you. But, periodically reviewing your mortgage and checking whether you can refinance against more favorable terms may be a fruitful endeavor! And remember that you can always consult a mortgage expert whenever you’re not sure if a loan proposal will save you money in the long run.
Use Tax Benefits to Your Advantage
Lastly, homeownership can come with a few worthwhile tax benefits. Be mindful of those when filing your taxes, as these benefits can potentially save you quite some money on your tax bill. You don’t want to sleep on these!
One such benefit is the mortgage interest deduction, which is a significant deduction that allows you to subtract a portion of the interest you’ve paid over the year from your taxable income. And to add to that, in most cases you can deduct your property taxes from your federal tax bill, too. Though, please be mindful that there are limitations to the total amount of mortgage interest and property taxes you can deduct.
There may be more wiggle room than you think!
By now, you know about six easy but powerful ways you could save on your housing costs. Did you know all six? Picking up the phone and calling your service providers, doing small and safe repairs yourself, and being mindful of your energy usage are all great ways you can potentially save money if you own your home!
And did you ever review your mortgage to check if refinancing could leave you with favorable terms? If not, then it is your reminder to do so! And lastly, whenever you’re filing your taxes, please don’t forget to use the homeowners’ tax benefits to their full benefit, as this may reduce your total tax bill significantly.
I hope that by reading this blog you’ve gained valuable insight into the different ways you can save money if you own your home. There may be more wiggle room than you think! Because housing is the category the average US citizen spends the largest part of their income on, a small reduction in your housing costs can increase your total savings significantly. Let’s save that hard-earned money!