It’s no secret that setting a budget and sticking to it can save you money. The trick is doing both and doing it well. That’s what we’re going to explore in our new series – Building a Better Budget. It’s all about how you can save yourself some money with a little budget planning and taking advantage of some useful tried and true tips. For more tips, check out Part 1.
One of your biggest expenses as an adult is your home. Housing expenses include rent or mortgage payments, utility costs, and operations – especially maintenance and repairs. In 2013, housing comprised 32.6% of average annual living expenses in the southern US region. According to Consumer Price Index (CPI) reports, the cost of shelter has been slowly rising for several years.
In Texas, CPI data shows that rent and the “equivalence of rent” (mortgage) increased 5.1% over last year in Houston and 3.9% in Dallas/Ft. Worth. Residential energy rates, meanwhile, are down a little from last year, but they are projected to continue gradually increase in the years ahead.
In short, expenses that already account for one-third of your average annual budget are slowly increasing.
That sounds pretty dire especially since it might appear that you can’t control these costs. We’re here to tell you that you can! While everyone’s situation is different, there are smart ways to rein in your housing costs. Using the CPI’s cost analysis, let’s look at three areas where you can save money.
CPI breaks shelter down into rent or mortgage, depending on the home’s circumstance. While it’s convenient to view them as fixed costs, it’s more productive to see them as cost/benefit arrangements. As a renter, you do face the price of their rent plus insurance (more and more landlords not require it), but generally you aren’t saddled with expensive maintenance and repair costs or property taxes – which can be seen as a way to save money.
And at the end of the lease, you can shop around for better housing situations as a renter. By developing an effective strategy for apartment hunting, you will land the best deal.
Homeowners, meanwhile, face mortgage payments, insurance, maintenance, and repair costs as part of building equity in their investment that pays them back at the time of sale. Homeowners do have the option of refinancing their mortgages to a lower rate, a shorter term, or from a adjustable rate to a fixed rate.
The trick lies in watching the rates, knowing the cost of refinancing the loan, (usually 3-6% of the principal), and whether your payment savings will recoup those costs). It also helps to understand the best times of the year to refinance, such as the last two weeks of the month or —even better — the last month of a quarter.
According to national averages, powering your home uses about 2.7% of your total annual income. The average monthly electric bill in Texas is 1,174 kWh and costs $133.33. Of course, those summer air conditioner bills far outstrip the winter heating bills.
Learning to reduce your energy use does save you money. The trick is to remember that lots of little things waste more energy than one or two big energy hogs.
We’ve already tackled a few ways you can better control your electricity and water usage. Being more energy efficient with heating and cooling will also reduce your energy costs and reward you with improved comfort —and increased value for your home.
The great thing is that, if you’re one of the majority of Texans with a smart meter on your home, you can track your energy usage down to 15-minute intervals at Smart Meter Texas. It’s free and all you need to do is set up an account. Just by staying on top of how much energy you are using throughout the day can provide you with money-saving insights about how much it is costing you.
Running your home requires maintenance and repairs — which costs money. Common cleaning chemicals such as glass cleaners, surface cleansers, laundry detergents, and dish soap can add up over the course of a year.
Instead, you can make some of these yourself for a fraction of the cost. Laundry detergent, for example, can be made in your kitchen at a fraction of the cost of a national brand. Homemade cleaners using vinegar or lemon juice are excellent environmentally-friendly cleaners and become even more effective when combined with simple dish detergent. Mixed in a spray bottle, it can be used to kill pet odors on furniture and carpets – and I’ve used it to scrub away dried latex paint splotches. You can also make your own dishwasher detergent.
And sure, things around the home break from time to time. The easiest way to avoid costly repairs is preventative maintenance. For example, by routinely inspecting your heating, ventilation, and air conditioning (HVAC) system and cleaning its key components, you can avoid costly damage from dirt and friction. Other suggestions include:
- Water heaters should be emptied and flushed once a year to reduce sediments.
- Clothes dryers should also have lint cleared out from inside them every year to improve their performance and reduce the risk of fire.
- Clean your gutters every fall and spring.
- Climb into the attic to check for roof leaks BEFORE they get bigger or do more damage.
Sure, all these jobs together sound like a mountain of work, but you don’t do them all at once, and most of them only take a few minutes. By taking a few minutes every few months to properly clean a major appliance, you increase its lifespan and reduce the probability of an expensive breakdown.
These are just a few ways you can stretch your home budget to save money. Expenses vary from city to city in Texas, and not everyone’s will be the same. But by better understanding what your expenses are you can find better ways to control them — instead of the other way around.
If you’ve got some more ideas, post them to the First Choice Power Facebook Page. We’d love to hear about them!