Housing Expenses

Housing expenses are the largest single expense category for most senior couples so there is usually plenty of room to cut expenses.

This is how housing expenses break down into the sub-categories used in the example for our Bureau of Labor Statistics model retired couple .

Category Per Cent of Total Expenses
Shelter 18.03%
Utilities, fuels, and public services 6.92%
Household operations 1.50%
Housekeeping supplies 1.34%
Household furnishings and equipment 3.60%
Total Housing Expense 31.39%

We will break these housing expenses down into the costs and payments associated with paying for your shelter (home mortgage or rent) and household expenses.

If you own your home free and clear, go to cut household expenses.

If you are renting, go to Reduce Rental Cost.

Still paying on your mortgage?  Probably the largest single check you write each month is for your mortgage payment.  To reduce that cash outflow, consider paying off or  refinancing your mortgage.

Pay off your mortgage

For most of us, the value in our home is our single largest asset.  We hope that the drop in real estate prices has slowed or stopped and our home value will start rising again.  However, the value of our home is the same with or without a mortgage.  Just the equity is different.

If you have the retirement savings that allows you  to pay off your mortgage, you might consider doing it.  Paying off your mortgage eliminates that monthly cash drain.  Your current available cash will be increased by the amount of the mortgage payment which should be substantial.  Then, if you need it, you can use your home in the future to establish a reverse mortgage which can further increase your available cash.

Bottom line: The money you put into paying off your mortgage should be recovered in the future when you sell you home.  Keep in mind, this depends somewhat on the housing market.

Consult with your personal financial advisor about paying off your mortgage.

Tell us your story about paying off your mortgage.

Refinance your mortgage

If you cannot payoff your mortgage, consider refinancing it to lower your monthly payment.  You can refinance for 25 or 30 years at a lower interest rate on the reduced balance of your old mortgage and lower your payments substantially.  This should not be done quickly or without considerable study.  You need to carefully evaluate the economics of refinancing.

The Federal Reserve has the best information I have found about refinancing.  It is a straight forward information site that is not trying to sell you anything.

Tell us your story about refinancing your mortgage.

Reduce Rental Cost

Are you renting a house or an apartment?

Renting a House

Here are a couple of basic strategies to reduce your housing expenses.

When your lease comes up for renewal, try to negotiate a lower lease rate.  Times are tough now and real estate prices are depressed.  You might find that rental rates in your area are also depressed.  Search for comparable  rental houses in your area and determine the rent for each one.  This will give you the information to see if you can negotiate a lower rental payment.  If the comparative rates are lower, you can use this information in your negotiations with your landlord.

Perhaps the largest decrease in rental payments can be realized by finding another house to rent and moving into it when your current lease expires.  You may find that you can downsize and still live just fine.  Moving will be a hassle, but when you start paying that lower lease payment, it should be worth it.  Don't move if you are not convinced that the saving justify it.

Tell us your story about reducing your house rental rate.

Renting an Apartment

The cost cutting strategies for an apartment are similar to those of renting a house except for asking the landlord if you can provide any "in kind" services for a rent reduction.  Perhaps you could assist the apartment manager as needed.  If you are handy and can fix things, you might be able to do "fix it" work for the landlord in exchange for a rent reduction.  It would be worth asking.

In our current economic times, apartment rental rates have dropped considerably and landlords have been forced to reduce rental rates to prevent vacancies.

According to an article in Business Week posted on Yahoo Finance:

"The economic crisis has opened up opportunities for apartment tenants. The inventory of vacant apartments is expanding, and rents are dropping quickly in major metros across the country.

For renters with leases about to expire, it's time to negotiate. Landlords are working extra hard these days to keep units filled.

When your lease comes up for renewal, negotiate for a lower rental rate and try to get as long a lease term as possible.

You might find apartments that are offering very attractive incentives for new tenants.  This would  entail a move, but it might be worth the hassle.  The savings may be well worth it.  Do your homework and check it out.

Tell us your story

Share your experiences and results concerning housing expenses with our readers so they can benefit from your experiences.  We seniors can certainly learn from each other and you can lead the way.

If you do not have a story yet, or you are not ready to share your experiences with us, go to household expenses.  If you do lower your shelter costs, please come back and tell us about your experience.  Thanks in advance.

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Rent out the room! 
When I lost my job, lost my home, and all benefits, I knew I had to do something. My rental on my trailer and 7 acres is 450.00. I was able to find lady …

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