Recent dramatic shifts in the economy and rising prices have left many people struggling with a significant increase in their basic cost of living. They find themselves constantly rebalancing their bills and adjusting their budget.
Housing, an integral part of your bare bones budget, represents one of the items that you absolutely must fund every month, along with food and transportation. These three largest expenses form the bulk of your budget, often leaving little room for flexibility.
A recent article on Yahoo Finance revealed that the average rent in the US has risen to just over $1500 a month and over half of Americans are finding it difficult to continue to pay that amount.
As rent prices continue to climb, finding ways to offset this increase and live beneath their means is essential to allowing those on a tight budget to save money and reach financial goals.
The reality is: As you make financial decisions about your increased rent, other areas of your budget will also be impacted.
Here are the frugal steps we suggest you take when you get that unexpected notice from your landlord or landlady or property management company (you get the idea) – revealing that your cost of living is about to get more complicated.
Watch the video on dealing with the rising cost of rent.
Know Your Rights
Knowing your rights and responsibilities as a renter will save you a lot of time and effort. You’ll avoid either missing a valid opportunity to question the timing and amount of the rent increase or waste precious time arguing a losing case. The attorney general’s office in your state is where to look for information. Their website may also have a handy list of renter rights and landlord responsibilities that you can download.
Buy Yourself Some Time
When your rent goes up, you must immediately focus on ways to give yourself time to reevaluate your budget.This is the single most important step which will allow you to go from panicking to planning.
Use Money from Savings
Do you have any funds available to cover the rent increase for a few weeks or months? If you do, this will buy you time as you rebalance your budget or make alternative housing plans.
Knowing your average savings rate each month is quite helpful in determining this number. However, your true savings rate is different than the amount your bank account is growing every thirty days.
Some of the money in your account should be reserved for upcoming expenses, especially those which are due quarterly, semi-annually, or annually. Insurance, memberships, or classes are all examples and the specific method of saving to pay them is known as sinking funds.
All this means is that a savvy budgeter sets a specific amount aside each month so that when the bill arrives, the money is available to pay the bill in full. The money set aside to pay these bills accrues each month, which may make your bank account look healthier than it truly is.
Subtract the money reserved for sinking funds before determining how much you have available to underwrite the uptick in rent costs for a short period of time.
Use your Emergency Fund
If you have an emergency fund, you might consider using a portion of it to cover the rent increase. If you do this, be absolutely certain you put a strict time limit on it. Remember, the goal is to reassess, recalculate, and rebalance your budget, not to totally deplete your emergency fund.
Cut Discretionary Spending
Finally, if you have neither savings nor emergency fund, pausing all discretionary spending on things like restaurants, movies, plays, or expensive social occasions can allow you to set aside a significant amount of money in a short period of time.
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Cut Your Expenses
Ultimately, the money for the increased rent must come from somewhere. You will either need to cut back your expenses or bring in additional income.
Since you cannot control the monthly rent payment, the alternative is to focus on what you can control. Here are some obvious categories in your budget which can be cut back or cut out in order to devote more money to rent.
Lower Energy Bills
There are many strategies you can use to lower your utility bills (without drilling holes in your landlord’s property).
For instance, most items with a digital clock or remote-control use phantom power. This means that even though they not turned on, they are still consuming power. Unplugging these items when not in use is an easy way to reduce your energy consumption.
Using a fan, instead of turning on the central air can help a lot in the summer. Raise the AC temperature and use fans in the rooms where you sit. Statistically, by doing this you’ll be able to raise your AC by up to four degrees with no loss in comfort. For every degree you raise the AC, you’ll save between one and three percent on the next month’s bill.
Cut Grocery Bills
Despite rising grocery prices, another prime place to look for extra money each month is cutting food expenses.
When I started creating weekly meal plans around ingredients which I purchased on sale, I was able to drop my grocery budget by twenty percent. You’d also be surprised how effective it is to apply simple strategies like: shopping with a list, looking for markdowns, avoid shopping hungry, and avoiding buying prepared meals and frozen entrees.
Stop Eating Out
When it comes to food dollars spent at restaurants, can save over $100 each month just by taking lunch from home instead of eating out with coworkers.
If you also reduce drive-thru dinners and sit-down restaurant meals or drinks with friends, you could save several hundred dollars every month.
Picnics are, of course, a great alternative. Now, that’s truly “eating out”.
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Increase Your Income
Increased rent may mean that you need to explore ways that you can increase your monthly income. Here are some ideas:
Work overtime
Taking on additional hours at your current job can be a straightforward way to increase your earnings, especially if you are eligible for overtime pay, which is typically higher than your regular hourly rate.
Work a Premium Shift
Shifts outside the standard 9-5, such as evening or night shifts, often come with higher pay rates due to the less desirable working hours. This may work for you, especially if you are a night owl and don’t mind sleeping during the daylight hours.
Ask for a Raise
If you’ve been performing well and taking on extra responsibilities, consider discussing a raise with your employer. Highlighting your contributions and the value you bring to the company can help justify an increase in your salary.
Take a Second Job
Taking on a second job can help bridge the gap between your income and rising expenses. Look for part-time opportunities that fit around your primary job’s schedule.
Work a Side Gig
Utilize your skills and hobbies to find additional work that you can do in your spare time. Side gigs such as tutoring, pet sitting, or handyman services can help you earn extra income.
Sell Handiwork on Etsy
If you have a talent for crafting or creating handmade goods, setting up an Etsy shop, like this one owned by our daughter-in-law, can provide a platform to sell your products to a wide audience, potentially turning a hobby into profitable side gig income.
Freelance on Fiverr
Offer your professional skills, such as writing, graphic design, or programming, on freelancing platforms, like Fiverr.
Be aware that you’ll need to create a profile which lists your unique skill sets and allows you to stand out amongst in the crowd. It can also take a while to build a client base as you get positive reviews of your work, but this does allow you a platform for connecting with clients looking for temporary or project-based work.
Flip and Resell Items
Purchase items at a low cost from thrift stores, garage sales, online marketplaces, or even found thrown out to the curb. Clean the up, complete repairs, refurbish and then resell them at a higher price.
Friends and family members will often give you unwanted items. To avoid hurt feelings and unnecessary conflicts, just be sure they understand ahead of time that you will most likely be reselling the items they have given you.
This can be a lucrative way to make money if you have an eye for valuable items.
Deliver Food
Working for food delivery services can be a flexible way to earn extra income. However, consider the costs associated with the job, such as vehicle wear and tear, increased fuel expenses, and the importance of tips to make it financially worthwhile.
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Consider Housing Alternatives
Finally, you may want to consider other living arrangements and locations. Check your lease and with your landlord or landlady. Determine how much time is left on the lease and the total cost of breaking the lease. Sometimes, this penalty is surrendering your security deposit. Other times expensive stipulations may apply, which drive up the cost of moving out early.
Find out if it is permissible to take in a roommate. The lease should spell this out in writing. It is not lawful to sublease or sublet your rented space, but it may be permissible to take in a roommate. Be certain you follow any stipulations spelled out in the lease. Otherwise you may be putting your own residence in jeopardy if you are caught.
By asking around at work, church, or other spaces you frequent, you could find a roommate (who is possibly in the same situation as you with rent going up.) It goes without saying to know the person well before moving in together.
When looking at rent prices, search for similar square footage apartments in your area. You may even want to look for less square footage, if you can be happy and function in less space.
You may need to set your search perimeter wider to find a new living space that fits in your budget. If you move a little farther from where you work, you may find more reasonable rent prices. But, be sure to figure in increased commute time, additional cost of gasoline, and wear and tear on your car before making a decision.
Bear in mind, that prime locations will tend to cost more, even if you reduce your living space. Be sure you weigh all the factors before signing a new lease, because moving can be quite costly.
More Ways to Cut Expenses
Even if your rent isn’t going up, you may be looking to cut expenses and save some quick cash. Our guide to saving more money covers ten ways you can dramatically reduce your expenses. There are step-by-step instructions and checklists in the guide.
Your Turn!
What’s the cost of rent like in your area and is it increasing? How are you dealing with the higher cost of living? Tell us in the comments.
I found that a house payment is often cheaper than a rent amount. Now might be the time to start a down payment stash.
We’ve noticed that, too. But, there are a lot more expenses to owning a home when compared to renting. So, you really have to do the math before buying.