Trimming the Average Budget: Housing and Shelter

Housing – shelter – $10,023/year

Keeping a roof over your head is the single biggest part of the budget of the average American, consuming over $10,000 per family per year – more than 20% of their take-home pay. Yet, quite often, shelter isn’t seen as a target for trimming spending. Many families simply view rent or the mortgage as requirements without stepping back and looking at the big picture.

Here are several ways – both easy and challenging – to reduce the money you spend each year on your housing bill.

Cutting Down Your Housing Budget


Downgrading is perhaps the most effective way to save money on shelter, as it immediately and directly reduces your bill. However, for many, this can seem like an impossible choice, especially if they’re established in a residence.

Move from a larger home to a smaller home

Quite often, people who live in homes have more space than they actually need. In fact, I’d argue that our current family – two adults and (soon to be) three children – has arguably more space than we need in our current home. Ask yourself if there are rooms that you rarely utilize in your home or rooms that could easily be combined to cause unused rooms. If this is the case, you’re probably appropriate for downgrading your home, which will reduce (and perhaps eliminate) your mortgage payment.

Move from a home to an apartment or other rental property

This is a worthwhile choice for people who are finding that the financial burden of owning a home is too much for them. In truth, homeownership has a lot of additional costs that you don’t see right off the bat, which can take new homeowners by surprise and stretch their money much tighter than expected. If you find yourself in this boat, look seriously into selling your home and moving into a rental, which is much easier in terms of managing costs on a limited budget.

Move from a larger apartment to a smaller one

This often works well in cities with many apartment options. If you’re finding that your apartment is stretching what you can afford, start hitting Craigslist and rental sites to see if you can’t downgrade into something smaller that still meets your needs. Quite often, singles and couples without children in city environments don’t spend significant amounts of time at home – and when they do, it’s often doing sedentary activities. Thus, you can often downgrade with much less discomfort than you expect.


An alternative option to downgrading is to simply share your housing with someone. Finding a roommate is a surprisingly effective way to reduce costs without giving up the place where you life, no matter what your situation. Here are some options to look at.

Get a roommate for your apartment

This often works best if you’re single, but can work well with married couples in apartments, too – I know of several married couples who have shared two bedroom apartments over the years. If you’re having a hard time meeting costs on your own and have a spare bedroom (or some spare space that can be so utilized), look into getting a roommate. One good place to start is via your own social network.

Rent out a portion of your home

If you live in a home and have rooms that are unused (perhaps the children have moved out), you can consider renting part of your room out to singles, couples, or families who are looking for low-cost housing over the short term. This works best if you have a floor of your home that you can rent.

Look into cohabitation arrangements for your home

Perhaps a family member of yours is in a unique situation after graduating from college or going through another life change. If this is your situation, look into cohabitating with them. Invite them to share your home with you for some portion of the monthly mortgage payment (perhaps have them pay half of the mortgage while you cover the full energy bill – after all, you’re the one whose name is on the mortgage, so you’ll gain asset value by their presence). Alternately, you may be the person that takes advantage of such a situation. My wife and I have actually discussed this option in the past.


Given the costs of home ownership (and even the monthly cost of a big, fat rent check), some preparation before you make a big leap can really help.

Rent instead of buying

In most (not all) situations, renting is more cost-effective than owning a home if you’re conservative with the difference in money. This is particularly true if you’re not confident you’ll be living in the same area in five years. Look at apartments and homes that meet your needs both on the rental and the ownership side of the coin and also consider the extra costs of owning a home – insurance, repairs, maintenance, and so on.

Save until you have at least 20% of a down payment before you even consider buying a home

If you rent with less than 20% down, you’ll either have to take out PMI (insurance against your lack of a down payment) or take out a secondary loan, often with a higher interest rate. Be patient and avoid those extra costs – keep saving until you have that 20% down payment.

Choose a place to buy/rent that’s smaller than you originally wanted

It’s easy, when you’re looking at apartments and homes, to fall in love with a living space that far exceeds the space you need. Be realistic and don’t push your money just so you can have more space to store all of your stuff. Speaking of all of your stuff…

Sell off all of the stuff you don’t use

Before you even consider moving, go through the items you own and get rid of the stuff you don’t actually want or use. Turn a critical eye to everything. Not only will this earn you a bit of cash, it might shock you when you realize that you really don’t need as much space as you initially thought you did.

I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.

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