People sometimes forget that being a homeowner means extensive budgeting. It’s one of the largest and most valuable purchases that you are going to make in your lifetime. With that being the case, housing costs can eat up into your monthly income fairly quickly.
Financial advisors will argue that there isn’t any problem with putting 50% of your income towards housing costs. While this is certainly doable, it barely leaves you with any room for comfortable living.
It’s possible to cut your costs down to 30%. With that extra 70% in cash flow, you could be taking care of priorities such as: paying off debt, stashing it in an emergency fund, or taking care of home repairs.
Cut out the unnecessary purchases or luxuries in your life. For example, if you go out to eat everyday on your lunch break at work and it ends up costing you $8.50, by cutting 3 days out of your usual 5, you would be saving $25.50 a week. That’s $102.00 a month and a whopping $5304.00 a year. Now that’s a nice financial safety blanket.
Get rid of your credit card debt or any forms of debt that you owe. One by one, as you pay them off, you’ll be giving your bank account more and more room to breathe. Going back to the previous example, by taking the $102.00 that you had saved from bringing a packed lunch and adding it on top of your usual monthly credit card payments, you’ll experience a 10-15% quicker pay off rate.
By cutting costs and ridding yourself of debt, you’ll be able to place your hard-earned money towards other necessities or even a much-needed vacation. While it requires patience, and at times frugality, you’ll be able to reap the rewards in the long run.
Bio: Kuba Jewgieniew, who is the founder of Realty ONE Group, had a vision to create a culture that empowers employees to provide ethical, professional and results-oriented real estate services to property owners and prospective buyers.