THE BROKEN WALLET

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“I can’t afford to live below my means…now what?!“

Just four short years ago, brand new single-family homes in my neighborhood (about 2,500 to 3,000 sq. ft) sold for around $400,000. Today, new houses of the same size are hitting the market for $600,000 to $700,000.

But the sticker shock doesn’t stop there.

Brand new three-level townhomes with garages were about $275,000 in 2019. Today, the starting price for similar properties is $450,000. And don’t get me started on two-bedroom apartments, which now average between $2,000 and $2,500.

This isn’t just a local quirk, though, it’s a nationwide story.

Everything is more expensive from groceries to gasoline, and unfortunately, this makes it very hard for some people to live below their means (or even within their means).

Living within your means is a golden rule of personal finance – a fundamental principle of financial stability.

Simply put, it means spending less than you earn, which is the only way to take control of your money so that it doesn’t control you. But in today’s economy, being able to achieve this is becoming a privilege for the average person. In many areas, the average income simply can’t keep pace with the average cost of living. 

So if you’re feeling the squeeze, hopefully these tips can provide some financial breathing room.

Cutting expenses: A 10% Challenge

Chances are you’ve already taken steps to tighten your budget, such as skipping dining out, only purchasing essentials, or sacrificing vacations.

But here’s a challenge: Push yourself a bit further and try trimming an additional 10% off of every expense in your life – and not just the non-essentials.

Although it’s common to focus solely on cutting discretionary spending when trying to save money, don’t neglect those priority expenses (we’ll get into how to do this later).

Granted, lowering your expenses by another 10% might feel like a stretch. And if so, aim for at least 5% instead. 

Start by creating a comprehensive list of all your expenses (both needs and wants) and their current amounts. From here, cut back wherever you can. 

Negotiating rent: A potential money saver

Did you know that negotiating your rent can be a powerful tool to help you stay within your budget?

This applies whether you’re dealing with private landlords or apartment managers. This might be a new concept, but after speaking with a few leasing agents I discovered that this actually works – under certain circumstances.

Factors that affect your ability to negotiate include the length of your tenancy. Longer leases often provide better negotiation leverage.

Your payment record also plays a significant role, in which case consistently paying late or having insufficient funds in your account may weaken your negotiating position.

Be open to offering something in return, too, such as committing to an extended lease. Also, negotiations are most effective during lease renewals, as landlords are less likely to adjust rates mid-lease.

Finally, be reasonable in your negotiations. Realistically, you’ll likely only reduce your rent by $100 to $200 a month.

Budget billing for utilities: Predictability in an unpredictable world

Budget billing is a helpful tool that can prevent unpleasant surprises in your utility bills, particularly during extreme weather or changes in usage patterns.

Unlike traditional billing, where monthly bills can fluctuate significantly, budget billing allows you to pay a fixed, predictable amount each month based on your average usage over the previous year.

Budget billing offers financial predictability, enabling you to plan and budget more effectively, which can be a game-changer when you’re on a tight budget.

4. Utilize freebies and borrow wisely

Apps like Freebie Alerts can be a lifeline for those on a tight budget.

These can connect you with people in your community who are giving away items they no longer need. You’d be surprised at the treasures you can find for free – from furniture and electronics to toys and even food.

Normalizing the act of borrowing is another smart strategy. Consider borrowing items for special occasions instead of buying new. It’s an eco-friendly and wallet-friendly approach.

Barter: Trading skills for savings

Bartering is a time-honored practice that can help you obtain what you need without spending money.

Start by identifying your skills and those of people around you. Then, seek out barter opportunities. For instance, if you’re a graphic designer in need of home improvement work, propose a barter agreement where you offer your design services in exchange for the necessary renovations.

Cash back apps: Earning while you spend

Cashback apps are a modern way to put money back in your pocket when you shop. These apps partner with both online and in-store retailers, rewarding you for your purchases with a percentage of your spending returned to you.

Getting started with cashback apps is straightforward:

• Download a few cashback apps, some of which offer sign-up bonuses.
• Connect your credit or debit cards to the app, allowing it to track your purchases.
• Browse offers to find cashback deals from various retailers.
• After making a qualifying purchase, the app credits your account with the reward.

Popular cashback apps include Rakuten, Ibotta, Honey, and Dosh, and they’re an excellent way to balance your budget while still enjoying some of life’s pleasures. As a bonus, if you sign up for Ibotta using referral code “renmwpo” at registration, Ibotta will give you $5 when you submit your first receipt.