How to reduce monthly expenses (including your mortgage)

The cost of living remains one of the biggest concerns for Americans today. 

According to the latest 2020 figures from the Consumer Expenditure Survey, housing expenditures — such as rent, mortgage, and utilities — are growing at nearly twice the rate of household income.

These figures may seem high, but thankfully there are solutions.

Learning how to spend your money wisely and understanding all the financial tools at your disposal can help you live comfortably without going into more debt or putting yourself at risk financially. 

Being more thoughtful about your finances doesn’t mean changing your entire lifestyle. With a bit of elbow grease and financial savvy, you can still enjoy all the nice things in life while improving your financial wellness. 

Here are some simple ways you can reduce your monthly expenses and help improve your personal finances in the process.

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1. Negotiate a better deal on your utilities

‍‍One of the easiest ways to start saving money on your monthly expenses is to negotiate a better deal on your utilities. 

Your best bet is to start with telecom services, such as your cable, landline, and cellphone. These service providers typically have the most flexibility in the plans they offer, and how much they can be discounted.

It’s as easy as picking up the phone. Call your current provider and let them know you’re shopping around. They won’t give up a deal too easily, but it’s important to remain persistent at this stage. Pro tip: ask to speak with the “Retention” department — they tend to have the best deals.

One way or another, you’ll likely end up with a lower bill. Just be sure to do your homework and compare rates from at least three different companies before making a final decision. 

Typically, utilities like water and sewer charges are often overlooked in terms of ways to save money. Make sure you are not overpaying for these bills, and if you are, talk to your utility providers about getting a lower rate.

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2. Make small, intentional investments in yourself

You can make small, but intentional investments in yourself by earning a degree in a field that pays higher and/or offers more opportunity to grow. 

Many people are hesitant to take time off from work in order to pursue a new degree or field of work. But if you crunch the numbers, making the change often pays off.

You may be concerned about losing income in the short run, or not feel ready to commit to a full-time course of study. Fortunately, there are plenty of low-cost or even free degree programs that you can complete online.

With a higher salary, you’ll be able to pay off debts faster, thus reducing your monthly expenses. 

Even setting aside time to educate yourself about managing your finances counts as investing in yourself. And look — you’re doing it right now, keep it up!

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3. Stop paying your mortgage (legal)

Let’s face it — your mortgage is probably your biggest monthly expense, and eliminating payments would do wonders for your financial wellbeing. You may consider refinancing your mortgage or switching to a low-interest loan to reduce monthly payments. 

Or, you could go one step further and make monthly payments optional* with a Fraction Mortgage.

In the past, your only option to defer or eliminate monthly payments was to sell your home and move to a cheaper area. Now, thanks to innovative solutions like Fraction, you can choose to not make monthly payments* all while staying in the home you love.

The cash you receive from a Fraction Mortgage can also be used to increase your monthly income, such as investing in a rental property, or building a rental suite in your home.

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4. Ditch the car

One of the more health and environmentally conscious ways to reduce your monthly expenses is to use alternative methods of transportation.

If you live and work in an urban area, you may have the option to take the bus or train to work. You could save even more money by walking or riding a bike. 

You can plan your routes using websites like Google Maps to calculate the distance between your home and work. Or, you can use websites like WalkScore to get information about the best neighborhoods to live in based on their walkability. 

If you live in a walkable community, you may already prefer to get around without your car. With many of your essential amenities within walking distance, you could even sell your car to save on payments and insurance, and simply rent a car when necessary.

Traveling more by foot or bicycle can do wonders for your health and wellness, and it can also save you thousands of dollars each year in gas, insurance, and maintenance costs.

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5. Move to a cheaper area

Some people prefer to live in the city, but this comes with its own set of challenges. Large cities are notoriously expensive. Fortunately, there are plenty of opportunities to move to a cheaper area and lower your monthly expenses. 

One way to do this is to use websites like Homes.com to search for homes in areas that offer a lower cost of living, including cheaper rent, utilities and easy access to essential services. 

By moving to a cheaper area, you can significantly reduce your monthly expenses. This may mean giving up the creature comforts of city living, but with more money in your pocket, you may be able to afford certain luxuries that were previously out of budget.

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6. Eat at home

Eating out is prohibitively expensive, there’s no way around it.  Delivery apps like UberEats not only make this habit more expensive, but they also make eating out dangerously convenient.

Fortunately, you can reduce the amount you spend on food by simply eating at home. This may mean taking a break from your favorite restaurants for a short period of time, but it’s a worthwhile sacrifice if it helps you to save money.

What’s more, eating at home doesn’t have to be a boring, monotonous process. You can make it fun by inviting friends and family over to enjoy a meal together, or trying to recreate your favorite restaurant dish at home.

If you miss the convenience of eating out or delivering in, you can always opt for prepared foods at your local supermarket. These meals are generally cheaper than what you’d order at a restaurant, plus there’s no cooking mess to clean up.

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7. Consolidate debt

Consolidating and eliminating high-interest debt is one of the best things you can do to improve your financial well being. 

Doing so can drastically lower your monthly expenses, all the while improving your credit score.

If you have a mortgage or already own your home, you can make use of a Fraction Mortgage or other home equity financing to consolidate your debt.

Homeowners with a Fraction Mortgage on average saw a 30 point increase in their credit score*. 

If you don’t have home equity to tap into, you can find debt consolidation companies online to help support you. These companies specialize in helping people to get their debt under control and are often less expensive than a traditional bank or credit union. 

The key is to start paying off your debt and consolidating your monthly expenses today in order to avoid falling into a debt trap.

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Reduce your biggest expense

Ready to say goodbye to mortgage payments for good? With enough home equity, you may be eligible to switch to a Fraction Mortgage — a financing option with no required monthly payments.*

Get your free estimate today. 

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Disclaimer: Information in this article is general in nature and not meant to be taken as financial advice, legal advice or any other sort of professional guidance. While information in this article is intended to be accurate at the time of publishing, the complexity and evolving nature of these subjects can mean that information is incorrect or out of date, or it may not apply to your jurisdiction. Please consult with a qualified professional to discuss your specific situation and confirm any information.