This article is not for beginners. It’s not for those just thinking about purchasing their first property in pursuit of financial independence. It’s for those who are ready, willing, and able to take their life in their own hands. It’s for those ready to seriously start making serious strides towards saving ~$20,000 to get that down payment for a first property.
If you aren’t one of the lollygaggers, if there is absolutely nothing that is going to stand in between you and freedom, this article is for you.
In this post, I am going to describe some extreme budgeting techniques that some of my friends and I have used to save a significant amount of money, allowing us to quickly jump into this real estate game!
Full disclosure: Some of these are extremely effective, while others may seem completely outlandish. I suggest giving them a shot before shutting them down.
Here it goes.
Living: The Rent Hack
The rent hack is house hacking before you have the means to house hack. What you do here is you find a 2-5 bedroom apartment or house that you can rent. You rent the entire thing from the landlord and turn around and rent it by the room (or Airbnb it) to other people such that they are covering your full rent payment.
For example, you find a 3-bedroom house for $1,200 on Craigslist. You rent out the entire place from the landlord for $1,200 and then rent out each of the other two bedrooms for $600 each. That way, you are collecting a total of $1,200 from your roommates, paying your landlord $1,200, and effectively living for free. The more bedrooms you rent out, the higher likelihood that you will bring in money from your living situation.
Note: You need to let your landlord know that you are doing this! This is a new idea so most will likely say no, but it only takes one yes to get started. I would hope that a couple of rejections are worth $600+ per month.
Transportation: Bike to Work
Ideally, the house or apartment that you find is within walking or biking distance to work. That way you eliminate your need for a car. If you don’t have a car, that’s great! Let’s keep it that way.
If you do have a car and don’t want to get rid of it
This is a very good way to transition your car from a “liability” that takes money out of your pocket to an “asset” that puts money in your pocket.
Food: Grocery Shop & Grocery Shop Cheap
Food is another large expense for many Americans. One of the reasons this is the case is because we so frequently go out to eat where the meals are three times as much. No thanks!
If you want to save in the food department, you need to start making the grocery store a place you frequent. However, grocery stores can be dangerous too! There are a lot of things that are tempting but that you don’t need. Stay strong!
Go meatless for lunch.
If you’re vegetarian, this won’t be too hard for you. However, if meat is the staple of your every meal, there is likely some slimming down you can do (pun intended). Meat is 30%-40% of the average person’s grocery bill. Only eat meat for one meal each day, and you’ll be saving 15%-20% of your total grocery bill AND you won’t get that mid-afternoon groggy feeling. Win-win!
Fun Extreme Budgeting Tips
This is the area that might get the most push back. These are extreme, fun—albeit less impactful—ways to save money, but they do work!
Let’s talk about saving on utilities:
Take military showers.
This is when you only use the water in your shower for functional purposes, to get yourself wet before you lather up and right after to rinse yourself off. For 90 percent of the time, your water is off and you are just washing yourself.
In this same category is making sure you shut your water off while you are brushing your teeth, shaving, and performing all other idle sink-side activities.
Put a two-liter bottle in toilet tank.
Get a two-liter bottle, put a few rocks in it, fill it with water, and place it in the back of your toilet tank. By doing this, your toilet will need less water to fill the tank, and therefore less water will be flushed. If a two-liter bottle is too big, try a one-liter bottle.
Hang clothes to dry.
This is self-explanatory. It’s no secret that your dryer uses a whole lot of utilities. I’d recommend getting a clothes rack, and if it’s a nice day, hang dry your clothes. Depending on where you live, it may only take two or three hours to complete.
Unplug electronics when not in use.
When your electronics lie idly but are plugged in, they are still using electricity. If you aren’t using your TV, appliances, and other electronic devices, unplug them! You’ll save quite a bit of electricity this way.
Cut sponges in half.
Look at the size of most of the things that you wash. I would bet that in most cases you do not need the ENTIRE sponge. Why not cut them in half or even thirds to make them last two or three times as long?
Put a soap bowl next to the sink.
Now that your sponges are cut in half, I would bet that they can fit in a small bowl beside your sink. Fill that bowl with soap and water, and put the sponge in there. That way, you are saving water and saving soap all at the same time!
There it is—some extreme ways you can save to expedite the time towards your next investment. Again, some of these are silly and some are affective, but I do, have done, or know people who do all of these ideas. If it works for us, it can certainly work for you.