“The obstacle in the path becomes the path. Never forget, within every obstacle is an opportunity to improve our condition.”– Ryan Holiday
For some of us, it’s really hard to financially get to the next phase in our lives. We might have aspirations of one day starting a family, buying a house in a great community, and not to mention being extremely successful in our careers. Although some of these things might seem like a dream now, they can and will one day become reality. In today’s blog I’m going to address three things that people spend the most money on, and how you can save on these expenses. My hope is that by analyzing your financial situation you will realize all of your dreams are more than possible, you just need to go down the right path. Without further adieu let’s analyze your three biggest expenses:
Housing – Housing is probably the biggest expense Americans endure. Rents specifically have skyrocketed and have created a bit of a vicious cycle within the millennial generation. For this reason many millennials are staying with their parents for longer periods of time; they simply cannot afford to move out. Luckily I’m a landlord, and will share a bit of insider information. What we find as landlords is that there are plenty of people who make good salaries, but might have less than stellar credit usually due to outstanding loans. So the question is what can you do about high rents in your area? And how can you save money? I have a few answers for these questions.
1)The most obvious answer is to get a roommate to absorb some of the rent costs. This allows everyone to save a little more money and can really cut down on your living expenses.
2)My next suggestion, which might seem unconventional, is to get pre-approved for a mortgage and try to buy a house (wait a second hear me out). There is little dispute that in parts of the U.S (specifically New Jersey) rents are comparable to what you can buy a house for, so why not go for it? My best suggestion would be to purchase a small multifamily home and live in one unit while renting out the other; this alone can dramatically diminish if not completely wipe out your housing expense.
3)But wait a minute; say you don’t want to be a landlord or manage tenants, then what? Another way that you can come close to eliminating your housing expenses is to actually buy a 3-4 bed single family home; and then get roommates or Airbnb the spare rooms. This again will allow you to dramatically decrease you living expenses, give you the potential to live for free, and you won’t need to manage tenants as you just need to find roommates.
Health Insurance – For the past few years health insurance has been a bit of a topic of discussion. If you are paying out of pocket for Health Insurance, it is probably one of your biggest expenses. Luckily again, I have some experience in the health insurance industry and can certainly shine some light on how you might be able to save on your monthly premium.
First, I should disclose that like all insurance Health Insurance is a game of risk. No one plans on getting sick or injured. The plan you choose is based on calculated risk. With that said when choosing a health insurance plan, be extremely conscience and honest with yourself about your medical history. If you do have a medical history a plan with a high premium and low deductible might actually be worth it to you. Why? Because typically plans with higher premiums and lower deductibles offer better coverage. If you are in the Dr’s office or hospital frequently your insurance would absorb the cost you would have to pay out of pocket if you didn’t have that plan.
Now on the other hand say you’re generally healthy, then you might be able to go for a plan with a higher deductible and lower monthly premium. The logic behind this choice that if you go to the gym, and eat healthy the likelihood of you dropping dead from cardiac arrest shouldn’t be all that high. Taking a plan with a higher deductible and lower premium would allow you to really just have basic coverage and allow you to save on your monthly health insurance premium. Again it’s all based on risk and how you feel about the condition of your health.
*One last item to mention with health insurance plans are in and out of network plans. It’s important to realize not all procedures and Dr’s will be in your medical plans network. So before you do go in for a surgery or any type of procedure make sure the Dr. (specifically any anesthesiologists) are in your network. If not, you could be balanced billed for the cost of the procedure which could be tens or hundreds of thousands of dollars based on the procedure. Make sure to really do your homework when dealing with doctors and insurance plans, as it could take a huge toll on your financial health if something is overlooked.
Loans/Debt – The last biggest expense that most people have are loans and debt. Whether these are student loans, car loans, or credit card debt. The really great things about loans and debt is that they are extremely controllable and manageable. If you are in massive credit card debt; hide the credit card and continue to pay off your balance with you credit card company. The same goes for loans. If you are facing student loans continue to work on them and pay them down as long as the payment is manageable. Now, in the event you are having trouble making payments on either loans or credit card debt, these items are negotiable with your lender. Here is my story of how I negotiated the terms on my credit card, along with another blog on how you can consolidate and save on your student loans. By both negotiating and consolidating loans your monthly debt can drastically decrease and making for a much healthier financial future.
Conclusion – Housing, Healthcare, and Debt can be a brutal vicious cycle with no end in sight. These three expenses are what prohibit many people from moving on to the next stages of their lives, but if approached with a different mindset can really have a massive effect on your financial well being. Let us know what you think in the comments below! Are these your three biggest expenses? What are some other expenses you could do without?