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We all would probably like to have a little more cash in the bank. One easy way to do that is to underspend on housing and transportation costs.
Business Insider recently spoke to Tanja Hester, the author of the book “Work Optional: Retire Early the Non-Penny-Pinching Way.” In the book, Hester makes a number of suggestions for how you can save more money without feeling like you’re saving money. One of the easiest, in her opinion, is cutting back on housing and transportation costs.
For instance, while you might be more comfortable in a 2-bedroom apartment, choosing to live in a 1-bedroom could save you hundreds of dollars in housing costs. Hester, who retired at 38, lived in an older 1-bedroom apartment even though she could afford to move somewhere much larger and nicer.
Housing costs can also be reduced by doing things like getting a roommate or renting your house (or a room) out on Airbnb on the weekends.
A savings of just $400 a month, for instance, would net $4800 a year. Do that for a decade and you’ll have almost $50k in the bank, more if you’re socking it away in a high-interest savings account. The more you’re saving each month, the quicker things will add up. I’d also venture to say in most cities the difference between one and two bedrooms is a lot more than $400. If you buy a home, purchasing a $500,000 home even though you can afford a $800,000 mortgage can mean great things for your savings.
Housing is where we all spend the largest percentage of our money. The more was you can figure out how to cut down those costs, the more you’ll save. Even more than cutting corners in other parts of your life.
Another big one for Hester was transportation costs. Owning a car and paying for the insurance, maintenance, and costs associated with it can get experience rather quickly.
Hester recommends living somewhere where you can walk to most places, eliminating the need for a car. If you do need a car, consider buying used and keeping the vehicle for a long time rather than trading it in for a new model after a few years.
When I moved to San Francisco I actually ditched my car to save some cash. Beyond the car payment and gas, I was also going to have to pay for parking. Once I added it all up, I would have spent close to $600-$700 a month on having a vehicle. I walk a lot and take the train, but even if I chose to take Lyft’s everywhere I would be spending less than that every month.
Clearly, your (literal) mileage will vary, but look for ways you can cut down on spending when it comes to getting around. Carpooling if you need that car or taking the bus or train can add up to a significant savings account over time.