In last month’s post on the best ways to spend less, I noted that housing is by far the biggest piece of the average American budget, representing one-third of typical household spending. The best way to cut your costs (and, therefor, boost your profit margin) is to reduce how much you spend to keep a roof over your head.
One obvious option is to choose a cheaper house or apartment. But if you truly want to slash your spending, consider moving to a new neighborhood. Or city. Or state. If you’re willing to change locations, you can supercharge to your purchasing power and accelerate your saving rate.
While Kim and I are in Savannah, for instance, we’re spending much less than we would for the same lifestyle back home. According to the CNN cost-of-living calculator, Portland is nearly 37% more expensive:
Cost of living is one of those factors that few people consider, but which can have a huge impact on the family budget — sometimes in unexpected ways. According to The Millionaire Next Door:
Living in less costly areas can enable you to spend less and to invest more of your income. You will pay less for your home and correspondingly less for your property taxes. Your neighbors will be less likely to drive expensive motor vehicles. You will find it easier to keep up, even ahead, of the Joneses and still accumulate wealth.
It’s one thing to talk about the effects of high cost of living, but another to actually experience it. [Read more…]