Move over Suze Orman, there's a new advocate for financial security on the scene -- and he's not your typical personal finance expert. It's NFL running back Phillip Lindsay, who admitted to living with his parents during his first year as a professional athlete to save money. Lindsay's base salary at that time was $570,000.
Experts say you should cap your housing expenses at 30% of your take-home pay. On an annual salary of $570,000, that 30% cap equates to nearly $8,800 monthly if we assume 38% of his salary goes to federal, state, and local taxes. By the numbers, Lindsay definitely had the resources to live in a nice place.
And yet, he chose to play it safe financially and save up for a year. Clearly, you're never too rich to find creative ways to spend less or to make more. Even if your rent or mortgage payment is already below that 30% cap, some frugality today always improves your financial security later. Try these five strategies to make it happen.
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1. Live with your parents
You can make like an NFL player and live with your parents. You wouldn't be alone, either. According to U.S. Census data, some 24 million people aged 18 to 34 live with their folks.
This arrangement is more likely to be successful if you are saving for something specific, such as a down payment on your own place. Do your homework first -- know how much you'll need to save and for how long. Then have an open conversation with your parents about it. Let them know why you want to share space with them and how long the arrangement will last. Find out what they need from you in terms of rent and household responsibilities. You'll want to talk about boundaries and privacy, too.
2. Get a roommate
Real estate website Trulia estimates that nearly 4.2 million households in 2018 included a roommate. If your place has an extra bedroom, you might be able to turn that into a stable source of income by renting it out.
Before you advertise that room, research the landlord rules in your homeowners association and the laws governing renting out rooms in your state and city. As a landlord, you'll generally be responsible for providing a safe residence, completing repairs promptly, and respecting your tenant's privacy. Prepare yourself for the maintenance duties by considering how you'd like a tenant to report maintenance problems, and how you plan to address what needs fixing.
You'll also need to decide on terms. Will this be a month-to-month arrangement or an annual lease? What happens if you or the tenant wants to make a change to the arrangement? Document your requirements in a formal rental agreement and have your tenant sign. Even if you end up renting the room to a good friend, you need to have a contract in place.
3. Negotiate with your landlord
You can also talk to your landlord about ways to lower your costs. If you are a great tenant and the place is priced higher than comparable properties, you might be able to negotiate lower rent or at least more flexible terms. Research what's available in your area and document your findings before you open up the conversation with your landlord.
If lower rent is a no-go, think about the property maintenance that your landlord currently manages. Are there any responsibilities you can take over? In less formal situations, you may be able to trade some yard work or maintenance services for a discount on the rent.
4. Rent out your parking spot
If you have a clean and empty driveway or garage, it could be another source of ongoing cash. But there are caveats. Some cities, like Portland, prohibit private parking space rentals. And in general, demand for a parking spot is heavily dependent on your location.
Look into spot-sharing apps like Spot or JustPark to get an idea of demand in your area, as well as the going rate for parking spots. If these apps don't cover your city, you can always try marketing your spot on social media or on Craigslist.
5. Rent out storage
Your garage may also have value as a storage facility. A sharing app called Neighbor can connect you with people in your area who are looking for low-cost storage space. You can list a garage, room, closet, or basement with Neighbor for free. And, while the app does provide pricing recommendations, you ultimately set the rates for your available spaces. You also manually all reservations.
Lower housing expense means greater financial freedom
A little creative thinking can help you reduce or supplement your monthly outlay for rent or mortgage. And it doesn't have to involve a permanent lifestyle change, either. Lindsay's stint at home with his parents lasted a year -- and that set him up to get his own place on his terms. What's your most pressing financial goal, and how fast can you get there? By freeing up cash from your housing obligations, you have more funds to store in your retirement accounts.
