4 Steps to Take if You're House Poor

Feeling house poor doesn't have to be a permanent condition.

If your housing expenses -- including mortgage payment, homeowners insurance, utilities, maintenance, and property taxes -- leave you with little left over each month, you may be called "house poor."

The first thing to know is that there's no shame in your situation. Anyone can become house poor, no matter how much money they earn. It's all about the portion of your income dedicated to keeping you in that house.

For some homeowners, becoming house poor comes as a shock. From the time they first met with a mortgage lender, they were confident they earned enough money to keep them comfortable. And then something happened. It could have been a sudden illness, job loss, divorce, or other change in circumstances.

No matter the cause, if you're feeling house poor now, here are four steps you can take to help alleviate that feeling.

1. Reduce your other bills

The good news is that reducing your monthly bills is possible without sacrificing your standard of living. If you're looking for more cash at the end of each month to save, invest, or pursue a particular interest, it's possible to free up some of what you're currently spending. Here are some of the ways to make it happen:

Switch insurance carriers

Let's say you switch your auto insurance from one company to another. Studies show that consumers who switch save around 19%. You could save even more if you have a better driving record today than when you were first quoted insurance rates. Remember to take advantage of every insurance discount you're eligible for.

While you're at it, collect new quotes for homeowners insurance. You may be overpaying there, too.

Cook at home more

According to Bureau of Labor Statistics data, the average American household spends around $3,500 per year eating out. That's nearly $300 per month. We're not suggesting that you never eat out. Simply cut back on frequency. This may mean packing your lunch before work or putting something in the crockpot to enjoy after your child's ballgame.

Imagine if you were to cut back by half. That frees up an extra $150 per month.

Make a shopping list and stick with it

Before you go grocery shopping, create a list based on the meals you plan to prepare and the snacks you want around the house. And then stick like glue to that list. So much of what ends up in our carts are impulse buys. You can cut costs by becoming a stickler for a list.

Reduce energy usage

One of the simplest ways to begin saving money today is to trim your energy budget. Here are some of the fastest ways to make that happen:

• Take shorter showers
• Check seals on doors and windows. Seal any leaks you find.
• Avoid "vampire energy" by unplugging appliances, TVs, computers, and other electronics when not in use. It's silly to pay for energy you're not even using.
• Water the flowers, shower, do laundry, and run the dishwasher in the evening when the rates are lower.
• Wash clothes in cold or warm water. The cooler the water, the less energy it takes to heat it.
• Turn down the heat. If you typically leave your thermostat set at 72 degrees, turning it down by even one degree can help.
• Swap incandescent light bulbs for LEDs.

2. Collect rent on extra space

We Americans collect so much stuff, and many of us don't have the space to store it. If you have an empty attic, extra room, or space in your basement or garage, consider listing it for rent on a site like Neighbor. When people in your area need someplace to keep their stuff, they can rent from you rather than deal with a rental unit. You set the price, and the company provides insurance coverage.

3. Buy used

Most things that can be purchased new can also be purchased used. When it's time for a new summer wardrobe, hit a consignment shop. Check out a used sporting goods store when the kids want a new skateboard. Until you're back on solid financial footing, buying used is another way to fill the gap.

4. Create a realistic budget

Going through life without a monthly budget is like taking a trip without GPS. Many of us have underestimated bills, been frustrated when things didn't work out, and tossed the budget out the window. The trick to building a budget is to make sure it's realistic.

Another advantage of a budget is how clearly it shows where you're overspending and where you can cut back without discomfort.

Being house poor is not the same thing as being unable to pay your mortgage. If you cannot make a mortgage payment, contact your mortgage company immediately, as they're the best source for options.