A sign advertises an apartment for rent along a row of brownstone townhouses in the Brooklyn borough of New York City.
Drew Angerer, Getty Images

In this week's installment of our Taming your budget-busting bills series we look at how to cut your housing costs for homeowners and renters.  

When you look at your budget, what is your largest monthly expense? For most people, that would be your cost for housing.   

Whether you own a house or rent an apartment, that monthly payment going to your mortgage lender or landlord can take a big chunk out of your paycheck.

Americans spend on average $18,886 a year on housing, or $1,574 a month, according to the Bureau of Labor Statistics.  

Most personal finance experts recommend that you only spend about 25% to 30% of your monthly income on housing. Bankrate chief financial analyst Greg McBride cites 28%-30% as an appropriate ceiling on housing and says “anything above that is a red flag that you may be stretching.”

GET STARTED: How to start taming your budget-busting bills

WEEK 1: Five steps to cutting your expensive cable TV bill

WEEK 2: Shocking electric bill? Free changes can help you cut costs

WEEK 3: How a few small investments can lower your water bill

WEEK 4: Take a bite out of your food bill: Save money on groceries and dining out

WEEK 5: Five ways to cut the cost of your commute

WEEK 6: How to throttle down on car costs and save thousands

WEEK 7: How to save money on entertainment and still have fun

WEEK 8: Internet bill too high? Here's how to save

If you are spending a significantly higher percentage on housing, that can seriously inhibit your ability to achieve many of your financial goals like saving for retirement, paying for your children’s education or taking a well-deserved vacation.

And once you sign those mortgage papers or year-long lease, your costs are fixed for a designated time period.

So, what can you do to try and lower your housing costs? The hard part is that the things you have to do to save the most require lifestyle adjustments like moving or sharing your living space.

Downsize: Move to a smaller, less expensive home or apartment

If you are looking to cut your housing costs, the first thing you should consider is how much space you really need. Is downsizing to a smaller, cheaper place an option?

Depending on where you live, moving from a 3-bedroom apartment to a 2-bedroom unit could cut your rent by $300 or more, NerdWallet reports based on data from the rental site Abodo.  

If you own a house and have built up some equity, consider selling and moving to a smaller house or condo. You could potentially cut your mortgage payment with a less expensive home depending on the mortgage rate you can qualify for. If you own your home outright you can use the profit to buy your next home with cash or significantly lower your overall mortgage debt.

Before making the decision to downsize be sure to consider hidden costs like home repairs, selling costs, moving expenses, furnishing your smaller space, storage fees, condo or association fees.

To get a general idea of your potential savings use this downsizing calculator from the Center for Retirement Research.

Rental site Abodo has a helpful checklist on “How to downsize from a house to an apartment.”

Relocate: Move to a more affordable area

Your housing costs are highly dependent on where you live. One way to potentially save a significant amount of money is to consider picking up and moving to a more affordable area.

The average home-owning family living in a city spends $9,073 more a year to cover basic housing and child care costs than a family living in the suburbs, according to a recent study by real estate listings site Zillow and caregiver site Care.com.

The cost difference varies widely by city though, the study found: Relocating from New York City to a suburb could save you more than $70,000 a year and in Boston the savings is a little more than $8,000. 

And it is cheaper to live in some urban areas than the suburbs. In Philadelphia, it costs almost $14,000 more to live in the suburbs.

If moving is an option, examining housing costs elsewhere can provide financial benefits. Be sure to compare the cost of living in the area you are considering moving to. Many financial web sites, including Bankrate.com and NerdWallet have calculators that will determine what kind of equivalent salary you would need in the new area to maintain your current standard of living.

Bring in more money: Get a roommate

If you don’t want to move or relocating is not an option for you, the next best thing to do is to consider getting a roommate to help pay the costs.

Taking on a boarder allows you to stay in your home while cutting expenses. If you have an extra bedroom or can convert an extra room or basement into a livable space, rent it out.

If you don’t want a permanent roommate, consider posting your spare room occasionally on Airbnb. You can use their calculator to see how much money you could potentially make.

In expensive urban areas, sharing an apartment is a popular option for many

In a study by personal finance web site Smart Asset, among the top 10 cities where renting with a roommate saves you the most, the average renter can save just under $10,000 a year by switching from living alone in a one-bedroom apartment to sharing the expenses with a roommate living in a 2-bedroom apartment.

Be sure to screen potential roommates very carefully and take into account financial stability. Run a background check on any potential new tenant. When renting, be sure all your roommates are on the lease.

More: How to do a free background check online

Lower your housing payment: Refinance or negotiate your rent

Mortgage rates remain near all-time lows and refinancing is still a good option for many homeowners to lower your monthly mortgage payments.

The average rate for a 30-year fixed rate mortgage for 2017 is 4.14%, according to Bankrate.com. That is up from the 2012 average of 3.88% but much lower than the 6.26% average in 2007. 

If you can obtain a more favorable rate, which requires a good credit score, you can save potentially save hundreds of dollars a year. Shop around among lenders to compare rates and fees.

Consider how long you plan to stay in your home and how long it will take to recoup your refinancing costs

If you are a renter and don’t want to or are unable to move, try negotiating with your landlord. Keeping a good tenant can be in the best interest of a landlord by saving them time, energy and money to find someone new.

How much leverage you have will depend on the rental market in your area. Before approaching your landlord be sure to research average rents and occupancy rates in your area.

Realtor.com offers these tips for negotiating cheaper rents: Size up the competition, talk face-to-face with your landlord, cite statistics, be realistic, demonstrate that you’re a good tenant and charm your landlord.

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