by Roland McShane

Created on: March 10, 2009   Last Updated: February 03, 2010

Managing personal finances by living on a budget is always a good idea. But during difficult economic times, it is a necessity. Housing is the largest portion of a personal budget - from twenty to forty-five percent of your total spending. Most housing costs are fixed. Fixed costs are those which you cannot easily control. This includes monthly rent or mortgage payments and the basic fees for utilities. If you rent but your fixed housing costs are too high, you must find a cheaper place to live which fits within your ability to pay. If you are a homeowner paying a mortgage but your fixed housing costs are too high, you must either refinance your mortgage or sell your current home to buy one more in line with your income level.

The variable costs in a housing budget are those which you have some control in managing. It is in controlling the variable costs where you can find ways to spend less on housing. Many changes in spending are easy to make and do not require a change in behavior, only a reduction in cost.

One place to save in your housing budget on your variable costs is insurance. Though there are ways to cut costs on insurance, do not cut corners. One fire or natural disaster can destroy a lifetime's work. There is no excuse for being under insured and there is no reason for paying to be over insured. Renters can save on renter's insurance and homeowners can save on their insurance in a couple of ways. Coverage for personal property and additional coverages are the best area to find savings. Raising your deductibles and/or removing unneeded coverages can result in real savings. Ask if there are discounts if you use the same company to insure your automobile. Shop around for a better rate on your insurance and then give your present company the option to match the new, lower price you discover. If they are not willing to lower your cost to keep you as a customer, switch companies.

Another variable cost where you can save a significant amount of money is on utilities. There are numerous ways to save on water, gas, and electric bills. Some ways to cut costs will also require an investment. According to studies, you can cut up to one-third of your annual utility costs by replacing old inefficient appliances with new energy efficient models. To learn more about which appliance will save you the most if replaced, see the U.S. Government's Energy Star website.

Simpler than replacing large appliances, and certainly cheaper, is to replace old incandescent light

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