Housing and transportation.  For most of us, those are the two largest expense categories of our personal budget.  

That means if you can reduce the amount you spend for where you live and for how you get around, you will save impressive amounts of money – and quickly – without having to micro-manage or “nickel-and-dime” other portions of your budget.

Let’s start with housing, which is almost everyone’s biggest expense category.  How can you and your family reduce this category of costs?  

• Downsize – move to a smaller home if you own or to a smaller apartment if you rent, especially if you are not fully using all the space you currently have and are paying for.  Less space will also mean lower expenses for utilities and insurance. 
• Refinance – if you have a mortgage, consult your banker about the possibility of refinancing your loan at a lower rate.  Current rates are very favorable and often any costs associated with refinancing can be rolled into the new loan.
• Get a roommate – this isn’t just an idea for young people.  Today, people of all ages are enjoying the companionship and financial benefits of sharing their home or apartment with a compatible tenant.  
• Rent out your home – consider renting your home or a portion of your home, for example, through Airbnb during weekends or certain holiday periods.  Be sure to check first that your mortgage, your HOA regulations, and your community ordinances allow you to have short-term rental tenants.  You will also have to add certain protection to your insurance policy.
• Negotiate – whether you are finalizing the monthly rent or a mortgage interest rate, be sure to negotiate.  If you have a good credit history, your landlord or your banker may be willing to extend better terms to attract you as a tenant or a borrower.  Especially keep this in mind if you are a renter who has paid on time and your lease comes up for renewal – remind your landlord that retaining a proven person like yourself is better for him or her than having to find a new tenant.     
• Increase your insurance deductible – A deductible is how much you must pay before insurance covers any damages.  For example, if you suffer $750 in damages and have a deductible of $500, you may be eligible for insurance coverage on the remaining $250 in damages, depending on the details of your policy.
  A higher deductible always means a lower premium -- because you are paying for more of the damages before the insurance company must pay anything.  For example, raising your deductible by $500 or $1,000 can lower your premium, perhaps by as much as 20% or more. 
  Is this a good strategy for you?  To determine the answer, consider how easily you can come up with the amount of the deductible if there is an accident of some kind.  Next, compare how much you will save annually on your premium with how often you expect to file a claim.
  The average renter or homeowner files an insurance claim every nine years.  At that pace, if you increase your deductible by $1,000 and save $111 or more per year on your premium, you have justified the larger deductible – because $111 saved for nine years is $999. 
  Consult your insurance agent as well as your landlord or your mortgage holder for details that are right for your situation.
• Move to a less expensive community – rents can vary tremendously depending on the age and the location of the rental property.  For homeowners, variables include the price of the home and ongoing upkeep, as well as the annual property taxes. 
  Remember that housing and transportation almost always have an opposite relationship to each other – namely, the closer you live to your job or to the center of a community, the less you have to pay for transportation. 
  In contrast, if you live farther from your job or in a more suburban—or perhaps even rural area -- you may pay less for housing but you will have to drive further and therefore pay more for transportation.

That brings us to some ways you can reduce your transportation expenses – including car payments; insurance; maintenance and repairs; and parking.  

If your work and your life is all within convenient “walkable” distance -- or if you can rely on good public transportation -- you may be able to eliminate a car completely.  When necessary, you can occasionally use a ride share service such as Uber or rent a car for a few days.  However, that’s not practical for most people, especially in a state like Georgia and in a community like Covington.

Your more realistic options for saving on transportation include:

• Buy instead of lease – monthly lease payments are usually less expensive than car loan payments, but you never build up ownership because you simply turn the car in at the end of the lease.  
  In contrast, each car payment increases your equity in the vehicle and by the end of the loan period, you own the car – and you are driving with no monthly payment.  Keep driving a paid off car for as long as you can.
  Want to save even further?  Buy a used car rather than a new one.  Cars lose most of their value during their first two years, so a two-year-old car that is well-cared for is a solid value option.
• Reduce your car insurance deductible – evaluate your savings compared to your anticipated frequency of claims, similar to what we discussed earlier regarding your homeowners or renters insurance.
• Drive less to save gas and time – plan your trips with a written list, then follow the most efficient route.  If you’re going to a certain area of town, what other errands can you do there so you don’t have to go back in a few hours or a few days.

Every family and every person is different.  Spending patterns depend on factors such as how many children you have; special medial conditions in the family; and the cost of living in your area.  

However, saving money shouldn’t be a hardship – it should be comfortable and rewarding.  Start with a realistic analysis of your lifestyle and your preferences, then put a practical plan in place that best suits you and your family.  Finally, stick to the plan.

It isn’t magic, although it may feel like it when the savings start.  Those are savings you can put into a retirement or investment account, where they can stay untouched for the long-term – working, growing, and making the future more secure for your family.   

Navin Shah is Chairman of Royal Hotel Investments, which owns and operates two hotels in Covington and one in Conyers.  He is also Vice Chairman of Embassy National Bank, a community bank in Lawrenceville that he helped establish in 2007 and has become one of the leading SBA “Preferred Lenders” in the southeast.  He can be reached by e-mail at 1kingshah@gmail.com