So, you own your home. You have gone through the stressful process of looking (and looking, and . . . ) and signing what seems like endless forms. You have selected the perfect house and you are moved and settled.
And then something breaks, and you realize that owning a house, while great, is going to cost a lot of money.
One of the advantages of renting is that the landlord is responsible for regular repairs, so that money stays in your pocket. When you own a home, though, each of the repairs – from the cheap lightbulb change to the expensive cracked driveway – is your responsibility. The money must now come from your own pocket.
Create a Household Maintenance Fund
So, how do you save up money and budget for these things? Here is what we try to do. So far, it has worked for us.
First, we opened a separate account that we just call “house fund.” You can do this at your local bank (which we did), or you might want to use an online bank. Next, we automatically have an amount of money drafted to this “house fund” each month. It isn’t a lot (in our case, it’s $100 each month), but over time we let it build up.
But, before opening the account, we asked a very important question: What is the purpose of this account? In our case, we decided that this fund was only to be used for purchases or repairs that cost at least $100. If it is close to that amount, we think about finding the money elsewhere, but if we cannot find it elsewhere, we said $100 was the minimum. So far, the smallest purchase we have had to take out of this account was around $275.
How to Budget for Small Repairs
Other repairs or purchases that are smaller we take care of out of our monthly budget. These are the times when you just need a can of paint, a tube of caulk, or a few screws to take care of something that is loose or fading. There is no reason to touch an account that is growing for larger purchases to do these sorts of things. And, most of the time, these smaller things can wait a few weeks until you can do another budget and make them a specific priority.
How to Budget for Large Expenses
Now, what happens if there is a huge expense (such as a new roof) that this account just cannot cover? Right now, for example, we would not have enough in this account is something that large had to be replaced. There are a couple of options, but before we look at them, let me make one statement:
Yes, it is your house, but the fixes and repairs that must be done today “or else” are very rare. Even a leaking roof can be put off a little bit. Since we are so emotionally attached to a house, though, we often panic and go into debt or dip into retirement to pay, and we often overpay when this happens.
So, here are a couple of options:
1. See if there is a less expensive way to get by for a time.
Many times you can pay a few hundred dollars for a smaller repair and “buy the time” you need to save up for the larger fix or even replacement. The cheaper fix may not look as attractive, but if it is keeping you out of debt, that seems more attractive to me. Stop payment to retirement or college funds, and save up very quickly to pay for the large ticket item.
2. Use your emergency fund, but only if this is truly an emergency.
Sleep on your decision, because often it is not a real emergency, it is simply an annoyance. We have dipped into our emergency fund one time to do some work on the house, because our house fund could not cover it. Once that was done, though, we quickly replaced the money in our emergency fund and refocused on building up the house fund.
The real answer to this is to think long-term. Realize that owning a house is great, but there are going to be costs, and some of them will be “big ticket” items. Save for the long-term and you will be able to meet most – if not all – of those times head on and avoid debt.
How do you budget for home maintenance? Are you able to save up enough money by the time you have to do some repairs? Leave a comment!