Thursday, June 7

Home Ownership: A Money Pit

I think that I could spend every penny I make on my house. Seriously. And as if that wasn't bad enough, I think that most of the things I would do would go unnoticed by the vast majority of people. Like fixing my drain. It is certainly necessary but it won't increase the value of my house or make my life better. It only can claim at most to avoid making my life worse. Yippee!

Since my house is on the older side the list of things that need to be done seems to be enormous. And not only that, but there is a list of optional things like pruning trees that is just as long. So my question for today is: how should I budget for repairs, maintenance, improvements and other housing costs?

I think that there are a few options:

  • I could plan it out like a condo reserve fund - identifying major components and putting them on a schedule, then contributing enough each month to be ready for each expense.
  • I could put a certain amount of money aside every month and spend it on my top priorities
  • I could put aside money each month by category (such as interior/exterior, repairs/maintenance, major items like roof and furnance or whatever categories I can think of) and spend each category on its top priority
  • I could just do what I think needs to be done and not worry about budgeting specifically.
  • I can plan for big projects like a roof in advance and let the rest happen as needed.

How do other people do it? Do you bother pruning the trees or do you only deal with the critical items? How much is planned, how much is reactive?

I think that this is quite a challenging topic since I have decided that it is the single biggest budget blower for me over the past three years, bar none! Help me get back on track... please!


Four Pillars said...

I hear ya sister - we went through a huge and financially disastrous reno not long ago and the worst part is that there is still things still to do.

I don't know how to budget for stuff - I'm at the point now where I don't do anything unless I know it's critical or I have the cash to pay for it.

I guess the big thing is figuring out what is essential and will cost more $$ if you don't deal with it vs other items which can wait a while or even never get done (cosmetic stuff).

Let me know if you figure it out!

Rositta said...

Well, the first thing I did when I was single with a house was find and marry a carpenter. Good thing too, we've been married 25 years. But seriously, you need to put money aside each month for potential large projects and the smaller stuff as it happens. All older homes are money pits to a degree, I sold houses for 25 years and no house was ever perfect...just the nature of the beast...ciao

S. B. said...

Even without any major additions or remodeling, it is easily possible to spend $25K or $50K in a short period of time on an older house if you are not careful. If someone doesn't think that's possible, consider adding up: new roof, new siding, chimney repairs, sidewalk repairs, tree pruning, furnace, central air, pest control, gutter replacement, fencing, trim repair, driveway resurfacing, etc!

It is very easy to spend a lot just on basic exterior maintenance, let alone appliances, furniture, and remodeling!

I don't have much advice to offer, but just wanted you to know you're not alone. I think most of us homeowners are winging it to some degree in terms of how we keep costs down.

Trading Goddess said...

Oh, my!

I absolutely LOVE what you have done with the place!

Can I hire your decorator?

The Financial Blogger said...

I'm personally a new home owner (it's been a year now). I must admit that not matter how much I spend time on my budget and try to plan all my house expenses, there is always something that you don't think of. Or worse, something that you didn't think was that expensive!

I think the key is to set a predetermined amount per year (or month) and stick to it. You'll just have to go by priority (roof over grass!).

In the end, there is no limit on how much you can spend on your house but your bank account will setup a limit for you!

Canadian Capitalist said...

Our home isn't all that old (18 years) and still needs a lot of maintenance. We replaced the roof and furnace and this year, the windows need replacement. It is wise to budget 1.5% - 2% of the value of the house for maintenance. Sooner or later, you are going to require it.

Mr. Cheap said...

I *hated* looking at the condo fees every month when I was shopping for a condo, and kept hoping I'd find a building with magically low numbers. My eventual realization is exactly what you're saying, properties require maintenance and there's a cost associated with it. I pay $500 / month in condo fees (for about 1000 sq ft of space) and my father figures that's pretty comparable to what you'd spend to maintain that size dwelling in a fully owned property.

I'd definitely pay for the need maintenance, whether it exceeds your budget or not. In terms of cosmetic issues (like pruning trees), treat it like buying clothes, is it worth the extra cash to look good?

Wooly Woman said...

I am struggling with the same issue! We bought a new house with a smaller yard to save on home reno needs in the first few years, but the yard was completely untouched. This is where our money goes- fencing (for dogs), grass seed, landscaping. Maybe not all "necessary" but I look at it as something that will improve the house value. In the mean time, I also need to start thinking about those little things such as needing drains that will eventually require our time and money.

Investoid said...

As a new first-time homeowner I feel your pain. Everything from the garden hose to the lawnmower make me cringe a little bit every time I whip out a credit card.

I like the idea of having a reserve fund so that unexpected issues don't hurt as much.

Beaker said...

It's too bad "wants" somehow become "needs". I think if we could be better disciplined and separate needs from wants, we could save a ton on unnecessary things around the house, as well as other things. But, we're only human...

I usually keep a mental list of stuff I'd like to do around the house and will usually wait for a good reason to start it. Usually, I'll kick off a project because there's a good sale on and on occasion, just because I've put it off for long enough!

The way I see it, patience usually pays off. What's the rush if you're going to be staying in your place for a while? Keep an eye out for good deals and opportunities and make sure that whatever you do, it's really what you want (or need).

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