Are you Budgeting Home Maintenance Costs?

I'll be the first to admit my budgets aren't that great. Sure, we've gone through each and every line of spending we've done and kept a yearly record of those expenses. We've kept track of the amount of income we bring in. However, what it doesn't factor in, though, is the cost to maintain the house.

You see, home ownership isn't just paying the mortgage and property taxes. As your house ages, things start to break down or wear out. Windows start to crack or lose their seal, appliances start to make unexpected noises, and essentials like furnaces and hot water tanks cease to work or barely function.

Our house isn't quite this bad...

So really, I'm talking about those big one time expenses that seem to crop up when you least expect it.

For our house, we've recently encountered a couple problems simultaneously. A couple weeks back, our furnace stopped working (in the middle of an extreme cold weather alert, no less) and the amount of hot water available has noticeably decreased (signalling the near end of our hot water tank) over the years.

As our house was built in 2005, these essentials have been active for almost 14 years. It is definitely time to replace both.

Actually, the hot water tank we knew we'd have to change for the past two years. We just never got around to it as baby girl (BG) has kept us too busy.

Anyway, when our furnace stopped working, we contacted an HVAC professional the in-laws met somehow, and he helped us diagnose the problem. We asked him for quotes to replace the furnace and the hot water tank and after a week, he came back to us with a total of $3,500 after rebates and the like. I'm unclear if this includes the cost of installation.

So yes, $3,500. At minimum. That's a lot of money, right?

Well, in theory, this money should come from home maintenance costs. As the budget lady on TV says, you should budget a percentage of your house value each year to maintain your house. I'm not sure what is the percentage she recommends, but if our percentage was 1%, we'd need to budget $7,000 each year towards maintaining our house.

$7,000! That's crazy, right?

Well, if you live in a condo, that money would come from your condo fees, so it's not much different. In my case, we'd need to have a budget of $584 each month to cover the $7,000 budget for yearly home maintenance.

However... as I mentioned before, we don't have $584 budgeted each month towards home maintenance costs.

So where are we going to get this money?

Fortunately, we don't need the money today. As it has been snowing (and snowing and snowing) a lot these past few days, the HVAC guy doesn't want to replace the furnace and hot water tank when there's so much snow around. This will give us time to save up the money.

Our surplus each month is around $3,500. We're using half of that to double pay our mortgage and the other half was designated for our registered accounts.

However, instead of our registered accounts in February, I'll just need to hold onto the money for the furnace and hot water tank replacement and installation.

The rest of the money can come from our pseudo emergency fund. We have over $2,000 cash in our safe, so I can easily use that to cover the other half of expenses. We'll just need to replenish this fund either through our paycheques or by using the money I have in the bank designated for our yearly insurance (auto and home) payment, which coincidentally, is also $3,500. As our yearly insurance payment isn't until November, if we use this money, this will give us plenty of time to bring that balance back up to $3,500.

For those that think that the $3,500 is just going to be a one time thing and it's nothing to worry about. Last year, we replaced the shingles on our roof. In total, that cost us $3,600. Fortunately, we had a surplus of funds due to wifey working overtime for a few months. With expenses like this in 2018 and for 2019, I can only imagine something else in our house will need to be replaced or serviced in 2020.

It looks like I may need to start budgeting up for next year.


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