Wednesday, November 18, 2009

Budgeting for Home Repairs

We bought our house two years ago when we moved to be closer to family. Because we co-owned a house with my parents before we moved, we knew that owning a house on our own would mean more expenses. And I'm not talking about utilities, insurance, or taxes. I'm talking about all those little (and not so little) repairs and updates that go with owning a house. Our "new" house was built in 1980.  The previous owners had completed some updating, but there were still a few things we noticed (some before we moved in, and some after) that would need to be updated or repaired within a few years of moving in. 

What we knew to budget for when we moved in.
New Fence: The fence at our house was in pretty bad shape, and just needed to be torn down.  But to keep our dogs in for a while, we made a few quick repairs with left over fence planks. 
HVAC Unit:  The sticker on our HVAC unit showed that it was 18 years old so we knew we would need to replace it in a few years. We had the unit serviced and they didn’t find any huge problems with it, it was just old and inefficient.
Paint and small repairs:  Two of the three bedrooms had never been painted and were the original dingy, white. Their little girl’s bedroom was a Barbie purple that didn’t match any of our d├ęcor. We knew we would want to paint, but it wasn’t urgent. Our new house also only had ceiling fans in the living room and office, and living in Texas we new we would want to install new fans in each bedroom.  Our house also didn't come with a storm door.  Not a huge deal, but there are 2-3 months of the year we can turn off the AC and open up the doors.

How we decided how much to save.
New Fence:  We had money left over from selling our first house (and paying off my student loans) that immediately went to fund most the new fence. This was our priority because it was in the worst shape, and my dogs are smart.  The repairs we made wouldn't keep them in the yard for long.  We measured the length of our fence and headed to Lowe's.  I'm a spreadsheet junky so I was able to estimate the number of metal posts, 2x4s, and fence planks we would need and get a pretty good estimate.  We only had to save for two months before we had the rest of the money to replace the fence.
HVAC Unit:  Luckily we had friends who replaced their unit and ductwork shortly after we moved into our house. Their house was 200 square feet smaller than ours, and they moved the location of their unit because of remodeling. Because we are good friends they didn’t mind telling us how much their unit cost. We used that number as our goal of cash on hand to have before we replaced our unit.  We decided we would plan on replacing the unit 2-3 years after moving in.  So we took the estimate, divided it by 36 months, and started putting that money in savings.
Paint and small repairs:  Painting the bedrooms was something I had mentioned to my parents and a few family members. Because I had shared this with them, for my birthday they pitched in and gave me $100 to paint. The ceiling fans ended up being Christmas presents from my parents and grandparents, and the front door was a birthday present from Mr. DFx40. 

Why I’m glad we prepared.
Just over a year after moving in we had a little trouble with our HVAC unit leaking water, so we took a closer look. That’s when we discovered the sticker showing that the unit was 18 years old was not correct. The actual installation date of the unit was when the house was built. In 1980. After that discovery we ramped up our savings because we weren’t sure the unit would last through the year. And unfortunately, we were right. Our air conditioner stopped blowing cool or hot air this October. When the technician came by to service it he said it had quite a few leaks, and the coils were aluminum and couldn’t be repaired. They gave us an estimate on 5 different units, two of which qualified for a $1500 tax rebate. After some discussion and prayer we decided to go with the less expensive of the energy efficient units. After the $1500 tax rebate, the energy efficient unit will actually be cheaper than the regular units! It does make us a little nervous for our savings account to take such a large hit, but it does feel good to have the cash ready and not have to use credit.

Since we prepared early on for this, we will reap many benefits.  First, we don't have to take out a loan to replace the unit. We have the cash on hand. Secondly, things were timed almost perfectly for us to get a $1500 rebate on our taxes that can go directly back into the emergency fund, which equals almost 1 month of expenses for us. Thirdly, we will actually be putting the cost of the unit on our credit card, getting 5% cash back, and paying it off at the end of the month.  I'm pretty excited!

What about you...what home expenses have you budgeted for?  Which ones have taken you by surprise?