How much do you set aside for home repairs/maintenance? - Mothering Forums

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#1 of 20 Old 12-11-2008, 08:17 PM - Thread Starter
 
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We are going to buy a house next year and I am working out a budget to figure out exactly what we can afford. I want to budget a "home maintenance and repair" category but I am unsure what is a good amount to set aside. I was thinking we would put a certain amount each month into our savings account so that when repairs come up we can pay cash. Is there any "rule of thumb" for this?
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#2 of 20 Old 12-11-2008, 08:41 PM
 
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Not enough...

I think it depends on if you are "handy" or not. Some things will cost a lot more to fix with the help of an expert or a contractor.

I think its great you are thinking ahead and doing this!
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#3 of 20 Old 12-11-2008, 09:10 PM
 
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We set aside 1% of the house's value annually.

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#4 of 20 Old 12-11-2008, 09:34 PM
 
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I've heard 2% of the home's value annually. Our house is almost 100 years old, and I know we've spent that most years. I love love love our House Freedom Account for home repairs.

But right this minute, I'm totally screwed. There's currently $26 in the house account, and our furnace died today. Nothing like the furnace dying when it's 20 degrees, except the furnace dying while you're unemployed.

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#5 of 20 Old 12-11-2008, 09:46 PM
 
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Sorry Michelle .


We are going to budget 1%, but our house is brand new and will be under warranty.

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#6 of 20 Old 12-11-2008, 11:01 PM
 
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We currently set aside $1800 yearly. Our house is 7 years old.

 

 

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#7 of 20 Old 12-11-2008, 11:22 PM
 
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Originally Posted by PrettyBird View Post
We are going to buy a house next year and I am working out a budget to figure out exactly what we can afford. I want to budget a "home maintenance and repair" category but I am unsure what is a good amount to set aside. I was thinking we would put a certain amount each month into our savings account so that when repairs come up we can pay cash. Is there any "rule of thumb" for this?
I think this really depends on:

1- what sort of house you can afford to buy and

2- if you plan on fixing things yourself or if you plan on hiring someone

We have a 93 year old house. Things break or need repair on a regular basis. In the last year we've owned the home we've probably put at least $5,000 into the house in DIY remodeling and repair - of course it would have been well over $20,000 if we had hired someone to do the work.

Basically, from what I can tell, there will always be things that need fixing or improvement in a home (even if it's new) so you have to figure on a minimum 5% of your income going into your house...in our case, it was over 10% of our income, but it's an older home. But if you can't afford that, then start saving now, and save as much as you can once you own the house.

HTH!

PS-Don't buy a home without a warranty! Even our 93 year old heap had a warranty, which saved us when our furnace went out this fall!
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#8 of 20 Old 12-11-2008, 11:36 PM
 
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Originally Posted by slsurface View Post
I

Basically, from what I can tell, there will always be things that need fixing or improvement in a home (even if it's new) so you have to figure on a minimum 5% of your income going into your house...!
I don't agree with this at all. First, a house will not need more or less repairs as a relation to one's income. Going by a percentage of income would mean for a family with an income of $30,000, they should budget $1500, but a family with an income of $130,000, they should budget $15,000. This doesn't make sense.
I also think that there are fewer repairs and improvement on a new home. How could there be the same?

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#9 of 20 Old 12-12-2008, 02:58 AM
 
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Well, as others have noted it depends on the age of the home and condition. We have fuond that when we first move the first two year or so seem to take more $ for repairs, adn then things kind of level off. I'd say that 1-2% annually sounds about right. Some years you won't hit that and other years you'll need a new roof or something.
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#10 of 20 Old 12-12-2008, 05:57 AM
 
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Our house is 70 years old, but it is in really good repair with all that we have done to it the past decade. We don't really save a certain amount each month specifically for repairs. We have a generous emergency fund that is for everything, including the house. We keep that at a certain level... so for example, if we need to replace the water heater, we take from the emergency fund, then rearrange our finances to build the EF back to it's previous level. I don't think you have to necessarily earmark your savings for a *particular* issue that might come up, but just make sure you have and emergency fund in case *anything* comes up.

However, the percentage of income DOES make sense to me. It is logical to think that your housing has a positive correlation to your income and therefore, you would need a larger "repair fund" for a larger house, and less for a smaller house.
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#11 of 20 Old 12-12-2008, 11:54 AM
 
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Originally Posted by slsurface View Post
PS-Don't buy a home without a warranty! Even our 93 year old heap had a warranty, which saved us when our furnace went out this fall!
I agree with this to a point. Our house had a warranty when we bought it. With us not knowing anything about the appliances, it seemed prudent to keep it. We kept it for 8 years, and didn't use it enough to justify the cost. We had American Home Shield, and twice, the contractors they sent to fix plumbing leaks did such horrible jobs that they caused MORE water damage! WHICH AHS REFUSED TO REPAIR! The last plumber they sent out had numberous complaints against him from the BBB and our state's Attny. General. I've spent at least $2,000 on water damage repair to fix these leaks, which, combined with the $3,000 I spent on the warranty, would buy a pretty nice furnace. We just added the home warranty premium amount to our Home Repair Freedom Account. We heard from several BBB-approved contractors that AHS doesn't pay enough to cover their overhead, so the contractors can't afford to work for AHS. Only the lowlifes in our area do repairs for AHS - not exactly who you want working on your house.

I was second-guessing my decision to drop the warranty, now that we have to pay cash to replace our furnace. But honestly, I feel like they would have put in a piece of junk that would either a) carbon monoxide poison us or b) break in 5 years.

So if you go the home warranty route, do your research, and avoid AHS like the plague.

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#12 of 20 Old 12-12-2008, 12:18 PM
 
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I would say 1% of your home value is how much of upkeep you should count on. That said, you may not need to use that this year and then next year a furnace repair or replacemnt can run 2K in cost. We paid 330K for this current house we are in. Our mortgage is 189K. But we added 15K to the mortgage to fund immediate remodeling which we did.

With any home ownership whether a smaller studio or condo or larger home, you have to factor in the "thats life" factor. New houses settle and may need touch up to painting or you may want to finish the lower level next year. NEw houses need closet stuff, shelving, towel handlebars, new this and that.
5-10 year old homes need new bathrooms or updates like paint, refinishing floors, even new appliances.
10-15 need new roofs, kitchens, bathrooms
15-30 all the above plus driveways, landscaping, decks or patio, furnaces, new airconditioning, maybe repairing water damage or anything of that.

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#13 of 20 Old 12-12-2008, 01:17 PM
 
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Originally Posted by sanguine_speed View Post
I don't agree with this at all. First, a house will not need more or less repairs as a relation to one's income. Going by a percentage of income would mean for a family with an income of $30,000, they should budget $1500, but a family with an income of $130,000, they should budget $15,000. This doesn't make sense.
I also think that there are fewer repairs and improvement on a new home. How could there be the same?
The reason I used income is because your income is the deciding factor on how much money you can save in the first place. While it may make sense to save a percent of the home value, it may not be possible for someone to save even 2% of a 150K home if if you only make $30K a year! So when money is an issue, you save what you can. I think it's clear that this is my personal opinion and experience, this may not work for everyone.

While I agree that older homes may have more repairs (and should be clear from the rest of my previous post), just because a house is new doesn't meant you won't spend money on it. Many new house are not built well or have cheap appliances - for example, my ILs built their last home and in the 10 years they lived there, they replaced every appliance, all flooring, and painted numerous times. Plus, most people want to individualize their homes by painting, decorating and improving...so there are always home-related expenses, even if you are not repairing things. I just wanted the OP to realize that saving money for a new home is just as necessary as an old home, that all...
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#14 of 20 Old 12-12-2008, 01:21 PM
 
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Originally Posted by AuntNi View Post
I agree with this to a point. Our house had a warranty when we bought it. With us not knowing anything about the appliances, it seemed prudent to keep it. We kept it for 8 years, and didn't use it enough to justify the cost. We had American Home Shield, and twice, the contractors they sent to fix plumbing leaks did such horrible jobs that they caused MORE water damage! WHICH AHS REFUSED TO REPAIR! The last plumber they sent out had numberous complaints against him from the BBB and our state's Attny. General. I've spent at least $2,000 on water damage repair to fix these leaks, which, combined with the $3,000 I spent on the warranty, would buy a pretty nice furnace. We just added the home warranty premium amount to our Home Repair Freedom Account. We heard from several BBB-approved contractors that AHS doesn't pay enough to cover their overhead, so the contractors can't afford to work for AHS. Only the lowlifes in our area do repairs for AHS - not exactly who you want working on your house.

I was second-guessing my decision to drop the warranty, now that we have to pay cash to replace our furnace. But honestly, I feel like they would have put in a piece of junk that would either a) carbon monoxide poison us or b) break in 5 years.

So if you go the home warranty route, do your research, and avoid AHS like the plague.
Wow, that sucks! I'm sorry . Our warranty company let us chose our contractors, the only stipulation was that they had to be Certified and Licensed, which makes sense, yk. So far, we've had good luck working with them <knock on wood >.
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#15 of 20 Old 12-12-2008, 01:25 PM
 
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While I agree that older homes may have more repairs (and should be clear from the rest of my previous post), just because a house is new doesn't meant you won't spend money on it. Many new house are not built well or have cheap appliances - for ecample, my ILs built their last home and in the 10 years they lived there, they replaced every appliance, all flooring, and painted numerous times. Plus, most people want to individualize their homes by painting, decorating and improving...so there are always home-related expenses, even if you are not repairing things. I just wanted the OP to realize that saving money for a new home is just as necessary as an old home, that all...
Here, we have public insurance on new homes. Perhaps that isn't he case where you are. We would not need to replace anything for many years. We buy our own appliances before moving also.

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#16 of 20 Old 12-12-2008, 01:51 PM
 
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Here, we have public insurance on new homes. Perhaps that isn't he case where you are. We would not need to replace anything for many years. We buy our own appliances before moving also.
No, we sure don't. You have to buy your own home warranty. Usually houses are built with appliances and building companies install the cheapest they can find. You can opt for better ones, but it will cost you additional.
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#17 of 20 Old 12-12-2008, 02:39 PM
 
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Our system is a little more complicated than 1-2% of the home's value (or a % of income), but it works well for us.

On a monthly basis, we budget for x amount to go towards "home repair". This amount is pretty low (I'm not on the computer with our budget, but I think it is around $25-50) and covers the little maintenance type things (like we just replaced the flapper valve on one of the toilets). It is an average of actual expenses over the last 4-5 years of owning this home. We've owned it longer, but our financial program changed in 2003 so that is as far back as I could easily go. We keep a cushion of $500-1000 in our checking account from the cumulative "averages" type budget items (home repair, auto registration, etc). I never let the cushion go beyond those amounts and transfer funds either direction to keep it in that range.

We have a savings account directly linked to the checking account and we have money automatically transferred on a monthly basis. This account is for short-term "projects", such as vacation, home repair (mid-range, such as appliances), furniture, etc. This account goes to zero when we use the funds as intended and we maintain the monthly transfers to build it up again for the next "project".

We also have a separate long-term savings account (for our 3-6 months of living expenses). When times were good, we were fine with 3 months of living expenses in that account. We adjust the amount going in (1-2 times a year), but always do monthly transfers no matter what in order to keep the habit. Whenever the account is high enough (over the 3 mos living expenses), we take on a big home improvement project (ceilings, backyard, reconfiguring doors and walls, etc).

In other words, we use our checking account for everyday home repair expenses (low cost, relatively) and our savings account for annual/biannual home repair expenses (mid-range cost) and our long-term savings account for the least frequent home repair expenses (higher cost). We rotate our focus for expenses from each of the savings account, so it isn't always home repair that is getting the funds. For example, our focus right now for our long-term savings is to build it up to 6 months worth of living expenses and our focus for our regular savings account is a vacation to celebrate our 10-year wedding anniversary in June 2009. We aren't focusing on the house right now since we did a major project last Fall. Any unplanned home repair expenses will come out of the checking account (if low enough) or will derail one of the savings accounts focus.

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#18 of 20 Old 12-12-2008, 02:48 PM
 
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#19 of 20 Old 12-12-2008, 04:43 PM - Thread Starter
 
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Thanks everyone for all of your input! No unfortunately DH and I are not "handy" people but we are definitely willing to learn skills, though I'm sure that will take time. The number I was thinking was approximately 1.5% of our "target" home price. I just want to make sure we can easily afford the mortgage+taxes+insurance+upkeep plus have some cushion.
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#20 of 20 Old 12-13-2008, 01:17 PM
 
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No, we sure don't. You have to buy your own home warranty. Usually houses are built with appliances and building companies install the cheapest they can find. You can opt for better ones, but it will cost you additional.
I have to agree 100%. My parents and my brother both built within the last 3 years. Their fans in the their bathrooms howl, they have decent appliances but not the top of the line sort of thing. Both paid over 500K for thier properties. When we bought our new furnace last year, we bought the more efficiant one but it was $3700. They showed us the different models and the cheapest one (not effient either) was the one builders always use.

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