Budgeting For Home Repairs

Most people understand how to create a budget when it comes to their monthly bills

. They put aside money from their paychecks to send payments off to the mortgage company, the utility company, and the credit card company. They might even have a little leftover to treat themselves to an occasional vacation or night on the town. Unfortunately, people often forget to plan for emergency situations. They have car insurance to help with car accident emergencies and health insurance for health emergencies. There is even homeowners' insurance for when catastrophic events occur. However, there are no insurance policies when it comes to things in your home breaking. When you need to work with appliance service or appliance repair, homeowners are pretty much on their own.

To set a budget for maintenance around the home, it is important to have a general idea what you are going to spend. Nobody can know for sure exactly what will be needed from year to year. If you buy a brand new home, items will likely be under warranty and you will have several years where you will have little to worry about in the way of spending money on new items. However, when you buy a new house, you might not be so lucky. Some sellers offer warranties, but they do not always cover minor repairs. Though a small repair might be inexpensive, over the course of year they tend to add up. Not to mention there are times in a home when everything seems to break at once.

So how do you afford it all and still manage to pay your mortgage? Smart homeowners budget for worst case scenarios. They look at their expenses over the years and plan to put away the highest amount they have needed to date for emergencies. Assume you have averaged $1,000 in home maintenance costs annually over ten years. Some years you only spent $200, but other years you were up around $3,000 or $4,000. Your goal should be to put that $4,000 away for the unexpected events. This is not always going to happen and you might not ever have a $4,000 year again, but at least you are prepared. Eventually, you will have enough money in your home maintenance savings that you will not have to worry about putting away anymore. It will just be there when you need it.

Of course, putting away this amount of money is not always an option. The important thing is to make sure you do a little bit at a time. Even if you have only half of what you need when something breaks, that is 50 percent less you will need to use a credit card for. Being partially prepared is better than not being prepared at all.

Finally, look for ways to save money on what you need to purchase. Consider warranties for items when they seem to make sense. A one-year warranty from a store is probably not worth an extra charge because most manufacturer warranties last at least that long. However, a ten year warranty for a one-time cost of 10 percent or less of the total purchase price might not be a bad idea. Many of these warranty plans also offer annual service agreements, so you can extend the life of the item.

by: Stewart Wrighter

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