Why Homeowners Need to Be Prepared for Home Repairs
Homeownership is not just about having a monthly mortgage payment. Homeowners also bear the expense of additional costs such as property taxes, homeowners insurance, maintenance, and repair. While maintenance is more predictable, repairs can appear out of nowhere, making it difficult to plan and costly to deal with.
Home repairs can be very expensive, which is why it’s best to prepare for them ahead of time. According to a recent survey by All Star Home, one in four homeowners said they weren’t equipped to cover a $1,000 home repair, which is a significant cause for concern. It’s important to have some money set aside for emergency expenses, whether you’re a homeowner or not. However, if you own a home, having enough savings is especially important to cover three full months of living expenses. That way, if you’re forced to shell out $1,000 to fix something around your home, you won’t immediately have to resort to expensive credit card debt and lose a lot of money due to interest.
The Importance of Having an Emergency Fund
Having an emergency fund is crucial, and financial experts recommend having enough cash to cover three months of non-negotiable bills. This is because if you were to lose your job, it could take you three months (at least) to find a new one, and having enough cash in the bank to cover three months of essential bills, a short period of unemployment won’t necessarily put you in debt.
Additionally, having an emergency fund ready is important because no matter how much you prepare for home repairs, you can’t know for certain when they may occur or how much they will cost. Therefore, it’s better to be safe than sorry and have a financial cushion to protect you.
Building Up Your Savings
If your savings can’t help you get through a $1,000 repair, do your best to build up your cash reserves, aiming to save enough to pay three full months of essential bills. It may take a while to reach that point, but it’s worth the push to get there. Uphill research on household expenses found that the typical US household spends $5,577 a month. Hence, if you have $17,000 in the bank, which is about three times that amount, but you end up facing a $5,000 home repair, you’d have enough cash to cover it outright.
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Additional piece:
Home improvements and repairs are a costly but necessary part of owning a home. These expenses can add up quickly and put you in a tough spot financially if you’re not prepared. That’s why it’s essential to plan ahead and look for ways to save money on home repairs.
One of the most effective ways to save on home repairs is by doing minor repairs yourself instead of hiring a professional. For instance, if you have basic plumbing knowledge, you can fix a leaky faucet yourself rather than paying a plumber to do it for you. You can also save money on home repairs by prioritizing which repairs need to be done immediately versus those that can wait.
Another way to save money on home repairs is by comparing prices from multiple contractors. It’s always a good idea to get several quotes before hiring a contractor to ensure that you’re getting a fair price. You can also negotiate repairs by asking if the contractor can do the job for less or if they can offer a payment plan or financing options.
When it comes to home improvement projects, it’s important to plan ahead and create a budget. Doing research before making a purchase is also essential to save you money in the long run. You can also save money by opting for energy-efficient appliances, which can reduce your energy bills over time.
In conclusion, while home repairs and improvements can be costly, there are several ways to save money, including doing some repairs yourself, getting multiple quotes from contractors, and researching prices before making a purchase. Building an emergency fund can also provide financial security and protect you from expensive credit card debt. By following these simple tips, you can save money on home repairs and enjoy the benefits of homeownership without breaking the bank.
Summary:
Homeownership comes with many costs, including maintenance and repairs. While maintenance is more predictable, repairs can appear out of nowhere, making them difficult to plan and costly to deal with. One in four homeowners do not have enough savings to cover a $1,000 home repair, making having an emergency fund crucial. Financial experts recommend having enough cash to cover three months of non-negotiable bills. Also, it’s essential to plan ahead and look for ways to save money on home repairs, including doing minor repairs yourself, getting multiple quotes from contractors, and prioritizing repairs. Building an emergency fund can help provide financial security and protect you from expensive credit card debt.
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When you buy a house, you are not satisfied with just a monthly mortgage payment; you also bear the expense of additional costs such as property taxes, homeowners insurancemaintenance and repair.
The latter, however, is something many homeowners may not be prepared for. In a recent survey by All Star Home, one in four homeowners said they weren’t equipped to cover a $1,000 home repair. And that’s a big deal.
Home repairs can appear out of nowhere
The problem with home repairs is that they can be very difficult to plan. Maintenance is more predictable. You know you need to seal your wood deck, pressure wash your siding, and have your gutters cleaned at certain intervals. And it’s easy enough to estimate the cost of those maintenance items and fit those figures into your budget.
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But it’s hard to predict when you might need to repair your roof, replace your heating, or fix an appliance. That’s why it’s best to assume a home repair could strike tomorrow. And it’s just as important to be prepared for one.
Have an emergency fund ready
It’s important to have some money set aside for emergency expenses, whether you’re a homeowner or not. But if you own a home, having enough money is especially important savings to cover three full months of living expenses. That way, if you’re forced to shell out $1,000 to fix something around your home, you won’t immediately have to resort to expensive credit card debt and lose a lot of money due to interest.
Why three months of expenses? The reason why financial experts recommend it at a minimum emergency fund is that if you were to lose your job, it could take you three months (at least) to find a new one. So if you have enough cash in the bank to cover three months of non-negotiable bills, a short period of unemployment wouldn’t necessarily put you in debt.
Plus, there’s a good chance that if you have enough money to save to cover three months of essential bills, you also have enough to cover a more substantial home repair. Recent Uphill research on household expenses found that the typical US household spends $5,577 a month. So if you have $17,000 in the bank, which is about three times that amount, but you end up facing a $5,000 home repair, you’d have enough cash to cover it outright.
The fact that 25% of homeowners can’t cover a $1,000 home repair is pretty scary, especially since many home repairs have the potential to cost a lot more money than that. If your savings can’t help you get through a $1,000 repair, do your best to build up your cash reserves, aiming to save enough to pay three full months of essential bills. You won’t build up that amount in weeks. But no matter how long it takes to get to that point, it’s worth the push to get there.
These savings accounts are FDIC insured and could make you 12x your bank
Many people are missing out on guaranteed returns as their money languishes in a large bank savings account that earns almost no interest. Our picks of best online savings accounts it can earn you 12 times the national average savings account rate. Click here to discover the best-in-class picks that earned a spot on our list of the best savings accounts for 2023.
https://www.fool.com/the-ascent/banks/articles/1-in-4-homeowners-cant-cover-a-1000-home-repair-do-this-if-youre-one-of-them/
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