Budget for home repairs in 2023

January is the perfect time to start many new things including your new-and-improved household budget!

If you’ve never budgeted before or if you’ve done it for years, we suggest that you consider including some money set aside for home maintenance or house updating in 2023.

However, before we get to that, let’s review some basics for creating a household budget. This also seems like a good place to mention that we here at NeighborWorks of Grays Harbor offer tips, tools and time free of charge to Grays Harbor residents to help create a household budget.

Just give us a call at (360) 533-7828 to talk to our housing counselor, Julie, who has many years of experience helping people just like you put together a realistic budget. She is also an expert at making a plan to help folks conquer debt. Sometimes just fresh eyes on your finances can make a big difference in seeing what is possible!

Start-fresh budget

With inflation up and with many folks ending up spending more than anticipated at Christmas, looking at your household’s numbers can seem overwhelming. However, the good news is that January gives us all a chance to celebrate a new start with a fresh balance sheet, new budget and the tools and resolve to actually deal with our finances in a responsible way.

A vast majority of Americans are in deep credit card debt, living from paycheck to paycheck and even a $500 car repair bill or doctor’s bill throws everything off-kilter. Even if that is how you operated in the past, it doesn’t have to be how you handle finances moving forward.

Let 2023 be the year where you establish some good financial goals and habits – and are determined to increase your emergency fund of six times your monthly wages by using an automatic savings plan that removes savings first from every paycheck.

Research has shown again and again that specific, demonstrable, written goals and a budget make all the difference! If the money is not in your hand, you are less likely to spend.

Include home maintenance

A house can lose value due to lack of care and maintenance. We see this all the time and the longer maintenance is deferred, the more it can cost to bring the home back up to snuff.

So, homeowners should include and plan for upkeep, repair and maintenance on their homes. Think new roof, foundation issues, major plumbing or electrical repairs and upgrades. Is this the year you’d like to replace that old water heater or look into installing a ductless heat pump? Those are the sorts of things that usually need to be specifically planned and budgeted for.

Even if you don’t have any major repair or remodeling planned for 2023, it’s always good to budget regular maintenance items and repairs for your home.

Other things to consider are to budget for new fire extinguishers, a new smoke alarms and CO detector, a pest control inspection and treatment, professional tree trimming and limbing, or concrete/asphalt repairs. Summer seems a long way off now, but when it comes, you may wish you had money set aside for deck repair or house paint! Maybe all of your appliances are older and the likelihood that one of them will need to be repaired is great. Plan for the unexpected!

If you don’t have money set aside for such things, how would you pay for these expenses when they arise? Will you pull money from savings? For most folks that has some limitations. Will you put it on a credit card? Expensive. Or, perhaps go out and get a Home Equity Loan or Home Equity Line of Credit? That can come with its own set of problems when time is of the essence and perhaps your financial or credit situation is less than optimum.

Think Mortgage Reserves

Most homeowners have a monthly mortgage payment that pays down their home loan. In addition to that payment, the lender also collects a bit more money to pay for property taxes and homeowners’ insurance. They hold on to that money until the annual insurance premium or tax bill comes due and then pay for it out of these collected reserves. Simply put, you have the money when you need it. We suggest you think in these terms when it comes to your home maintenance fund too.

Making It Happen

If you were to put as little as $50 a month into a home maintenance fund, in five years you would have saved $3,000. It may not buy a new roof but it would be a good start and could sure take the edge off the cost of a new water heater or cover your homeowner’s insurance deductible should a covered event happen. You decide what you can afford, but the important thing is to start now. It’s as easy as going to your local financial institution and opening a basic savings account.

Some online banking services even let you name accounts so they show up on your account list as “College Fund,” “Vacation” and “Home Maintenance.”

What else can a Home Maintenance fund buy you? The answer is time. Sometimes you just need a little time to get longer term financing in place for the bigger projects. Having some cash reserves available to meet your immediate needs allows you time to get other options lined up and may reduce a little of the stress, both mentally and financially.

How Much Is Enough?

Just how much is enough to set aside for home maintenance? Well, it just depends! But we’d suggest a goal of at least three months of house payments. Take that number and divide that by 60 months. Like our earlier example, that would be $50 a month if your monthly house payment is $1,000. If you know a larger repair project is looming, then use that expense as a goal to start with. Of course, it still has to fit your budget so don’t worry if you can’t make this monthly number right now. Start with less, but start nevertheless.

What’s the worst that could happen? In 10 years, you’ll be sitting on a pile of cash you don’t know what to do with? We’re sure you’ll think of something!

Homebuyer Education Classes

Speaking of saving your money, if you re hoping to buy a new house soon, taking a home buyer education class can save you time and money! NeighborWorks of Grays Harbor offers eHome homebuyer education classes that you can take in the privacy and comfort of your own home. These classes can help you qualify for a better loan rate with some home loan programs, saving you a pile of money over time. For more information, give us a call or check out our website for details, www.nwghc.org.