Expensive home maintenance - how do you save?

[ua_guy]

How do you save for home mainteance? Let's assume you're up against a major expense like a roof replacement, siding replacement, or maybe even a big paint job. On some homes, roof replacements can be $20,000-$30,000 or more if contracted out, depending on size, complexity, and materials. They can also be much less. In either case, let's assume it's not an expense you'd be able to absorb on a monthly basis with disposable income.

For those of you that own homes where these expenses are sizable, would these kind of replacements come out of emergency funds? Or, is it something you start planning for say, 5 years out, and specifically sock money away in anticipation for the expense?

[disneysteve]

How to save? Get multiple estimates. When we did our roof, the lowest estimate was less than half of the highest estimate - a difference of thousands of dollars. Of course, you want to be careful not to just pick the lowest number because they may be using inferior materials. Check references and actually go look at work they've done if possible.

How to prepare? You really should have savings for this type of non-emergent work. You know a roof only lasts 20 years. Major appliances last 10-20 years. Stuff like that. It really shouldn't be an "emergency" when your refrigerator dies if it is 15 years old. It is the same as auto maintenance. New tires isn't an "emergency" if they have 50,000 miles on them.

[ua_guy]

How to save? Get multiple estimates. When we did our roof, the lowest estimate was less than half of the highest estimate - a difference of thousands of dollars. Of course, you want to be careful not to just pick the lowest number because they may be using inferior materials. Check references and actually go look at work they've done if possible.

How to prepare? You really should have savings for this type of non-emergent work. You know a roof only lasts 20 years. Major appliances last 10-20 years. Stuff like that. It really shouldn't be an "emergency" when your refrigerator dies if it is 15 years old. It is the same as auto maintenance. New tires isn't an "emergency" if they have 50,000 miles on them.

Thanks Steve. I think the "lowest cost/highest quality" option was already inferred in terms of getting estimates and finding the right people to do the work, if it will be contracted out. Good advice nonetheless. There are a lot of BAD contractors out there.

I'm more curious if people plan for this as a line-item budget in their savings goals for specific replacements and projects, or if they save an EF to the point where it well-surpasses the 6 month salary/expense level to cover big hits like this on a predictable timeline.

[MonkeyMama]

The general rule of thumb is to save 1% - 3% of cost of home on an annual basis, for home maintenance. Of course, if you buy a home that needs a lot more work up front, you should plan accordingly for that. (I think the masses use their home equity, for the most part).

We bought a fairly low maintenance home (brand new, roof - and many other materials - should last *forever*, no siding, no large trees, etc.) and so actually skipped out on that savings the first decade or so. (But we already had a very large cash cushion in case of the unforeseen). If we had saved 1% all along, we'd have about $30,000 today, earmarked soley for home repairs. We find 1% more than ample due to the higher cost of living here, and due to the low long-term maintenance expenses that we expect. WE are maybe saving 2% now (years 10-20) to play catch up. To-date I am not expecting any super large repairs, so if we don't need it, it can go to pay down the mortgage eventually.

I agree with Steve too. Another tip we have found is to do home repairs while economy is in the toilet. Subcontractor pricing is really rock bottom right now. We have the cash to take advantage. The vast majority of our neighbors could not afford a $100 repair and have tapped out all their equity and credit. We are finding A+ quality at rock bottom prices. I'd like to do as much work as possible in these years and try to avoid large repairs in more robust years, but there is only so much you can do to that end.

[bjl584]

A little bit of knowledge of how to do things yourself can save you thousands of dollars. You don't need to become a master craftsman, but there are tons of books available on how to do basic carpentry, electrical work, plumbing, etc.

I helped put a new roof on my Dad's house and on my cousin's house in the past few years. The only costs were the material costs. I've also helped with plumbing and electrical work, built a few decks, did some interior rough framing, and some finish work. If you have the tools and a willingness to learn, then you can save countless thousands of dollars.

[Wino]

If you don't know what you're doing, you can easily kill yourself or cause concealed damage doing electrical work. I do all of my own electrical work, and quite a bit for friends, but I really don't recommend you read a book and then think, "I'm going to save $75 by doing this myself."

Putting up light fixtures or replacing an outlet with a GFCI is fine. If you plan to install another circuit or add another outlet, then call a professional. Hardware stores sell non-contact voltage testers (we call them "chirpers" where I am from). If you're going to try electrical work, buy one and use it to check for voltage, but first make sure it works (every time you use it) by testing it on a known-live circuit.

Plumbing codes and electrical codes and building codes are there for a reason. Repairing things or replacing things can be done if you're handy with tools and maybe ask some questions on forums for handymen. Actually doing upgrades, though, is not something you should do without complete knowledge of what you're up against.

[Bob B.]

I like MM's 1-3% figure, although I live in a really old house, and in my case, I think I would have to figure 3-5%.

ua_guy - do you currently spend 28% of gross monthly income on PITI? If you're less, why not sock away whatever the difference is to make that 28%?

As a hypothetical, say your gross monthly household income is $5,000, and your monthly PITI is $1,200 (24%), so you have $200/mo. of "extra" to to save per month get to that magic 28% number generally recommended for housing costs.

[ua_guy]

All good advice, thanks. My partner and I are handy and we do most of our own work. We've saved a mint over the years and are well-trained. No worries there. We've rebuilt a home together.

It's really a time/risk factor for the larger projects and we've elected to save and contract out one of the bigger ones we're looking at, like the roof. We could have done it ourselves on our last home, but on the new one, it's just too big, too steep, too complex to risk injury, and our time is better spent hiring out, even if it is the much more expensive option. I'll make it last forever once it's on, but the actual installation needs to be done by a licensed contractor. That's why we're preparing our finances to make it possible.

[JoeP]

If you don't know what you're doing, you can easily kill yourself or cause concealed damage doing electrical work. I do all of my own electrical work, and quite a bit for friends, but I really don't recommend you read a book and then think, "I'm going to save $75 by doing this myself."

Putting up light fixtures or replacing an outlet with a GFCI is fine. If you plan to install another circuit or add another outlet, then call a professional. Hardware stores sell non-contact voltage testers (we call them "chirpers" where I am from). If you're going to try electrical work, buy one and use it to check for voltage, but first make sure it works (every time you use it) by testing it on a known-live circuit.

Plumbing codes and electrical codes and building codes are there for a reason. Repairing things or replacing things can be done if you're handy with tools and maybe ask some questions on forums for handymen. Actually doing upgrades, though, is not something you should do without complete knowledge of what you're up against.

Agree with most everything you said. Certain skills can be learned by reading (installing laminate flooring, repairing an appliance), while others require a combination of reading and working alongside a pro (electrical, plumbing, gas piping). Complex projects such as major remodeling and additions compound the risk of injury/death/fire/etc because of specialized tools, technique, best practices, code knowledge, weight bearing knowledge, etc.

I will say that when I finished half of my basement, I did about 10 months of research online and asked a few trades friends. The new knowledge I gained gave me the confidence and skills in: metal studs, electrical, lighting, suspended ceilings, primers and paints, molding/mitering, networking, audio wiring, hanging doors, drywall, waterproofing.

See attached for finished product right after completion.

[kork13]

When I bought my home about a year ago, I started a savings account for it at the same time. I have a monthly transfer set up with my bank to send some money to it every month. I like the idea of saving 1-3% of home value per year, I've really had no idea how much I should actually be saving for it. For the last year or so, I've just been doing $100/mo, which would be a bit below 1% of my home value. But anyway, that's how I do it... I've basically got a separate account for all things related to home repair, maintenance, and upgrades. I plan to rent it out later on whenever I move on to my next assignment, so I figure that account will be a useful way to track all money related to the house, rent, etc.

Unfortunately, I'm not much of a handyman, so the best I can do is shop around getting multiple estimates for major work. I'll tackle small projects (like I changed out the tank refill mechanism on a toilet), but I honestly just don't know enough to do anything significant. Perhaps as the years go by I'll be able to pick stuff up, but for now, I'm hopelessly lost as a handyman homeowner. lol

[feh]

For those of you that own homes where these expenses are sizable, would these kind of replacements come out of emergency funds? Or, is it something you start planning for say, 5 years out, and specifically sock money away in anticipation for the expense?

You just need to start saving months/years in advance for looming large expenses. Whether it's part of your EF or a separate account doesn't really matter; that's just mental accounting.

[Gailete]

Saving over the long term is the way to go, but not always done unfortunately. Hubby built our house so basically he can repair most of what needs done. We are just finally getting to the financial spot where we are saving ahead for line-item expenses that come up regularly. So when we get to that place, we will also have to be putting more than 1% aside. In the meantime the smaller expenses that come up, we just pay out of our monthly income or our savings account that is earmarked for bills that aren't due this week. Not sure what that would be called.LOL

[willuc8]

Whether it's part of your EF or a separate account doesn't really matter; that's just mental accounting.

[Amanda695]

We save by doing the things we can do by ourselves. Sometimes it doesn't save much, other times it saves a lot!