Smart Money Tip #8: Planning for the Unexpected.

If you are one of the 75 million home owners in the US, then one of the things you need to plan for is keeping your house maintenance up to date. If you are a single woman, this is even more important because you are probably running your household on one income. Since your home is often your largest investment, keeping it properly maintained is very important.

This includes “expected maintenance and unexpected maintenance”. I suggest creating a money bucket for each.  A money bucket is a savings account that you add funds to from every paycheck so you can have readily available cash reserves when the funds are needed.

According to a recent MSN study, 43% of Americans spend more than they make and the average credit card debt is $8000. Planning for the unexpected with a special savings account is a smart way to avoid having to go into debt to cover home maintenance.

When purchasing a home and trying to determine how much of a payment you can afford, be sure to include all the possible maintenance costs both long term and short term and include those into your monthly calculation.

The secret is living on less than you make. You can do this by over estimating expenses, buying less home than you can afford and then setting aside those additional funds into cash reserves, retirement investing and some funds for enjoying life now.

Here is an example of how to calculate your home maintenance fund:

  • Annual maintenance
    Landscaping, carpet cleaning, minor repairs and replacements of worn out appliances like washer, dryer, dish washer, refrigerator (seems like one of these goes every couple of years).
  • Bigger Ticket Items
    New roof, furnace, air conditioner, hot water heater, siding, remodeling, etc.
  • Unexpected maintenance
    Rotting siding, fallen tree, storm damage, etc.
    Some of these items could be covered by home owner’s insurance, however, be careful about filling small claims because it could cause your insurance rates to go up. Sometimes it makes more sense to simply pay the deductible.

So in the above example, you could be putting away:

  • $100/month for the annual maintenance,
  • $100/month for bigger tickets,
  • $50 for unexpected.

The goal would be to create a savings account and add $250/month or $125 per pay if you are paid every other week. Start somewhere and tweak the account as you go. You can also add lump sums from things like tax refunds to build this account up quicker.

Come up with an estimate for each category and then create a figure that you will be saving on a monthly basis so you are building up your cash reserves. Having the cash to fall back on will help you sleep at night and keep the credit card debt at bay.

To learn how to shift your energy, get paid what you are worth and step into your money power, click here to pick up your free workbook and video now.

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Until next time, live with Purpose, Passion and Prosperity!


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