M is for Money

This is the final chapter in the series - Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8 and Part 9

Welcome to the world of homeownership. Unfortunately the costs don’t end with closing. There are many expenses that first time homeowners underestimate or don’t anticipate. This is especially painful when you’ve wiped out your savings to buy the house.

Property Taxes and Insurance

Hopefully you figured out the cost of your annual property taxes before buying the house. Often your lender will collect these funds along with your monthly payment, or if you’re lucky you can set up a self-escrow. But sometimes your lender doesn’t collect enough to pay the entire bill, this happened a lot during the bubble years when values were skyrocketing. You’ll have to come up with the difference at tax time. There is also the cost of homeowner’s and other insurances to protect your investment.

Lawn and Garden Care

Most first time home buyers haven’t had a yard to care for. Suddenly you have to acquire all manner of tools and supplies before that neatly trimmed landscaping turns into an overgrown jungle. Depending on your yard you’ll need everything from garden hoses and a shovel to a lawnmower. When starting from nothing, the costs add up quickly. You can shop craigslist but be wary of anything mechanical, I bought a used wood chipper from there that broke a day later.

Maintenance and Repairs

There is always something to fix around the house. Little things break and over time the major systems become worn and obsolete. Homeowners spend thousands of dollars on upgrades and upkeep, it’s unavoidable. There is no super or manager to call when something breaks either. The bill and the headache are all yours.

I keep a savings account specifically earmarked for home maintenance and repairs. An emergency fund is good, but you should consider a separate house fund as well. The cost of many home repairs is more than the average e-fund can handle.

A Handy Homeowner

The best way to save money on maintenance is to tackle the small stuff yourself. With a toolkit and a few plumbing supplies you won’t have to run to the phonebook when the sink backs up or a handle comes loose. The largest cost for small repairs is the labor, often the parts are inexpensive. We’re rebuilt faucets, repaired the water heater and replaced a light fixture, among other things. Assemble a toolkit with a few screwdrivers, wrenches, pliers and a hammer. For a plumbing kit you need a pipe wrench, Teflon tape, plumbers putty and a small hand operated drain snake. With these tools and the information on the internet, tackling repairs will be a breeze.

Welcome Home

Buying your first house is a huge financial commitment that doesn’t end with closing. First time home buyers get themselves in trouble by underestimating the cost and responsibility involved. Month after month you have not just the cost of the payments but the burden of maintaining your investment. Your satisfaction with your house is ties to your expectations. Knowing in advance the expected costs and concerns will make you a more educated buyer and happier homeowner. Welcome Home!


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