How to afford expensive home repairs without having a heart attack or using debt

Your home is your most valuable asset. Like any asset, you want to maintain, protect and even increase its value.

Just like your car needs an oil change, your home needs regular repairs and maintenance. The problem is they’re not ALWAYS predictable but they always seem to be expensive.

Often people try to band aid repairs and end up regretting it. Why? Because they didn’t take the time to work out the math & energy cost. For example, you may think you can’t afford the long-term replacement and opt only for the six month fix for your water heater. Then a couple months down the road you now have water damage and a new water heater to pay for.

There are a few questions you can ask yourself when you’re deciding whether to pay for a repair / replacement in your home:

How long are you expecting to be in the home?
What is the expected lifetime of appliance?
What are the expected energy efficiency savings?
Am I considering moving soon?
Will this make my listing more attractive / increase the value of my home?

If you believe that your home is an asset worth protecting, we’re going to tell you exactly how to pay for repairs so that you don’t have a heart attack and so you don’t have to go into debt.

The secret here (after you’ve gotten on a zero-based budget) is to open up a home maintenance account and start putting money into it. TODAY!

As soon as you do that, you’ve got what we call a sinking fund.

A sinking fund is a savings account with a purpose. Unlike your emergency fund, a sinking fund is not for emergencies. It’s also not your investment account where all your money is piling up so you can retire and live generously later.

No, a sinking fund acknowledges that there are certain (often reoccuring) expenses that come up annually or biannually that are too big to afford in just one month.

Sinking funds PLAN for this.

As we’ve said before, some examples of sinking funds are:

Christmas gifts
Travel
Home maintenance
Car maintenance
Taxes
Insurance premiums

In this case, there are a few different types of home expenses that you’ll want to save for:

Maintenance: duct cleaning, water heater flush, etc
Repairs: repairing a running toilet
Replace: HVAC system

The cost for these things can scale up or down pretty wildly. What you DO know, for sure, is that one or more of them will come up for you as a homeowner.

In order to have some peace of mind, we suggest you open up an account, name it home mx or whatever fun version of that you can think of and then start putting some money in it every paycheck. This will go in as a line item in your budget. You can even make the transfer happen automatically so you don’t have to think.

Once you get that going, you might want to take the time to see what a realistic amount you need to save up is. First, let us tell you about the 50% rule:

50% rule= If an appliance is more than 50% through its lifespan and if the cost of one repair is more than 50% of the cost of buying new, you should replace rather than repair.

Now, think about the items you have in your home. This includes things like your dishwasher, water heater, ac unit and more. What sort of lifespan do they have? How far are you into those? Do you have warranties? Do you know about upcoming repairs?

All of these questions will inform your decision on how much to set aside each month (along with the “wiggle” room in your budget). Here are some example costs to replace:

Water heater $2000 – $5000
HVAC $7500+
Air vent seals (duct upgrade) + Cleaning $2800
Replumbing $14300+
Heat pump $7500

So, if you are saving for something specific there is a specific formula you will use:

Total cost % time in months = monthly savings.

For example, if you know you have six months to save up for a new water heater you’ll want to get an estimate and then start setting aside that money. $3000 / 6 = $500 monthly.

Book Your Free Call Now!

We are excited to create the time & space to talk to you about your current money situation. This is a free, no-obligation call where we can answer questions you may have and maybe find some quick wins for your budget.

What do you have to lose?

IDEAL BALANCE: How to Budget, Get Out of Debt, Save Money + Financial Systems to Organize Your Money

Even high-achieving, Jesus-following moms need help organizing their finances. We want to help you learn how to budget, how to get out of debt & how to save money. We do this through 1-on-1 coaching where we teach you how to stop stressing about money & install systems that automate your finances. Once you have these money systems, you’ll be able to live debt-free, build wealth & achieve financial freedom. Join us to ditch the bad money habits & take control of your financial future.

Shana & Vanessa are best friends, business partners & Ramsey Solutions Master Financial Coaches.

Download Our Free 7 Systems Money Systems Workbook

IDEAL BALANCE