How to Save for Future Home Repairs
How Homeowners Can Save for a (Literal) Rainy Day
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Guest post by Bret Engle.
Bret Engle is an architect and co-creator along with Ray Flynn of DIYguys.net. He and Ray are co-authors of the upcoming book, How to DIY Damn Near Everything, which features Ray and Bret’s best tips based on their years of collaborating on DIY projects.
We’ve all heard the wisdom about setting aside some money for a rainy day. Usually, this is meant to refer to having the money set aside for necessary expenses such as food, clothing, and housing. However, you should also set money stashed away for household emergencies, which can happen when you least expect them, such as during a downpour.
Your Home Repair Fund
When you own a home, one of your first priorities should be to set aside a home repair budget. According to financial guru Dave Ramsey, 1 to 4 percent of the property’s value is about right. Things like a busted water heater and a leaky roof can cost thousands of dollars. Left unrepaired, these issues can trigger a downward spiral of events that are even more costly to remedy. Water damage, for instance, can cause mold growth, which can make your family sick and isn’t covered by home insurance, according to Louisville’s Braden Insurance Policy Group.
Professionals Are a Must
The cost of home ownership isn’t just in the mortgage and emergency repairs. Home maintenance is expensive but necessary if you wish to protect your investment. While many things can be done on your own, it’s best to hire a professional for your home’s major systems. Further, hiring a professional may actually save you money in the long run, especially if you are not handy, don’t have the right tools, or plan to make major repairs that require a permit. This Old House offers tips on choosing a contractor that’s right for your project.
The most important reason to outsource home repairs is safety. Electrical work is not like putting a piece of furniture together. One incorrect connection and you’ll face more than just a few broken pieces of wood. Faulty wiring can result in improperly functioning lights and equipment, at best, and, at worst, death by fire or electrocution. Wirecraft Electric further explains that without the correct knowledge, you may inadvertently install the wrong types of products in your home with potentially devastating consequences.
Professional repairs don’t come cheap. Installing a new 400-amp electrical panel can cost $4,000 or more. Digging and installing new mainline plumbing can cost twice as much. Repairs to the foundation, structure, or roof of your home are likewise costly, but the cost of any of these being done poorly is even greater. Similarly, it’s best to consult with an expert before doing significant upgrades, such as pouring a new foundation for a detached garage or building a deck. Without a proper understanding of the soil or local building regulations, you may be out of pocket for professional repairs later, plus any fines imposed by your city.
Before writing a check, research your preferred contractor online for reputation and to compare their rates with others. You should also ask for references from local homeowners. Reputable companies are happy to provide a list of happy customers for your review.
When Money Is Tight
If you have been unable to put money aside specifically for home repairs, paying for these issues may be a burden. Your personal savings or retirement accounts are an option. However, the latter comes with tax penalties and should not be done without consideration for future earnings potential and money lost due to premature withdrawal.
Another option is to take out a home equity loan, which Credit.com explains utilizes the current value of your home as collateral. A home equity loan may have an interest rate lower than the penalty you would incur by taking money from your retirement accounts.
Whether a foundation failure, leaking roof, or busted hot water heater, home repairs are a fact of life. Maintain your home when possible, and don’t hesitate to call in a professional for specialty repairs. While paying a pro may cost more up front, you’ll be better off knowing that the job was done right and that your home and family aren’t at the mercy of DIY repairs.