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Not saving for home maintenance expenses is one of the biggest reasons homeowners end up in credit card debt. Read below to learn more about how you can avoid having this happen to you.....
Commercial property owners often incorporate a “sinking fund” into their budget. This fund is established to cover the cost of maintenance items that inevitably arise over time. That way expenses are spread out over time, rather than hitting the property owner all at once. So a $48,000 roof that lasts 40 years would “cost” the owner $100/month, rather than have one big hit of $48,000.
How You Can Be Prepared
Many experts say homeowners should put aside 1% of their home value each year into a separate savings account reserved for home maintenance. So if you have a $600,000 home, you’d want to set aside $6,000 per year for future expenses on your home. In other words, you’d almost want to pretend you have a $500/month bill in this case for home upkeep. Then when the cost comes up for a new AC unit, exterior painting, a new roof, etc…you’ll have the funds ready and waiting.
It’s tough to think about saving that much for home maintenance, but it’ll help you avoid credit card debt if you don’t have the money when the time comes. Plus you’ll earn interest on your savings while you hold your breath for that home maintenance to hit!