Why you need a home fix-it fund

Home fix-it bill

If you own your home or are thinking about buying one, are you
prepared for the costs associated with fixing it if something goes

expert Clark Howard
says that every homeowner needs to be
prepared to deal with the home repair issues — small or large —
that are bound to come up eventually.

Here’s what you need to know about why home fix-it funds are
so important and how to start one…

Why saving money for home repairs is key to your financial

“People who’ve only ever lived in apartments think of just
picking up the phone and saying, ‘Hey, I’ve got a problem with
whatever!’” Clark says.

“But homes depreciate over time, not appreciate. People think
that a home increases in value. But it’s actually the land that a
house sits on that may well increase in value over time. The actual
house itself — the structure — requires continual tender loving
care, maintenance and repair.”

For that reason, Clark says it’s key that you establish a home
fix-it fund to make sure you have the funds to pay for that upkeep
and repair without going into or adding to your debt. He also has a
very simple formula for figuring out how much you need to save.

How to calculate what you need to save in your home fix-it

“I want you to think about, over the course of a year, putting
the equivalent of two monthly mortgage payments aside in a
maintenance and repair fund for your home. That may not be enough
money, but it’s a really good start.”

Rather than try to do this in one lump sum, Clark recommends
that you make your home fix-it fund
one of your budget categories

Download our Free budget worksheet: The CLARK method to create a
monthly budget

“The way I like for you contribute is every month when you
make your mortgage payment. Let’s say your mortgage payment is
$500 a month, just to keep it simple. Every month you’d put
around $80 a month into a savings account,” he says. “Over time
you’ll build up a cushion of cash for maintenance and repairs so
that you’re not fighting from behind when something does go

By “fighting from behind,” Clark means putting those repair
bills on a credit card or taking out a home equity loan that you
have to figure out how to pay back.

To figure out how much you should be budgeting to set aside each
month, follow these steps:

  1. Take your monthly mortgage payment amount
  2. Multiply it by 2
  3. Divide that by 12

The result you get will be the amount Clark recommends
depositing in your home fix-it fund each month when you pay your

You should keep this money in a separate high-interest
savings account
to be used only for home upkeep and

Common home repairs and what they might cost you

In case you’re still not convinced you need a home fix-it
fund, we checked in with HomeAdvisor to get some
estimates on the costs of some common home repairs. You’ll likely
encounter one or more of these if you stay in your house long

Repair estimates are for a home in suburban Atlanta

  • Repair a roof: $351 to $1,343
  • Install a new roof: $5,195 to $10,166
  • Install a new tank water heater: $763 to
  • Repair a foundation: $1,840 to $6,566
  • Install a new central air system: $3,750 to

Final thought

As you can see from the numbers above, home repairs aren’t
cheap. In fact, some of them can be as expensive as a new car. But
with some forethought and budgeting perseverance, you can make sure
you’re prepared when the inevitable issues arise with your

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need a home fix-it fund
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Source: FS – All – Real Estate News 1
Why you need a home fix-it fund