Interested in buying a home or condo??
Buying real estate is an exciting, stressful, difficult and crazy process.
Preparing financially is important. Here are 4 savings accounts you must have if you are preparing to buy a home.
So whether you've already bought a house or you're thinking about buying one preparation is awesome. Here are four different savings accounts that every homeowner must have here we go. First one being an emergency fund. This is for everybody really but especially when you own a home. When I bought my first home, I had lots of things happening the pipeline sales wise it was and I'm sure.
And long story short, I was given a termination notice because the company was going under no preparation. No, this is going to happen guys. All 50 of us are so received a termination notice with no preparation and nothing to really prepare for so I had bought a house two months previous and I just was laid off my job man.
My hair almost turned straight blonde. There's a very stressful time. However, thankfully I had a small emergency fund that's saved my rear. We tell you a typical emergency fund is between two and six to eight months worth of living expenses stashed away like a squirrel stashing away acorns for the winter.
So let's say every month every single bill you add together cost $3,000. Well, let's do an easy calculation $3,000. X 6 months is $18,000. Whoo. It's a lot of money. Yeah, absolutely but a life throws curveballs and it's way better be prepared in advance then have to think on your toes when life throws a curveball.
It's not fun. So be ready and be prepared. The next would be a yearly spending plan. So there are many things. That only happened periodically, it's not every single month situation you buy fuel every month for your vehicle. You may pay utilities every month probably but something that doesn't happen every month or something like car insurance or homeowners insurance that happens twice a year and once a year for myself.
So let's use a really easy example, let's say your homeowners insurance every year cost $1,200. We take $1,200. / 12 months $100. So now automatically might I add set up your checking to deposit $100 each month into a savings account. So when your homeowners insurance comes up again, you're already ready for it you transfer from savings into checking pay it off you're done as opposed to scrambling to find the $1,200 because a lot of times it's a lot of money to figure out.
With very little notice. So again be prepared be ready and what you do is add all those expenses up the homeowners insurance the car insurance the membership you pay once a year all of them that only happen once twice three times a year and take them all divide them by 12 figure out your total amount and every single month transfer that into your savings plan.
The next would be a sinking fund a sinking fund is used in finance when. Corporate players or governments actually buy back their bonds, but that's a bit information. That's really irrelevant sinking funds for personal finance is preparing for something that's going to break at some point. So I don't know the fridge the oven the washer and dryer the vehicle.
So let's say you anticipate your washer to go. Which no one anticipates that was just make-believe. You have privy knowledge and you can even prepare for let's say cost $600 for a new washer and you plan on replacing it in the next year again, six hundred divided by 12 months. It is $50 a month take the $50 a month siphon it into that sinking fund account.
So you're ready when your washer dies. Because let me tell you no one wants to smell your stinky clothing. So make sure to prepare for that washer. And then lastly the most important one for a homeowner is a home repair fund A good rule of thumb is to take 1% of the current property Valium. So let's say your home is worth $200,000 1% of $200,000 is $2,000.
Pretty easy math. Are that $2,000? Yearly is an expense that is most likely going to happen. So most likely eat you're going to spend $2,000 Mas o menos each year on repair cost for your home. Now. It may be more in other years. If you have to replace a roof or HVAC system or something of that nature, so be privy to that but just on a good rule of thumb one percent.
So take again two thousand dollars divided by 12. It's about a hundred and sixty dollars or so. I believe my math is right take that siphon it into this last and fourth savings account. So when you have to replace a window because the stupid neighborhood kid broke it and you don't have it on videotape.
Unfortunately you ready for that because the big difference between renting a residence and owning your residence is there's no more calling the landlord when the faucet starts leaking. You can call yourself. That's it. You don't have any backup plan. So you actually have to pay for it and do it or do it yourself Small Things learn to do it yourself.
YouTube has been a savior for me. I'm very non handy person but educate yourself be ready because you will have to repair your home and it's way better to get on top of it then have to have a. $3,000 window Bill and not be ready for it. Those are for super important ones for homeowners and I hope you invoke those.
What other ones are there though. Is there something I'm missing comment below. I want to see what else you guys are preparing for or not preparing for make sure to subscribe to the channel like the video and I will talk to you guys very soon.