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rated:
Hello people,

I am trying to do a proper budget.
Adding up all my fixed expenses, going through my credit card statement, and bank statement, i am figuring that i should be running a 700$ surplus every month. but in reality in the past 3 months its closer to 300...(moved into my house 3 months ago and been fixing it up slowly)
However it seems like something always comes up, EG : we recently repainted the house so that cost us 500$ of paint, all the receptacles and switches were painted over by previous owner so i changed them all, 100$, now i need to build storage in my garage because everything is laying on the ground, probably looking at another 100-200$ of lumber, toilet issues fixed, etc etc etc,

So i guess my first question would be, how do you budget for expenses like that
after my garage storage is done i will be finished doing what i want in the house, but what if my furnace gives out, or my A/C or something leaks..... i dont know what number to put aside for home repairs that wouldnt be covered by home insurance.... the house isnt too old, only 12 years old. but it still has the original water heater, furnace, and A/C

My second question would be that i am paying 70$/month for life and disability on my mortgage insurance i find that to be a lot of money.... i am 23 years old in peak physical shape and i almost find it to be a waste of money,. does anyone have any insight on pros and cons of cancelling that....

Thanks for reading, everyone here seems great with money and i am still young and learning so its great to be able to come to a community like this and get great feedback from successful people.


 

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rated:
First, start building an emergency fund to cover the unexpected expenses.
Second, you can budget an amount monthly for home maintenance/repair. This amount is variable, but these expenses exist, so no use pretending they don't. If you don't spend it in a given month, you can put it in your emergency fund.

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BostonOne said:   First, start building an emergency fund to cover the unexpected expenses.
Second, you can budget an amount monthly for home maintenance/repair. This amount is variable, but these expenses exist, so no use pretending they don't. If you don't spend it in a given month, you can put it in your emergency fund.

  
Should the emergency fund for repairs be separate from my emergency fund for unemployment? (i have a small savings account with roughly enough to sustain me for 10-12 months if i am on unemployment that long)
Or should i start a separate account for home repairs and contribute a certain amount every month? EG put 100$/month in an account dedicated to home maintenance?
I'm guessing that 700$ i have left will have to be split something like this :
100$ home maintenance fund
500$ savings, more rainy day funds? or put towards paying off truck loan? (truck loan is 0% interest) we only have 14,000$ saved up total at the moment, i feel like i should have much more given all the expenses im seeing 14,000 is starting to look like less and less money.
100$ vacation fund? (i have never taken a vacation and i'd love to go to mexico next year)

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If you need a more disciplined approach, you could open an account specifically to save for those major issues and leave those funds alone until you need them (while moving them from bank to bank to collect bonuses if you don't want to just let the funds sit there).

When we first bought many years ago, I had the mortgage payment plus a set amount deposited into the account that our mortgage was auto-debited from since we didn't use it for anything else. Each month, the additional amount grew and once it reached my set amount ($6,000), I transferred some of the funds to general savings or investments. We have both on paper and in the account money saved for house issues which over the past couple of years have paid for larger maintenance items like the roof deductible, new HVAC, new water heater, and major plumbing issue. After each item, I let the account fill back up before moving funds around again.

Most probably just consider it part of the emergency funds, but I think blocking it off helped me to leave it alone. In a true emergency, you could use it for anything, but I haven't had that experience yet.

rated:
If you have a lot of house repair expenses I would budget something for that. Average out your expenses over the past year nad then figure what you've been spending each month. for example in your case you spent $500, $100, $100 so thats 700 in 3 months or $233.33 average. I'd then round up and expect $250 a month.

Yes I'd agree that life/disabiliyt on your mortgage at $70/month is not warranted and seems very high cost. If you're 23 years old you should be able to get a lot of term insurance for much cheaper. Thats assuming you even need life insurance.

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You budget for this by estimating how much you'll spend on such repairs each year, or even over a number of years.  Then divide it by the number of months that timeframe covers.  If you estimate spending $4800 over the next two years, that's $200/month that you budget for repairs.  Then you take that $200 each month and set it aside - and whenever you pay a repair bill, you take it out of that reserved money not your monthly budget.  Even if you pay the full $4800 in one month, at the end of 2 years you'll still be "even."  

Of course, you'll have to monitor how accurate you're initial repairs estimate was, and if necessary adjust your monthly budget amount accordingly.  If after one year it looks like you are going to overspend your initial $4800 2-year estimate by an extra $1200, then you'll need to add another $100/month to your repair budget for the second year.

rated:
NoMoneyInMyWallet said:   Some background: https://www.fatwallet.com/forums/finance/1521627
  
Yes, that issue is still ongoing, i kept the truck to see if i cant save my credit, my bills for the house were lower than i anticipated, mortgage is 1240$ vs 1500$ i was expecting, gas bill is much lower now because i live closer to work, internet is less than half what i anticipated and so on. leaving me with a 700$ surplus as opposed to my initial math.

So yes i have a 712$ truck payment with stupid high insurance costs and i feel castrated by it but i came to the conclusion i can't do anything about it that wouldn't have extreme long term harmful effects on my life... having a good credit is huge and i want to keep it that way.
all i can do now is budget what little i have left every month and see if i cant make some good come from it.

rated:
So get rid of the truck as stated in the previous thread. You're always going to have unexpected expenses which is why you BUDGET for unexpected expenses. 1% of the homes value or something.. And it sounds like the things you did were very very optional. You need a bit of self control.

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Ma171aC said:   So get rid of the truck as stated in the previous thread. You're always going to have unexpected expenses which is why you BUDGET for unexpected expenses. 1% of the homes value or something.. And it sounds like the things you did were very very optional. You need a bit of self control.


As mentioned in the previous thread i cant get rid of fhe truck because of massive negative equity. I dont want to get back into this as its pointless to beat a dead horse, i cant take a 20k hit on my truck and have it be a smart move.

That 1% rule cant be for maintenance alone, my townhouse is valued at 300,000$, thats 3,000$ every single year in maintenance,

Thats the equivalent of having a major repair happening every single year. I just cant imagine how so many things can go wrong. I suppose that might be more accurate if that includes remodelling a kitchen or a bathroom once every 5-10 years.

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That 1% rule is a vague rule of thumb ballpark. It works best if you consider 1% of the value of the structure and ignore the value of the land.

$1k-2k a year will probably suffice for most. Keep in mind you're also considering eventually having to replace / repair everything in the house, repaint, etc. And if you do all the work yourself you can likely adjust those rule of thumbs accordingly. The rule of thumb isn't based on DIY work but assumes people pay contractors.

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You seem very impulsive and although your house probably did need paint, light switch covers, etc. I'm going to guess that you just ran out and bought a cartful of stuff at your local hardware store and just started working without any sort of plan. You need to back up for a second and plan your repairs and upgrades. Sit down and make a list of what the house needs right now, in the near future, and of what it doesn't need but you would like to do.

Next you start measuring, making notes, and doing internet research. For example, you say you spent $500 on paint. I know that you are referring to $500 Canadian, but that still is a lot. You should have checked prices on paint and supplies and found out when the sales are. Around me, both Home Depot and Sherwin Williams (my two personal favorites), have pretty big sales a couple of times a year. Before the sales, I usually get 7-10 paint chips and try then out around the house, then pick my 2-3 favorites and buy the little $3 samples, paint the samples in a few spots, and then when the sale comes around I am ready to jump on it.

You should be carrying around the measurements and specs for future projects on your phone in case you happen across a deal. For example, if you went to buy paint and the store had a few half price, open box hot water heaters, would you know what size and type you would need? You should. When we were finishing our basement a few years ago, I had blind sizes, Vanity measurements, shower door size, closet dimensions, and a lot of other specs on my phone so if I stumbled upon a deal I could scoop it up and know that I was getting what I needed.

Do you have some sort of reuse, recycle place near you for home items? You need to check them out. I was able to go to a place like that and get my toilets for $20 each, and then we put new seats and handles on them, which was soooooo much cheaper than buying new. The one near us also has tons of really nice flooring that contractors have donated because they are left over from a big job, so if you have a small bathroom, entryway, or a small room you can get flooring for about 1/4 of the normal price and it is brand new. I could go on and on, but basically the gist is that you need to step back and plan.

rated:
So i just got a call for a 1+ year project in fort mcmurray,
I took it obviously.
Time to make good on all my promises i made to myself if i could go back.

I want to pay off as much debt as i can but i have a question regarding what i should pay off first

My current plan is this:
i currently make ends meet with 2800$/month including food and any expenses. my new job will be around 5500$/month (all after taxes and deduction)
Plus all the food that will be provided to me, no gas to buy, a lot less expenses compared to being home all month.
So im going to find myself with 3000-3400$/month for 1 year.

I currently owe 12,000$ on my quad, 60,000$ on my truck, and my mortgage.
I want to pay off my quad first, that should take 3 months if i put all my spare income into it.
Then i was wondering how smart it is to pay off my truck as its a 0% loan.

Im thinking about paying off my quad because its a 2% loan. and then saving up as much money as i humanly can to come out of this next year with as big of a safety net as i can. (probably an extra 30,000 over what i have now)

Paying off my quad will save me 250$/month. I cancelled a few insurances i didnt really want and thats saving me 200$/month as well. so thats gunna put me 450$/month extra in the black over what im calculating too.
I'd apreciate any input on how to benefit most from this opportunity to get out of trouble.
Maybe i can invest my savings into a safe investment with a steady return... all input is welcome.

rated:
YNAB

rated:
jordantheoret said:   So i just got a call for a 1+ year project in fort mcmurray,
I took it obviously.
Time to make good on all my promises i made to myself if i could go back.

I want to pay off as much debt as i can but i have a question regarding what i should pay off first

My current plan is this:
i currently make ends meet with 2800$/month including food and any expenses. my new job will be around 5500$/month (all after taxes and deduction)
Plus all the food that will be provided to me, no gas to buy, a lot less expenses compared to being home all month.
So im going to find myself with 3000-3400$/month for 1 year.

I currently owe 12,000$ on my quad, 60,000$ on my truck, and my mortgage.
I want to pay off my quad first, that should take 3 months if i put all my spare income into it.
Then i was wondering how smart it is to pay off my truck as its a 0% loan.

Im thinking about paying off my quad because its a 2% loan. and then saving up as much money as i humanly can to come out of this next year with as big of a safety net as i can. (probably an extra 30,000 over what i have now)

Paying off my quad will save me 250$/month. I cancelled a few insurances i didnt really want and thats saving me 200$/month as well. so thats gunna put me 450$/month extra in the black over what im calculating too.
I'd apreciate any input on how to benefit most from this opportunity to get out of trouble.
Maybe i can invest my savings into a safe investment with a steady return... all input is welcome.

  You didn't even sell the 4-wheeler? Oh boy.

Can't wait for your next post in a year when you are back in the same boat.

rated:
Isn't that where the Highway Thru Hell guys are? Ft McMurray?

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