Staying On Top of Finances As A New Homeowner
January 22, 2015
We've talked about what you can do to get yourself into financial shape to purchase a new home, but what about keeping up your financials after the move? Sometimes the prospect of buying a new home and then staying on task with your budget can be daunting. Here are some great tips on keeping your budget and planning under control once you own that new home. Build Yourself a Cushion - Once you begin making your monthly mortgage payments, build up a separate account that you want to pad over the next 6 months to a year with anywhere from 3 - 6 months worth of monthly payments. This gives you security, keeps you from living paycheck to paycheck on your monthly bills, and will give you a little insurance and peace of mind against job loss, medical injury, or even unplanned expenses on the new home. Itemize a List of Extras - If you bought a new home you may have a wish list of improvements and frills that consist of items like landscaping, painting the house, adding new furniture, decorative window treatments and other extras and details that are not an essential for living in the home but will increase your enjoyment. As you assemble this list, rank and organize that list in order you'd like to achieve those additions. Maybe custom closet is at the top of your list, or maybe a backyard fire pit will be more enjoyed by the entire family. Build a Budget for Your Extras - Start assigning dollar amounts to the list of extras you've compiled so that you know how much to put away. Build Yourself a Planned Improvement Fund - Once you have a feel for how much you will need for the projects you want to take on for the new house, come up with a game plan on building your fund for improvement. Create a separate savings account and chuck money in there on a monthly basis to build up your fund. Don't take money from the separate cushion fund you are creating because that will just defeat its purpose. Use Credit Cards Judiciously - While it may be tempting to slap it all on credit cards as you go crazy with new curtains, couches, decks and flowers in the long run you will be paying over and over for these items in interest payments. You could also be setting yourself up for financial strain. Some items really can be put off as you save up in your planned improvement fund. Other things may make sense to do on credit. If you are going to make large purchases and use no interest for a number of months in order to pay for those items, make sure you pay close attention to penalties for missed payments, late payments, and not paying it off before the interest kicks in. You can be hit with large bills that can be a shock to the consumer. Consult a Financial Adviser - It can never be a bad thing to talk with a profession. This is especially the case if there is any language that is unclear in any credit agreement you decide to undertake. Just because you can break something into 6 monthly payments, 12 monthly payments, or 24 monthly payments, doesn't mean it fits your budget. Evaluate your wants versus your needs when you are just starting out as a new homeowner. In looking at your lists, it really helps to continually ask yourself, is this truly a need, or is it just something I want. It's easier to pull in your belt and evaluate your situation more clearly if you have these boundaries fully defined.