Thursday, July 10, 2014

If We Move Back to a Single-family Home, I’m Starting Our own Association Fee

I’m pretty good about keeping home repair and maintenance costs to a minimum.  Even then, such expenses ran about $200 a month in our previous, single-family home.  Add in another $250 for our average utility bills, and we were dropping some decent cash in regular home-related expenses, and we weren’t even getting crazy about things like updates, new appliances and the likes. 

Now we live in a condominium, and many such items are covered by our $300 monthly association fee.  I like this fee structure and I think that if we ever move back into a single-family home, I would institute a similar program to cover related expenses.

A fixed monthly allotment
A certain amount of peace of mind can come with knowing just how much we’ll be paying for the majority of our repair and upkeep costs.  In our previous single-family home, we might go for two months without spending a dollar on repairs and then be hit with an $800 bill out of the blue.

Such financial hits were harder to plan for and recover from than our current situation of just putting $300 a month toward our association fee that covers most repairs and maintenance.  In the future, I would continue to put this amount -- or a similar amount based upon our housing situation -- toward this purpose.

Covering repairs, maintenance, and home modifications without touching savings
By continuing the association fee-style payment even once we’re back in a single-family home, I can prepare for a variety of expected and unexpected repair, maintenance and home modification items without having to dip into our emergency fund for such costs.

I’d like to break down our home association fee into categories like repairs, lawn equipment, new appliances, roof replacement, HVAC repairs, etc.  Along with associated dollar amounts, it kind of sets aside money for such items for frugal people like me who consider a dollar saved a dollar earned and therefore have a harder time putting money aside specifically for such items.

Adding a reserve fund
Maybe the best thing about continuing the association fee-style structure -- even after condo life -- could be putting a portion of this money toward a reserve fund.  Taking out 10 or even 20 percent of my monthly self-charged fee and putting it aside for unforeseen repairs and maintenance projects means that we’re prepared when the unexpected strikes.  Sump pump goes out, we’ve got it covered.  Water heater dies, we’ve got it covered.  Air conditioning goes out on a 90 degree day, we’ve got it covered. 

With this money set aside in a separate account and only to be touched for home-related emergencies, it makes the shock of such repair costs less substantial, helps cheapskates like me bite the bullet and make repairs when they crop up rather than trying to put them off (sometimes making things even worse), and adds peace of mind regarding such costs when they arise.


Disclaimer:

The author is not a licensed financial or real estate professional.  The information provided in this article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

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