by Ashley
We’ve now been in our new-to-us (1980s) house for just over a month. I haven’t talked much about the house since we closed, so I wanted to talk about some of the financials in the past month of home ownership.
Monthly Bills
The house is larger than our last home so although it’s too soon to tell true differences in heating and cooling costs, my guess is our new house will be a little more expensive on average. Relatedly, our home is now 100% electric (no natural gas) so that’s a bill we’ll be eliminating from our monthly budget. Our trash is now paid quarterly instead of monthly and even though we’re now receiving more service (our neighborhood does twice weekly trash pick-ups), our overall cost is actually less. We do, however, have HOA fees to pay.
Overall, our monthly bills will probably be a little bit higher than in our previous home.
One-Time/Set-Up Costs
The hidden costs of home-ownership! We knew when we bought the house we would have to purchase a refrigerator (we got ours at a great Black Friday deal because Lowes did their “Black Friday” prices for the entire month of November! Great time to buy a home!). What we had NOT realized until we moved in was that not a single window had any blinds on it. Not one. I’ve never bought blinds before. Even going the DIY-install/Home Depot purchase route, we still ended up paying over $1,000 on blinds! We also ended up needing a few smaller items (e.g., one extra bathroom = one extra trashcan, extra hand-towel set, etc.). We also bought 3 ceiling fans for rooms where they were not present (the living room + 2 bedrooms). The bedrooms were already pre-wired (but just had metal plates affixed to cover the wires), so hubs was able to install those on his own. But we had to hire an electrician to wire the living room because, living in Arizona, we HAVE to have a fan in the living room and it hadn’t been wired for one so that work needed to be done.
A great majority the walls in the house are bare. Some of the rooms, even, are bare. But I’m okay with that for now. I’m in no hurry to rush out and spend a lot more $$$ to decorate and furnish the entire home. We’re comfortable with what we’ve got and I prefer spending some time in the house to try to find a design style, etc. and to slowly build up decorative pieces vs. going to the nearest Home Goods and buying all.the.things. just for the sake of having everything immediately decorated.
All things included, we ended up spending nearly $4,000 for one-time/set-up costs (the “big ticket” items were the blinds, refrigerator, and fans/electrical wiring). Luckily, we’d been building up a stash of money for the downpayment and an extra slush fund so we had the cash on hand for these expenses. I’m thankful to YOU readers because I’d initially wanted to make a larger down payment (leaving us with less cash-on-hand), but many of you had commented that we really needed to have a good cash reserve when buying the house for just this type of situation. Having a later-than-expected closing date helped in that regard, too, because we had extra time to save the money up.
Mortgage
Our rent at our old house was $1200/month. Our current house has a mortgage payment of $950/month. When we set up the auto debit, however, we also asked for an additional $300/month to be applied toward principal. That will take our monthly payment to $1250/month. We can always change or amend the extra/surplus payment, but that’s how we’ve set it up to start. I thought it would be a nice way to build some equity in right from the start, without really “hurting” us since it’s comparable to the payment we’re already used to making.
Not having a mortgage payment due in the month of December was the greatest thing ever!! We ended up having extra money to put toward our debt payment (debt update coming Monday that I’m super excited about!!!).
So that’s how home ownership has impacted our finances on an immediate basis (i.e., initial one-time costs) and for the foreseeable future (i.e., monthly bills). Before we’d ever started house shopping I was hoping to find a place that would be somewhat similar in costs to our current standard-of-living. I didn’t want our expenses to all the sudden sky rocket. And I’m happy with our home. Although, yes, it will likely cost a bit more than our old place, it’s not so much more that it will slow down debt repayment. We won’t be “house poor” by any means. And we always have that $300 buffer on our monthly mortgage – if we find we need a little more wiggle room in the budget we can always make that auto-pay adjustment.
I’m busy baking today with the kiddos and getting laundry done and suitcases packed for our upcoming trip. I hope you all have a very Merry Christmas or Happy Holidays and I’ll see you on the other side from Texas! : )
Happy Holidays, y’all!
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
Have you considered putting the extra $300 a month into a house emergency fund instead of paying down your mortgage? I would consider doing it until you have at least $5000 put away in a house emergency fund. Houses can be a money pit. One year you’ll find you desperately need a new roof, and the next year your water heater will bite the dust. If you already have a fund set up for such purchases (and I really do mean for the house… not for other emergencies), then please ignore. Otherwise, I’d encourage you to seriously consider. Once you have a good house emergency fund, then I’d consider paying down the mortgage if that makes the most sense (instead of paying down your other debt).
Just curious as to why you don’t apply that $300 monthly to your debt to help get that gone that much faster. Either way it’s going to pay a bill but I was just wondering! Congrats!
I don’t really have a good “financial” reason for it – it’s more of a “psychological” reason. It just feels good to be putting some extra toward the house. I know with our goal of paying off the student loans that obviously the money should go there (to satisfy that goal). But I’ve always done things a little bit differently than strict financial planners would suggest (a good example is how I paid off my car early, even though it was at a much lower interest rate than my student loans). I think it’s important to strike a balance between what’s good from a financial perspective and a psychological one. The “psychological” side is what helps me stay motivated and keep on my path. So if it “feels good” to put a little extra toward the house then I kind of let that guide what we do (to some extent – there must be balance). This probably sounds weird. Hope it makes sense!
Great to hear that you had a good slush fund for those one time expenses. We had a ton of furniture to buy when we moved into our new hours (including surprise baby furniture!), so it seemed like the one time expenses just never ended. Fortunately we took our time and slowly picked up pieces that we loved or were on super steep discount.
I like the idea of putting a little extra cash to the mortgage – especially in these early months. Have you downloaded an amortization table to track your progress? My favorite template comes from the Vertex42 and I love seeing those extra principal dollars make a huge impact on the bottom line.
Gotta love those surprise babies ; )
I had not downloaded an amortization table, but I just downloaded the one from Vertex42 at your recommendation. Fun to play around with!!
Sounds like you were really smart about things. Congratulations again on the house!
Thank you!
Make sure you still have a nice cushion for the “stuff” that always comes up. I know you have the $300 ‘extra going toward the mortgage, but you don’t want to have to worry about timing it just right or missing the deadline to keep the extra.
Ahh homeownership. Wait til stuff starts need repairing, you’ll be asking yourself, “why/how did they do thaaaat?”
With the house being older, what’s the state of the windows? And how new is the hvac system? And the roof?
Windows are original (and single-paned! Ugh!), but the HVAC is brand new – it got added when we were in negotiations. The roof is also in good condition. A lot of the inside has been upgraded (e.g., all new appliances, new floors, new kitchen), and some of the “guts” of the house have also been updated (e.g., new pipes, new plumbing, new electrical in areas). Even so, I don’t doubt there will be things that creep up in need of repair. I do plan to address this with a new budget for the new year.
To echo some of the other comments, it’s admirable that you want to pay and extra $300/month toward your mortgage, but there WILL be things come up – just like the things that you already experienced. So it might be better to put that aside for home repairs/upgrades so you’re not caught short-handed (short-funded?) when you need to replace the washer, etc. You’re a smart girl, and you’ve learned so much since you started on this blog, but this is a new area for you to navigate.
I don’t remember how your pay schedule is set up, but I get paid every two weeks, so I have half of my mortgage payment take out/applied once my direct deposit hits my account. That gives me an extra payment each year that goes directly to principle; with my original 30-year mortgage, it would have taken 7 years off the life of the loan. I refinanced a year ago to a 15 year mortgage so I may only pay it off a year or two early – but it’s still early!
This is definitely something I’ll be addressing with my new 2017 budget. The budget for the new year will be quite different, given that we’re losing hubs’ income (he’s going back to school) + there are some job changes on the horizon for me.
I may have missed this, but are you saving for your property taxes and home insurance as separate line items in your budget, or are they included in the $950 mortgage payment? Congratulations on the house. 🙂
They are not included. It will be a separate line-item in the (new) budget
so smart to do this. My mortgage company in Chicago forgot TWICE to pay my taxes and the second time they were sold via a lien sale. What a mess….
Congrats on the house! I’d agree with the other commenters and strongly suggest that you put the extra $300 towards your debt rather than your mortgage. I do understand the “emotional” piece though. Have you thought about starting a separate savings account and having the $300 auto debit to there when your mortgage is paid? You could then decide ever 3-4 months if you wanted to put that money towards principal, pay it to a student loan, put it in an emergency fund, or possibly use it towards a house related expense.
One of the things I regret in past house purchases is putting more down in principal than I needed to to keep my monthly payments lower. It was an emotional decision, but I would have been better served to have higher payments and pay part out of a savings account if needed, so I could deduct more mortgage interest.
You sound like you are doing a great job of maintaining your momentum towards your goals, so do what seems right to you! Congratulations again.