Goodbye 2020 – letting go of 2020

Goodbye 2020

2020 was a year unlike any other. Full stop.

I am just so relieved I survived it.

There are many, many more people in the world who had a much tougher year. After all, I didn’t have to deal with sick family members or home schooling children or working from home or all the above at once. I also didn’t lose any loved ones, job or business. I know I am one of the lucky ones. Therefore I feel guilty that I feel what I feel, as if I haven’t the right to feel them.

Reflecting on the year brought up much of the distress and anxiety of dealing with Coronavirus in my workplace, managing anxious and fearful staff, dealing with the public, panic buying, stock shortages, curfews, lockdowns and so on. (I wrote 2 posts about this at the time – How has the Covid-19 virus affected my retirement plan?  and Emerging from the storm of Covid-19)

There was so much mixed emotion – on the one hand I was happy I had a job throughout 2020 but on the other, that job had a real chance of coming into contact with the virus. And I was terrified of passing that inadvertently to my elderly parents.

I went to work every day so did not experience the isolation that others lived with during lockdowns and curfews. In fact, my colleagues and I longed for the peace and quiet of home and to some degree, envied those who could work from home, and therefore lessen the danger of contracting the virus.

I now realise that I’d largely suppressed a lot of feelings about 2020 and just got on with it. Honestly, I wasn’t aware of how much underlying anxiety and stress I buried under the surface or how much I carried with me all the time.

Until I came to a standstill on Boxing Day and could not be motivated to do anything. My tiredness has finally caught up with me. So I basically just slept, read and ate. And poured all my concentration into finishing a 1000 piece jigsaw puzzle.

I didn’t have a break between Christmas and New Year except the public holidays as we were short staffed. And as my extended family did not return to Australia for Christmas, I didn’t have a reason to take time off. Note to self – TAKE THE TIME OFF regardless next year (or really, it is this year now)

Shedding tears and letting go of 2020 – that is how I farewelled 2020.

But … there were GOOD things that happened in 2020 too and I learned many lessons.

 

jigsaw puzzle ice cream cones fallen on marble counter | goodbye 2020

The context for July to December 2020

My Mid Year 2020 Goals Review post was about the first six months where I discussed the disruption to my routines. Well, the second six months was more of the same. Every time I thought I succeeded at sticking to a routine, something else would happen and I’d be back at square one.

The last six months of 2020 was dominated by a ‘hard’ lockdown with curfews from 8pm to 5am initially, then 9pm to 5am for months, from mid July. We had the toughest lockdown conditions in the country to deal with a deadly second surge of cases. Then we had 60 days of zero active cases only to be back to a dozen or so cases before the end of the year. And we are now back to border closures as Sydney battles a new surge of cases.

Our collective mood seem to be at one with active cases. When the active cases were high, we were cautious and anxious and when the numbers were low, we were visibly more relaxed and happy.

Recap of decade goals

2020 was the first time I’d set decade goals – goals I want to achieve within 10 years.

My decade goals are to retire at 55, visit Antarctica and run a marathon. Amazingly, with one year done and dusted, I think I am on target to do the first two but need a LOT more work to tick off running a marathon.

Just articulating the goals somehow made them real and when opportunity struck, I leapt at it. For example, looking for a travel buddy to Antarctica. None of my friends has ever expressed the desire to visit Antarctica so I always thought I’d do it by myself. But lo and behold, when Frogdancer Jones, a fellow late starter to FI and blogger wrote about her new goal of visiting Antarctica, I put up my hand to go with her. This may very well be the first goal I achieve within the decade, yay! 

But how did I fare for my 2020 goals?

 

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1. Exercise and stretch daily

I am happy to report that stretching is now part of my morning routine. It has been a struggle for years. My personal trainer sent me a video on how to stretch ham strings against the wall while lying on your back in our first lockdown. I watched the video and was put off by how hard one of the exercise was.

Then one day, much much later in the year, I realised that I could do this first thing in the morning. I can continue my snoozing on the floor while stretching my ham strings against the wall. Why didn’t anyone tell me that earlier?

And now while I’m stretching, I manifest money flowing into my life and articulate why I need money. (Refer to my earlier post on How I Transformed my Limiting Beliefs about Money)

The exercise part is still a failure as I just can’t seem to settle into a routine to walk or run. There were many stops and starts. While a lot had to do with lockdown restrictions, I also know that exercise is the first thing I give up whenever life gets a bit complicated.

I will need to do better in 2021 somehow.

woman stretching ham strings against the wall
My stretch does not look like that AT ALL!

2. Journal daily

This was a partial fail, in that I did not journal daily but did keep up the practice at least thrice a week. Writing brings me clarity so I will persist.

3. Read more

I wanted to resume this habit in 2020 as I used to enjoy reading books but somehow stopped when I discovered FIRE and read blogs and listened to podcasts instead. I didn’t have time to read any books except finance related ones.

I smashed this goal and rediscovered my love of reading especially during the lockdowns. It is so good to lose oneself in someone else’s world (even if it is a fictional world) rather than having to face what is going on in my own life 🙂 It was pure escapism.

My goal was to read 20 books. I’d read 33 by the end of June and  ended up reading another 20 books by the end of December, only a handful of which are non fiction.

Once again my Libby app which allowed me to borrow ebooks from my library was a saviour!

 

4. Be more sustainable

At the beginning of 2020, I commissioned an Energy and Sustainability Assessment on my house. One of the key recommendations was to increase the insulation in my ceiling.

Unfortunately, this is still not completed as the second lockdown imposed strict restrictions on the building industry. They couldn’t work inside any residential building that was occupied, unless it were an emergency and a permit granted. Hopefully it will be done in 2021.

Installing extra insulation would have meant less reliance on heating and cooling and therefore using less electricity and gas.

I was home every day in 2020 compared to travelling 6 weeks overseas in 2019. With that in mind, I am very pleased that my gas bill in 2020 was only $20.66 more than what I spent in 2019.

And electricity was $163.75 less in 2020 compared to 2019. I am very happy with my solar panels!

I wrote about How to reduce your water bill – by reducing your water usage earlier in the year – the aim is to use 155L per person per day as per Victorian guidelines. In 2019 my average was 276L per day; in 2020, my average was 177L per day! Since I only started water saving strategies in February, I’m very happy with the result. Plus my water bill was less by $123.48

I’ve been using vinegar and sodium bicarbonate to clean the bathroom and kitchen, in an effort to reduce buying cleaning products in plastic bottles. So far so good.

 

5. Declutter

I did not manage to declutter at all! I must be the only person in the world who did not declutter in 2020 🙁

There was a new excuse … all the charity shops were closed due to Covid – who would take my donations? I tried half heartedly in July when I was on annual leave but gave up pretty quickly.

But I did manage to keep my kitchen counter clutter free 🙂 Gotta aim small these days!

 

young woman staring at orange piggy bank | goodbye 2020
Image by luxstorm from Pixabay

6. Financial goals

a. Invest $25000 in shares portfolio

I always knew this was a stretch goal for 2020.

My wages were lower due to transitioning to a role with lesser responsibilities – 2020 was the first full year on these lower wages.

I invested a total of $23200 – in AFI, WHF and VAS to be specific.

VAS is new to my portfolio. I already had AFI, MLT, BKI and WHF (all LICs ie Listed Investment Companies) in my portfolio and had in the past, decided not to hold VAS as well.

VAS, an ETF (Exchange Traded Fund) tracks the ASX300 while the LICs I own mainly focus on ASX200 companies. So, it’s kind of a duplication.

I like LICs in that they can smooth out their dividends so even in bear markets, they can offer a dividend. As in the case of AFI – which offered dividends throughout the global financial crisis. It is comforting for me, knowing that I will receive an income even during the bad times.

ETFs on the other hand must distribute all its earnings. So in lean years, when the underlying companies stop or reduce their dividends, it follows that there will be less distributions.

But LICs still depend on fund managers to make sound investment decisions, which now makes me a bit uncomfortable. Whereas VAS is a true index tracker and doesn’t rely on good judgement. Therefore I now aim to hold VAS in equal value to my LICs.

 

b. Maintain salary sacrificing into superannuation until end of June then review

I was hoping to stop salary sacrificing into superannuation this second half of 2020. I had calculated, based on the balance at the end of 2019 that it should double to my target in another 10 years, when I am able to withdraw the money.

However, at the end of June, my super was only just starting to improve after plummeting in March. So I decided to continue salary sacrificing. 

This meant that I did not have enough to invest in my share portfolio outside of super and hence did not make the $25000 goal.

But my super balance has recovered and increased by 9.4% compared to 2019. Should I stop salary sacrificing now? I’ll tell you in my next post!

c. Aim for a savings rate of 50%

At the end of June, my savings rate was 55% so I was on track if I kept to my spending pattern for the next six months.

Unfortunately, that was not to be. I always have larger expenses from July to December – local council rates, home and contents insurance, professional association fees and Christmas to name a few. This year, there were unexpected expenses too.

I paid a home insurance excess of $500 on 2 occasions. I made a claim in July to repair a hole on my porch ceiling from water leakage during heavy rainfalls. Insurance did not cover the wear and tear but covered the repairs to the ceiling.

The second occasion was more recent. I’d returned home to my kitchen and parts of the living room inundated with water pouring out of a burst pipe under the kitchen sink. Insurance did not cover the replacement of pipe and tap or plumber fees (which cost just under $1500) but will cover the cost of repairing my hardwood floor. Some boards have buckled from the moisture.

In October, my front door lock died. So that was another $400 for a new lock and locksmith fees.

I’d recently started a sinking fund for home maintenance. Needless to say, but that fund is more than depleted 🙁

I spent about $1500 on Pinterest, email marketing courses and Online Impact membership. This is an investment in my blogging side hustle – I have so much to learn! I decided as I wasn’t travelling this year, I had the money to invest in myself. To date, I haven’t considered blogging to be a side hustle but will do so from now on. More on that in 2021.

Growing my own vegetables gives me immense pleasure. I would love to be self sufficient one day. Fruits and vegetable prices are increasing all the time – if not from droughts then from lack of labour at the moment to pick them. There just wasn’t enough room in my 1.2mx1.2m and 0.6mx1.2m beds to plant what I needed. So I ‘invested’ in 3 1mx1m wicking garden boxes for the back garden in early December. I’m upping my game considerably!

With all these unexpected or unplanned-for expenses, my overall savings rate for 2020 was 47% (oh, so close!), with total expenses $7182 less than 2019. 2020 was my lowest spending year since I started tracking expenses in 2018. That has to be a win!

 

3 wooden wicking bed boxes
My new wicking bed vegie boxes

2020 Lessons

The biggest lesson for me in 2020 was that I needed to be resilient, both financially and mentally. I need to be able to bounce back from setbacks.

Although I am thankful that I did not lose my job, I also watched worriedly as my workplace adapted to less customers (and therefore less revenue). Plus we didn’t replace any staff who left.

I will never forget the TV images of long queues of people outside Centrelink offices, waiting to apply for welfare. It is not a scene I associate with being in the ‘lucky country’, Australia.

I am reminded again and again that I must set money aside to look after myself, for those rainy days. My grandmother and mother were correct.

I truly appreciated the value of an emergency fund for the first time and was grateful mine was fully funded. For the first time too, I considered work in other areas of my profession, just in case.

But it was also in 2020, that my blog had enough readership (for a few months at least) to qualify for ads revenue. And even though it is miniscule compared to what I spend on the blog, it gives me hope that maybe, just maybe I can derive a side income and therefore some insurance against a job loss.

Working with anxious and fearful staff and the public in 2020 showed me that how we respond to uncertainty and the unknown matters greatly. The ones who were positive and willing to adapt, performed much better than those who were negative and fearful. It showed me that having a positive mindset was a very powerful asset in life.

It was stressful having split shifts – where our day and evening shifts could not intermingle; one shift left promptly at 5pm by the back door while the evening shift enters via the front door. But we soon adapted and NOT one day shift person longed for extra hours when we ceased split shifts in November.

So that is a huge legacy of 2020 – I now finish work at 5pm! I can be home by 6pm even after a walk after work with my colleague. Unfortunately I need to work on my night routine – surely I can be more productive than falling asleep on the couch.

I learned how to bake sourdough bread and keep a sourdough starter alive; I learned how to bake bagels and pretzels, babka and challah from a bakery in London via Zoom. And once again, via Zoom, I learned how to make bang bang noodles from New York! Really, if I so desired, I could be very addicted to these classes … who knew I could learn anything from a small screen …

Final Thoughts

I shouldn’t feel bad that I didn’t accomplish many of my goals.

2020 was a year of constant change and disruption. Adapting to all these changes and disruption takes a lot of energy. And as one of my blogging friends said to me “You should give yourself some grace for 2020 – it took an emotional toll on you, dealing with all that you did at work”

I want to thank all of you who have read, commented, followed me on social media, interacted with me in any way this year especially Late Starter to FI series contributors. Thank you for your support and encouragement and your willingness to share your stories. I appreciate every single one of you ❤️

So it’s time … 2020, thank you for your lessons.

I am ready to let you go now.

Goodbye, 2020!

How was your 2020? Did you accomplish your goals? What did you learn?

Why I Prefer To Own My Home Despite the Ongoing Costs of Home Ownership

Image by Comfreak from Pixabay

The debate between what is ‘better’ – owning your home or renting – is ongoing and fierce in the FIRE community. It seems that we are passionately in either camp, no matter which camp it is 🙂 

I have previously written about why I do not invest in real estate to help me achieve Financial Independence. However, I will declare here that I am firmly in the camp of owning my home.

But I do not believe in buying a house at all costs. I bought a house that I could afford, having saved 40% of the purchase price. And I could afford the mortgage repayment, at less than 25% of my wage. I also did not move around – I have lived in my house for 18 years now. Buying and selling incur many fees.

My indoctrination (?) about the importance of home ownership

As I grow older, I realise that a lot of my money values are influenced by my parents, my mother in particular.

All throughout my childhood, I lived in ‘company’ houses ie houses provided by the oil company that my parents worked for. Working and living in an oil town was not secure as it was always dependent on work contracts being renewed. 

For my mum, security signified having your own home. She was always conscious of the fact that we lived a temporary life in the oil town, that one day it would all come to an end. And when it does, she wants a house to call her own. 

I remember my mum extolling the benefits of owning your own home from a very young age. My parents built a house in their home town and rented it out while working and living in the oil town. Every time we visited my grandparents, it involved a drive past our house – it was almost like a pilgrimage. Mum would point to it and tell us – that is our house. She was so proud of having her own home.

I understand where that yearning came from. She grew up as a family of four renting a room in someone else’s house. My grandmother took in ironing to make ends meet. My grandfather drove a bus, among other jobs. Eventually, they were able to buy a shophouse to live in during their retirement, living upstairs while renting the shop out downstairs. That shophouse is still in the family despite both grand parents passing on many many years ago.

My Renting 'Season'

I love the concept of looking at my life in terms of ‘seasons’. And knowing that whatever season I am in right now, it will pass, just as surely as winter will pass into spring.

When I first came to Australia, I was an overseas student. I went to a boarding school in a regional town. (Less distractions, according to my parents!) 

After boarding school,  I got into university in Melbourne. While I did not hate boarding school life, I also didn’t want to repeat the experience. I was determined not to live in residential colleges – I wanted freedom and no one to tell me when to turn my lights out. So together with a friend from boarding school, we looked for a flat to rent.

It was all very exciting and grown up. We were responsible for paying our rent on time, cooking for ourselves and doing our own laundry. We had to figure out the best route to university via walking or public transport.

But looking for potential flats to rent was a major pain in the backside. This was before the internet – so we had to scour newspapers in the ‘To Let’ section, circle the appropriate ones and attend ‘open for inspections’. Sometimes we had to get keys from real estate offices and go out to the flats for an inspection. Sometimes we met the real estate agents at the potential flats. We often did all this in between attending lectures.

I moved three times in three years of university.

Living this lifestyle is fine in my twenties. But in my seventies? No, thank you. 

I don’t want to worry or feel anxious that the roof over my head is not secure, that I would be forced to look for another place to rent at my landlord’s whim.

I hope to be fit and healthy in my seventies but good health is not guaranteed. What if I have health issues, needing to be in and out of hospital … worrying about my home or lack thereof, will distract me from focusing on recovery.

Not to mention the packing and unpacking involved with moving house. Ugh!

So my very first major grown up financial goal when I graduated from university was to buy a house. To be fair, I was not thinking about old and doddery me at that time. I only wanted security and an asset whose value would hopefully have increased by the time I sell it.

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Staycation during Lockdown

I am grateful to have a job during this pandemic, very aware that many are not so fortunate. But I must admit that going to work every day has exacted a toll on me and my colleagues. Our workload has increased not because we are dealing with more people but because our processes are now so much more complicated.

Many of us have delayed taking time off as planned holidays were cancelled. Most do not want to spend their hard earned annual leave ‘to be just at home’, preferring to wait out the virus.

I decided I would take two weeks off even though I could not travel, as I really needed a break. Like everyone else, my travel plans have not come to fruition – I was supposed to be in London then Toronto.

I cannot remember the last time I was home by myself for a two week
holiday. Usually, if I weren’t travelling then I’d be busy with overseas
family visiting and running around like a chook without its head.

These two weeks in mid July coincided with Melbourne’s second lockdown, just before curfew and the 5km restriction was imposed. I stayed home for the full 2 weeks – it was blissful.

I appreciated my space, both inside and outside the house. I fell in love with my home all over again. It’s a space, a sanctuary I created and it’s where I feel safe. A place where I can rest and relax, keep the world at bay or invite it in. And I am ever more grateful to have this space now, where I can retreat to at the end of a crazy day at work, or fully enjoy during a staycation.

Ongoing costs of owning my home

I remember the day I bought my house at auction. This wasn’t my first auction – I had attended numerous auctions in the past, as research. I had also asked my Dad to bid for me on two previous occasions as I didn’t feel confident bidding myself. And on both occasions he did absolutely nothing as prices just rocketed away.

But this auction day was different. I told my Dad I would bid myself. I was so nervous but in the end, the house was mine.

Entering the house afterwards and signing the biggest cheque I’d ever written – for the 10% deposit – was nerve wracking.

But that was only the beginning of more costs – stamp duty, conveyancing, mortgage loan application fee … I needed another $20k on top of the purchase price.(This is not counting the costs of buying furniture and stuff)

While those costs are associated with the purchase of a home, there are ongoing costs of owning a home. For me, they fall into four categories:

1. Local council rates

2. Home and contents insurance

3. Utility bills

4. Maintenance

I do not mention a mortgage here as I no longer have one. Yay!

Local Council Rates

I just paid my local council rates. This is the bill every homeowner loves to moan about. Probably because it is based on how much the council thinks your house is worth. Obviously, you haven’t sold your house yet so you haven’t profited from any speculation that your house’s value has increased significantly. But all the same, you have to pay the rates based on that assessment.

Perhaps speculation is a strong word. The Victorian Government prescribes the method of calculating our rates so it’s not as if my local council can just decide to raise rates.

Their formula for calculating the annual rates are as follows:

Rate in the dollar x your property value

1. Rate in the dollar is the amount they need to raise ($94 million in my council) divided by the value of all properties in the municipality ($57.2 billion) which equals to 0.00164164 in 2020/21

2. Property value – this is where it gets interesting …

The Victorian Valuer-General oversees property valuations for the State Government and for the purpose of calculating local council rates. These valuations are calculated annually as at 1st January each year. Therefore this year, it was done before COVID 19’s impact on house value was felt.

The local council must use the Valuer-General’s assessment of Capital Improved Value (CIV) of your property ie this is the market value of the land, buildings and any other improvements you made.

I have found it to be generally lower than what property apps value. For example, Commbank property app values my property at $186k higher than the CIV listed on my rates invoice.

My rates have increased every year, regardless of what my property value is. And is my biggest fixed cost. I set aside $2000 every year to cover this cost in my ‘annual costs’ sinking fund.

Home and Contents Insurance

This is a non negotiable cost for me.

I have worked very hard over the years to pay for my house. I don’t want some disaster to befall the house eg a fire and having to start from scratch again.

In saying that, I do review my home and contents insurance annually to make sure that the sum insured is still appropriate. I never used to do this and the yearly premium would just increase every year without me noticing. I have also switched insurance companies and now pay less premium than I did a few years ago.

This is also an annual cost covered by my sinking fund.

 

Utility Bills

There are 3 utility bills I pay – electricity, water and gas.
 
1. Electricity
Tenants and homeowners pay for electricity. But as a homeowner, I can install solar panels, for example, to offset my electricity usage from the grid and therefore lower my electricity bill. Not many landlords would install solar panels on rental properties to help lower tenants’ electricity bills.
 
2. Water
This is where being a tenant is more advantageous – tenants only pay for water usage. Homeowners, on the other hand, have to foot the bill for system charges such as water supply and sewerage disposal, parks levy etc which make up the bulk of my water bill.
 
These are fixed charges; I can only reduce my water usage which is a tiny portion of my bill but still worth doing for the environment. My water usage has dropped to below 155L per day since I made an effort back in February to conserve water.
 
3. Gas

I am still trying to do something about my gas bill. An energy audit of my house found that there is hardly any insulation in the ceiling which explains why my heating costs are so high. As a homeowner, I can choose to rectify this by installing more insulation. Unfortunately COVID restrictions set in before I could install the extra insulation.

 
 
solar panels on roof of house
Photo by Vivint Solar on Unsplash

Maintenance

Houses deteriorate over time. And if you want to sell your asset later, you’d need to maintain it in a good condition so as to attract a decent price, rather than sell it as a renovator’s dream.

Of course, the original condition of the property is a factor. If you are starting from a renovator’s dream, then your expenses will be higher than someone who bought a brand new property.

I loosely divide ‘Maintenance’ into 3 categories:

– Improvements to home to increase comfort or liveability

– Repairs of things that have broken down

– ongoing upkeep of existing infrastructure

Home Improvement

For me, home improvements are made to improve my comfort and in the case of solar panels, reduce my electricity bills and increase my sustainability efforts. I am aware of not over spending on improvement projects – there is no point in over capitilising ie I spend so much that I cannot recoup my costs should I decide to sell the property.

Over the last 18 years I have installed:

– air conditioner units

– fly screens to all windows

– gutter guards (so I don’t have to climb up and clean my gutters or hire someone to do so)

– solar panels

Future projects include improving the ceiling insulation so I can reduce my heating costs, which is the main contribution to my gas bill.

Repairs to Stuff that Break Down

Then there are things that just break down from wear and tear over the years.

 

In the same time period, I have replaced:

– fences on two sides of the property

– the hot water service when it died

– garage ceiling after it collapsed

– a few window blinds

– the garage door after the motor died

Of course, all of the home improvements mentioned above will also deteriorate in their own right over time and sooner or later, will need to be replaced or repaired too.

 

Recently, I made a claim on my Home and Contents insurance to repair my porch ceiling which suffered some water damage. During this process, we discovered that we need to seal some bricks as part of the maintenance which is not covered by my insurance.

These repairs don’t include replacing the fridge that stopped working or repairs to the washing machine. My dish washer is now 20 years old and the washing machine 18 so they will be the next major appliances to need replacing.

Ongoing Upkeep of Existing Infrastructure

In my case, this is mainly the outdoors.

Removal of trees on my property and removal of huge overhanging branches of neighbour’s tree were the major one off costs over the years.

My ongoing cost here is a gardener who visits every 6-8 weeks. I struggle with this cost all the time, especially since discovering FIRE. In the first few years after I moved in, I tried doing the work myself. But it soon got overwhelming when I didn’t have much time over the weekends. So I engaged a gardener who have done a wonderful job of keeping my plants alive and ensuring my garden does not resemble a neglected and derelict property.

This is an area where I can definitely save some money. I have a lot to learn about gardening although since last year, I’ve enjoyed planting and harvesting my own vegetables. The vegetable garden is my baby – the gardener doesn’t touch it at all.
 
Future projects in this category include painting the exterior and interior of the house, something that needs to be done before I retire.

Funding the Ongoing Costs of Home Ownership

Utility bills are budgeted for under normal living expenses. Local council rates and home and contents insurance are taken care of in my ‘Annual Costs’ sinking fund.

Out of my 4 categories of ongoing costs of home ownership, maintenance is the biggest unknown. It varies from year to year – I never know what needs replacing. In the past, when I had a mortgage, I would redraw my excess payments to cover any home improvement / repair costs. 

But now that I no longer have a loan, I depend on my emergency fund. Which makes me nervous as home maintenance is kind of predictable, not in what may break down but that it is certain that things WILL break down and need replacing. And should not be considered as an emergency as such.

So I started another sinking fund specifically for home maintenance a few months ago with minimum amounts automated from my weekly wage.

And guess what? I’ve had to use it this week – because my front door lock completely broke and while the locksmith was here, I got him to repair another lock before that one too dies.

If I don’t have to use my emergency fund for urgent home maintenance issues, then it will last longer than my 6 months of expenses. When I first started saving for my emergency fund, I merely looked at how much I spent in a year which includes travel and some home maintenance expenses. I feel more secure now knowing that my emergency fund can stretch further.

But how much is enough to set aside for home maintenance? There seems to be accepted wisdom, especially for rental property investors, that 1% of house value is set aside for maintenance. But I am confused as to which house value to base it on – the original purchase price or the current market value. Because in my case, it is a significant difference – my house value has increased by two and a half times the original purchase price.

So right now, I will just continue saving a little each week towards home maintenance. I will review it when the fund hits $10k. But I have a feeling it won’t have a chance to hit 10k for a very long time. Because as my house ages, there are lots of bits and pieces that may need attention.h

Final Thoughts

While there are definitely lots of ongoing costs to owning a home, costs such as maintenance can be mitigated if you are good with DIY. Unfortunately I am not, so saving for repairs / improvements is my only option.

Costs can also be kept to a minimum if you monitor your usage of electricity, water and gas and review your home and contents insurance. In sourcing ie not depending on outside help is another great way to reduce costs.

But despite all these costs, I much much prefer to own my home. I value having a space where I am free to do whatever I like, without asking anyone’s permission. The peace and security I feel is priceless. I know that no one can kick me out of this house because I own every inch of it.

 

Which camp do you belong to - owning your home or renting?

Ongoing costs of home ownership | is owning better than renting

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