Adjusting My Monthly Budget to Account for Home Ownership

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It is a widely accepted fact that owning a home changes your financial situation significantly.
Incorporated in with the smörgåsbord of financial changes is deciding how a person will change his/her monthly budget to accommodate for the pains and pleasures of homeownership.
The changes that I have made to my budget since buying a condo in late July of this year will be the subject of today’s post.
Listed below are the considerations and financial action steps that I have decided to take. Enjoy!

  • Electricity expense – 
    • This will vary as my usage varies each month.
    • No action is needed.
              • Netflix DVD rental monthly fee – $15
                • As long-time readers of the blog will know, I am a big fan of Netflix, as it saves me hundreds of Dollars per year on cable tv expenses.
                • I will continue to pay to receive Netflix in my new condo.
                  • Condo Insurance – $34 per month ($400 per year)
                      • Property tax savings –
                        • The closing statement (HUD-1) that the real estate attorney prepared for me in preparation for the settlement of my condo purchase stated that I was owed a property tax credit of $77.77 for the month of July.
                        • Multiplying this value by 12 to get the yearly property tax, I figure this is a pretty good estimation of what my property taxes will be, as it is fairly close to the 1.5% of the property value that The Complete Idiot’s Guide to Personal Finance in Your 20’s and 30’s recommends for financial planning.
                        • I will need to be sure to keep in mind the tax benefits of home ownership, as the property taxes I pay on my property are tax deductions.
                          • House Maintenance savings –
                            • According to the home buying and personal finance books I read by Eric Tyson, the generally accepted practice for how to account for the various home maintenance expenses that can come up throughout the year is to save 1% of the property’s value for potential maintenance issues.
                            • I feel that this level of savings is appropriate, so I will set up an automatic transfer each month for 1% / 12 of the property’s value in to an online high yield savings account.
                              • Condo Homeowner’s Association (HOA) monthly fees –
                                • For now, I am using $200 per month as an estimate for how much my HOA fees will be.
                                • This is calculated by taking the 1 day’s worth of HOA fees that I had to pay the sellers for the 1 day in July that I owned the condo and multiplying it by 31 days.
                                • According to my neighbors, this fee also includes my gas (heating and A/C) bill as well. So, it sounds pretty reasonable, since it is currently the summertime, and the A/C will be running constantly to keep the house cool.
                                  • Life dreams savings –
                                    • As stated in the previous post about life dreams and saving for them, David Bach suggests that you arrange to have 3% of your take-home pay (after taxes) automatically transferred to a savings account each month.
                                    • Since my monthly income will be decreasing by 67%, I simply recalculate this quantity to represent 3% of my new income. 
                                      • Life values savings –
                                        • As stated in the previous post about life values, these are calculated based upon how much money I need to save per month in order to achieve my specific values.
                                        • Because of this specific nature, these quantities will not change.

                                          Did I leave any expenses out that I should be accounting for now with home ownership? 


                                          Please let me know by commenting below!

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                                          Related articles about budgeting for home ownership at several of my favorite personal finance blogs:
                                          Budgeting for Home Ownership – Get Rich Slowly
                                          Cost of the First Year of Home Ownership – Budgeting in the Fun Stuff

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