It’s easy to over-spend on your first home
No one plans to waste money purposely… but sometimes it happens, especially when it comes to our first home. It’s easy to crank-up your spending and end up making costly first-time homeowner mistakes.
Owning a home already adds new expenses. At any point in time, you might need to unexpectedly fix or replace something, and your savings account may already be thin because you’re still building your financial footing. I always suggest that folks keep a house-specific emergency fund that’s at least as much as the deductible on their homeowner’s insurance. For my family, that’s $5,000 – a huge chunk of change!
If you’re still working on building up your “housing” emergency fund, then the following may help you flex your frugality until you’re on solid financial ground. (And let’s be honest: flexing your frugality is a good idea at any point in your life, solid ground or otherwise.)
Turn off HGTV, Ditch Pinterest and Houzz
Do you love design and renovation shows and want your home to be like the “after” shots as soon as possible? I get it, I do too.
But stop. Just stop.
Those shows and houses are as seeped in reality as…well…a reality show. Yes, I know it feels achievable, because it is. But you don’t have to achieve it now, and you certainly don’t need to feel badly that your home is not show worthy. Get this urge under control, and live in your home for some time with your existing stuff before you make any major purchases (i.e. sectional couch, bedroom set, dining room table), or too many minor purchases (i.e. linens, curtains, rugs). Don’t make any drastic renovation decisions.
I tell clients to give themselves a year. Let your house start to feel like home. Spend time in it before you do too much, learn how you live in your home first and then buy accordingly.
Don’t try to fill empty rooms with artwork, furniture, or decor “bling” like you’re in a race. Make thoughtful purchases and save up for the good stuff you’ll love for years to come. Enjoy the actual process of making over your new home by taking your time – you’ll save money along the way and your rooms will truly reflect your personality!
Expensive Mistakes You Might Not Have Considered
Bypassing Do-It-Yourself attempts. You may have a yard now that needs to be mowed or raked, or a larger home with more bathrooms to clean. Try to see if you can manage some of these new chores yourself before you hire a lawn care service or a cleaning service. That could save you hundreds of dollars each month.
Some fix-it tasks don’t necessarily need a handyman or a plumber. Learn to handle some DIY skills on your own. You can check out YouTube videos, get step-by-step instructions from home improvements websites, or attend free in-store workshops in your community.
Not updating some of your old “habits.” Do you buy a cup of coffee every morning on the way to work? Did you always have cable when you rented? Now that you’re a homeowner, you can reevaluate some of the things you did as a renter. Buying a home is like a clean slate where you can start some money-saving habits right away.
You now might have more counter space for a coffee maker and can brew yourself a cup (or cups) before you head out. The upfront cost will pay itself off before you know it. I used to love getting a latte at a coffee shop, but I bought a fancy milk frother 12 years ago and like my home-brewed coffee better now anyway. (I’ve gone through a few over the years and this one is my fave – it’s been really durable, and there’s no teflon to scratch as I wash it).
Keep looking for ways to save in your new place….What about a rarely used gym membership or the stack of constantly used take-out menus?
Paying for an extended warranty. Sometimes major appliances aren’t included with your home purchase. Shop sales, and if you buy one, consider skipping the extended warranty. That extra money might be better used or saved for your own cash flow purposes.
If something does break, it can cost less than what you put into the warranty OR that particular problem might not be covered at all. You should also check your credit card also to see if it offers a year of extended warranty on purchases.
Last piece of advice about home warranties—you could pay annually for one and it will cover all appliances and more!
Not shopping around for homeowner’s insurance. Don’t get into a rut when it comes to insurance. Look for a policy that better protects your home and your pocketbook. Many new buyers stick with their previous renters or auto insurance company. That’s great, but make sure you really know what’s being covered and the cost for their homeowner’s policies AND then compare this to other companies.
Keep in mind that having more than one policy with the same company might get you a discount. So ask about any savings if you purchase both your auto and homeowners insurance policies from a company.
If you need recommendations for local insurance brokers, give me a call.
Owning a home can feel overwhelming at times. Unless it’s a water leak, it’s unlikely an emergency. There is so much to do, so much to think about, so much to learn, and so much to take care of...and I’m still here for you whenever you have a question. I’ve been there before, and can point you in the right direction.
I'm Libby Earthman. I specialize in helping first-time buyers and sellers pursue financial security on the Northern Front Range.
825 Delaware Ave, Suite 208
Longmont, CO 80501