Financial emergencies can happen to anyone, at any time.
If you’ve been hit out of nowhere with a job loss, medical expenses or home repair costs, it’s no fun…even if you have the resources set aside to deal with them.
Working all day long and having no time to relax can take a toll on you, both mentally and physically. That’s why we need to slow things down and introduce certain changes in our lives. Achieving Zen is one of these things, and this idea has been gaining more popularity in the past few years. That’s why you should look into it as well, finding ways to achieve Zen in your own home. If that sounds like something you’d like to do, here’s what you need to know.
Like it or not, the TV is often a major focal point in our homes — and for good reason. We relax with it after a long day, bond over family movie nights, and gather to watch the big game.
Be it past 25 years, home security has been a major concern for humans. Especially when it comes to home and family. Because of increased crime rates, homeowners expect more enhancements with their security systems. This eventually led to the evolution of today’s home security systems. Let’s look at the evolution of home security systems.
Everyone tells you that your home is your largest financial asset and biggest ongoing expense. But no one seems to help you understand all the different financial ways to manage your home. Here are six home finances that you should track and manage.
Your home’s estimated value fluctuates based on current real estate market conditions. These market conditions include recent sales, comparable sales, current listings on the market, average days on the market, and whole host of other market conditions.
It is good practice to track what the estimated value of your home is at least four times a year. There are even some tools that do a 3 year forecast that estimate what your home might be worth in the future. The reason for this is to be constantly aware of what the market says your home is worth.
When most people get a loan, they tend to focus on the amount of the monthly payment. This makes sense because it is important to assess your monthly income against all of your monthly expenses, of which the mortgage and property related costs is the biggest part.
You should also track two other metrics on your mortgage. You should know what the remaining balance is on your mortgage at all times as this is amount goes down with every monthly payment you make. It is essentially how much debt you have left on your home. In addition, you should know what the total interest costs will be over the course of your mortgage. This is helpful because you could reduce those interest costs if you pay off your mortgage principal early.
Your home equity is how much of your home do you own. Your current estimated home equity is calculated by taking the current estimated home value minus the remaining balance on your primary mortgage and the remaining balance on any second loans you have. You should calculate your home equity at least 4 times a year. This will bring you more clarity to your overall and home finances.
The amount of home equity you have is always changing because the market value of your home is changing and the balance due on your mortgage is also changing. Home equity is usually the largest part of your overall net worth which makes it a huge part of assessing your overall financial health. There are some home finances apps that track this automatically for you.
In addition, your home equity can also be expressed as your loan to value (LTV) ratio. This is essentially taking the remaining balance on your loan and dividing it by the current estimate value. This is important to know because many people look for home equity loans to help pay for home improvement projects, or even other life expenses like college tuition or unforeseen medical expenses. How much of a home equity loan you might qualify for is dependent on your LTV ratio. The lower the percentage is, the more of your home you own.
Your mortgage is usually your largest home related expense. But there are many more property related expenses you should budget for including property taxes and home insurance premiums. Sometimes these are bundled together in your mortgage, but even if they are, tracking how much your annual home insurance premiums are as well your annual property taxes is important.
In addition, there are many more home related expenses to budget for that add to your overall home finances. Including utilities such as gas/electric, water, garbage, and phone / internet bills. Depending on the type of home you have and your preference, there are more service related costs such as pest control, landscaping, cleaning, and pool service costs. Your total home related expenses are your largest set of expenses, often times 30% to 40% of your monthly incomes, so having a budget keeps you in financial control.
All homes need ongoing maintenance and repair tasks. Things like air filters, fire extinguishers, tree trimming services, caulking, mowing the lawn, small tools, repairing broken toilets, steam cleaning the carpets, etc. all add up. It is important to track these costs as they add up to your total cost of ownership.
A good budgeting rule of thumb is to take between 1 and 4% of the purchase price of your home as your annual maintenance and repair cost. If your home is less than 5 years old, then 1% is a good number because your home’s appliances, equipment and materials are still relatively new. But if your home is 25 years or older, then 4% is a better number because many of your home’s materials and equipment have reached the end of their useful life, and you will spend more money fixing or replacing them.
For those people who perform larger remodel or renovation projects, it is important to track your budgets and your actual costs for these. The budget is important because each project can have a wide range of costs depending on the products and brands you select. Start by creating a realistic budget for your project. This can be done simply by researching different brands and products at different price points.
While managing your project, make sure you track all your costs along with all the invoice and receipts. Many renovations can be considered as additional investments in your home. By adding up the total amount of all your remodels to the original purchase price of the home, you have your tax basis. Your accountant will need to know this number if you ever decide to sell your home to assess your tax situation.
Many people ignore all the financial aspects of their home, yet as you can see above, there are so many reasons to manage all your home finances. Some people will use spreadsheets and paper to try and stay on top of these. Yet, others will use digital home management software apps like HomeZada to help them get organized. Whatever method you choose, managing your home as a complex financial asset will save you money both short and long term, and can possibly even improve the value of your home.
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