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Old 03-01-2013, 02:47 PM   #21
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I'm not retired yet, but I expect to do something similar to Retire2013. I would rollover the annual amount each year till I hit a ceiling, like $25k, then when a large expense came up start putting it in again. Kind of like a maximum vacation account at w*rk
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Old 03-01-2013, 03:30 PM   #22
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Originally Posted by Midpack View Post
Just to compare notes, I agree on home expenses, but how do you deal with periodic car purchases? That's our biggest accrual expense, we pay cash (that may be my answer).
I have a separate accrual account for non home maintenance things. 3k / year. Assumes a new used car every 10 years and occassional furniture meltdowns needing replacement.

I only use cash. Or let me restate ... I only use my credit card (love the year end summary and the points !!!) but I pay it off in full year month.
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Old 03-01-2013, 03:34 PM   #23
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You and I are thinking along the same line. The $5,160 per year amount is less than 1% of my current home value (based on real estate comps). I hope this will be sufficient. I will not look at any amount leftover at year-end as "extra" money to be spent on frivolous things. My plan is to continue to add to this repair fund so that the one year when I may need a new roof, I will not be traumatized!
Ok - the 1% makes sense. and yes, keeping that accrual money aside until you hit the "realm of the ridiculous" is a good idea. I would that once you have enough to pay for a new roof and replace all the appliances that you can bring your monthly budget down.
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Old 03-01-2013, 03:37 PM   #24
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I got the new Kiplinger's Personal Finance, April 2013 magazine today. There's an article called "How Long Will it Last?" on page 56. They state housing experts recommend you budget 1% of the purchase price of you home annually for maintenance and repairs.
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Old 03-01-2013, 06:42 PM   #25
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What might need replacing in your home? A new roof? I new furnace/boiler? I'd let the pot build until it is large enough to cover a major repair, then drop the budget to the average of what you've been spending on maintenance. When you do a major repair, start saving for the next one.

In anticipation of retirement, we've re-roofed our house and replaced almost every component in our boiler. Appliances are about the only things that might need to be replaced in the future. We'll likely keep our cars for another 10 years or more and will go to one car. Since we've done this all pre-retirement, I don't envision any major repairs for a long while, so we aren't budgeting for them. Instead, we'll use the surplus in our retirement fund to cover them. If we have no major repairs before the point when income exceeds expenses (mortgage paid off), we'll save the excess for repairs and final car replacement.
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Old 03-01-2013, 07:03 PM   #26
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Wow. I feel ashamed. As a retired bean-counter, I feel like I should have a better budgeting system, but I don't. We, too, are so LBYM that I don't seem to need a budget. I just take care of what needs taken care of. So far, age 58, I am still able to DIY much of the repairs, which saves money. Wow... some of you guys and gals are pretty amazing.
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Old 03-01-2013, 07:07 PM   #27
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Originally Posted by Ronnieboy
I'm not retired yet, but I expect to do something similar to Retire2013. I would rollover the annual amount each year till I hit a ceiling, like $25k, then when a large expense came up start putting it in again. Kind of like a maximum vacation account at w*rk
I have a basic 1500 sq ft ranch. I got 20k squirreled away for any major repairs in a CD. It's really only there for roof and siding when it needs replaced in 10 years. Everything else, I just pay out of pocket like my outside a/c unit that went out last summer. Complain a bit then wrote the $1300 check.
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Old 03-01-2013, 07:25 PM   #28
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Lord willing, and all that, I figure I'll need maybe one new roof, two A/C units, and maybe two cars for the remainder of my useful life, assuming it actually is useful...

So, my plan is to have that much in taxable accounts, to avoid overly large withdrawals from tax-deferred, where most of the stash is.

More routine stuff will come out of the yearly budget. Luckily, I'm fairly handy around the house, and can DIY.
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Old 03-01-2013, 09:29 PM   #29
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For home repair and car repairs, I don't set extra money aside. Instead, I just budget have an amount allocated in my monthly budget. For example, let's say I allocate $1000 a month. Then during the year, if there is not repairs done from Jan to June, then my checking account should have the unspent $6000 sitting there in my checking. (At the start of each year, I do the rebalance, set aside annual money in money market and withdraw monthly to checking thing). If I get lucky and have no repairs, then I'll deposit the excess from checking back into the money market for the following year.
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Old 03-02-2013, 07:31 AM   #30
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[COLOR=black][FONT=Verdana][COLOR=black][FONT=Verdana]I guess I'm lucky in that I'm able to do most of my maintenance (cars, home, appliances, electrical, plumbing, property, etc) myself "if it's repairable".
I have always been moderately handy and try to fix things myself before calling in the professionals. And these days the internet and YouTube make performing many repairs possible for many people who aren't all that handy.

For example, last month DW came home from work after a tough day and put her lunch tupperware in the dishwasher. She didn't notice a couple of small chicken bones stuck inside the container and the bones were run through the wash cycle. Next thing you know the dishwasher won't drain and there's standing water in the bottom. My first inclination is to fix it myself but in looking at it I can't figure out how to take the insides apart to get to the drain area. So now I'm thinking about calling the repairman because I've never worked on a dishwasher before and don't want to screw anything up and make the problem worse and potentially more costly. But the thought of a $100+ repair bill made me think twice. So I get on the Net and did some searching by brand name and problem and low and behold there's a YouTube video demonstrating step by step how to repair the problem. About an hour and a half later it's back in working order without the ground up chicken bones clogging the drain. Did you know there's a food grinder in the bottom of your dishwasher? That was news to me. Anyway, that was time well spent for me and most satisfying on a personal level. (Yes, I'll take my cheap thrills where I can get them!) I've had similar success with plumbing, electrical issues and replacing a water pump on the clothes washer ($35 part + one hour labor).

So, my advice for those wanting to cut the repair bill is search the net for advice before shelling out money for service techs. With a little work you can find great sites that will help you diagnose and fix many household issues. Just make sure you realize your limitations and pull the plug before getting in over your head. If you do have to call a repairperson, make sure to watch them do the job as you'll often learn the secrets of accessing appliances and other useful tidbits that can save you money later.
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Old 03-02-2013, 08:13 AM   #31
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So, my advice for those wanting to cut the repair bill is search the net for advice before shelling out money for service techs. With a little work you can find great sites that will help you diagnose and fix many household issues. Just make sure you realize your limitations and pull the plug before getting in over your head. If you do have to call a repairperson, make sure to watch them do the job as you'll often learn the secrets of accessing appliances and other useful tidbits that can save you money later.
+1 ! My microwave oven had a couple of issues with the door handle breaking. Seems it was a "known issue" but since the oven is 10 years old the warranty was way expired. Found a video on YouTube that told us how to fix the problem. The second time another part of the door malfunctioned and it needed a new part. There was a $120 repair fee if I "called the man". Another YouTube video and viola - no repairman needed. Took about 20 minutes to fix.

We're pretty good about fixing little things around the house. My mainteance budget is mostly "parts" (not labor) until you get to the big ticket items like roof, hot water heater, etc
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Old 03-02-2013, 08:49 AM   #32
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I have a separate accrual account for non home maintenance things. 3k / year. Assumes a new used car every 10 years and occassional furniture meltdowns needing replacement.

I only use cash. Or let me restate ... I only use my credit card (love the year end summary and the points !!!) but I pay it off in full year month.
I don't actually accrue, we just call the account that because it serves the same purpose (from my Corp days) and it's easier than calling it the 'major unusual expenses for cars, home repairs/replacements, consumer electronics and whatever else comes up outside normal expenses' account. In practice we include those expenses as spent, on our spending spreadsheet, but there's no budget and variances are meaningless. It's all coming out of the nest egg as needed anyway. YMMV

We only use cash too, though I can see how zero/low interest can be compelling...
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Old 03-02-2013, 08:51 AM   #33
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We put about $500 a month into an account dedicated for major repairs, new car purchases, that sort of thing. Usually we contribute a lot more than we spend, but occasionally there are years when the fund takes a big hit. As long as we both don't need a new car at about the same time, it should hold up.
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Old 03-02-2013, 11:25 AM   #34
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We have about the same $5k yearly budget and let it build. We've had this for years now. When it gets ridiculously large, we buy some new furniture. We've gone through a new roof, two external repaints, new appliances, 2 heat pumps and a third will be coming soon, and new carpet and internal repaint is sure to come in a few years.

New cars are paid from individual investments/savings, but not really individually budgeted.
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Old 03-02-2013, 11:41 AM   #35
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I got the new Kiplinger's Personal Finance, April 2013 magazine today. There's an article called "How Long Will it Last?" on page 56. They state housing experts recommend you budget 1% of the purchase price of you home annually for maintenance and repairs.
I live in a condo, which might behave differently. I have a line item for condo fees, which cover many maintenance items. Sharing smooths out those expenses! I also budget about 0.3% of my home's value for internal maintenance. Only time will tell whether that's appropriate.
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Old 03-02-2013, 11:51 AM   #36
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I'm not completely retired yet, but getting close. I'm not sure I understand the "budgeting process" during retirement. So, are the people that are setting aside money each month taking money out of one account and putting it in another account? Or are you "saving" part of Social Security or Pension payments into various accounts?

I've been keeping track of expenditures for years but have never really "budgeted" for anything. I always just assumed when the roof needs replacing, I'd just withdraw that amount from one of my retirement accounts or CDs. Am I missing something?
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Old 03-02-2013, 11:58 AM   #37
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I live in a condo, which might behave differently. I have a line item for condo fees, which cover many maintenance items. Sharing smooths out those expenses! I also budget about 0.3% of my home's value for internal maintenance. Only time will tell whether that's appropriate.
The *usual* rule of thumb is to budget about 1% of a home's value for repairs and maintenance each year, though with a condo or townhouse most (or all) of the external maintenance is handled through the dues and HOA fees so it's mostly internal stuff and appliance repair/replacement that gets you. Stuff like new roofs, siding or external paint is covered (in theory) by the association dues.
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Old 03-02-2013, 12:35 PM   #38
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How do you think about/manage/track your home repair and maintenance? Do you set money aside and never touch it and keep adding to it and spending only from that fund for that particular type of expense?
Never have been a big fan of budgeting. We just have a cash reserve of about 18 months in expenses. Anything that needs fixing, updating or repairing gets paid for out on the cash-stash that is sitting in a savings account at USAA Bank earning 0.85% APY.

Keeping it simple for over 68 years.
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Old 03-02-2013, 01:28 PM   #39
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We only use cash too
Bartering has been getting tougher and tougher. Too many folks that are not interested in trading home repairs for DW's quilting. So, more often than not, we pay for things using cash (currency, check, CC, etc.) too.

I do have a buddy who is quite the beer brewer and makes some terrific stuff. He still finds bartering with a couple of different guys who do home repairs to be possible.
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Old 03-02-2013, 02:49 PM   #40
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Beer and Pizza can go a long way as goods for bartering
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