Unexpected expenses

[FIREd]

(I'd like to know where a tree can be removed for $250.00. Nobody around here will touch a medium-sized tree for less than $1000, and it goes up from there).

What I do is this: for medium- to large-sized trees, I ask a pro to bring the tree down safely. Then I take it from there. Using my chainsaw, I dispatch the tree, discard the small limbs, cut the large ones into logs that will later be used as firewood, etc... It's a a lot of work, but it was my summer job for many years as a kid, so I am used to it. I usually pay about $200-$300 to have a medium tree removed.

 

[FinallyRetired]

(I'd like to know where a tree can be removed for $250.00. Nobody around here will touch a medium-sized tree for less than $1000, and it goes up from there).

The tree was not on our property, it was on common area in an HOA. The tree was partly blown down by a storm, and the rest of it was threatening to come down on our home. The HOA payed about $1200 to bring it down the rest of the way, but the trunk and limbs would remain wherever they fell (those are their rules). So I payed $250 for the tree service to remove them from my yard and haul them away.

 

[RonBoyd]

[as] a kid, and I am used to it.

Because you are still a child?

 

[aaronc879]

We had our house built in 1990 and have replaced pretty much everything in it since then. We're on our third refrigerator. Houses really are money pits.

Shouldn't refrigerators last 20+ years? My parents bought a new one when I was about 5 or 6 years old and still have it today, i'm 29. Same stove that they bought at the same time too. The refrigerator and stove in the condo I bought last year are both original(1986). So is the waterheater.

 

[Alan]

Shouldn't refrigerators last 20+ years? My parents bought a new one when I was about 5 or 6 years old and still have it today, i'm 29. Same stove that they bought at the same time too. The refrigerator and stove in the condo I bought last year are both original(1986). So is the waterheater.

On average they should last that long.

Major appliances Appliance Expected life in years

Microwave oven
10
Garbage disposal
10-12
Trash compactor
10
Water heater, gas
11-13
Water heater, electric
13-14
Water heater, tankless (on demand)
20+
Smoke detector
10
Refrigerator, side by side
14
Refrigerator, top mount
14
Refrigerator, bottom mount
17
Refrigerator, single door
19
Refrigerator, compact (dorm type)
5
Washing machine, top load
14
Washing machine, front load
11
Dryer
13
Range, electric
17
Range, gas
19
Dishwasher
10
Cooktops
13-20
Air Conditioner (room size)
10

 

[Amethyst]

Shouldn't refrigerators last 20+ years?

One would think so. We had one in a previous house that was in its 30s. Unfortunately, appliances don't always behave the way they're supposed to.

Every time we buy new appliances, which has been often of late, the salespeople tell us appliances 'aren't made the way they used to be.' Energy-saving is usually blamed for making appliances less sturdy and reliable than in the past. Who knows.

 

[Amethyst]

Washing machine, front load
11
Dryer
13
Dishwasher
10

Well, there you go. Some of our appliances lasted longer than Alan's list said they are "supposed" to last. Oh, the disobedience of inanimate objects....

 

[FIREd]

Because you are still a child?

No, but if I could handle the job as a kid, then I can certainly handle it as a adult, don't you think?

 

[accountingsucks]

The main ones are home and auto of course. I'm in Canada so medical is not an issue in that I don't have to worry about expensive health insurance, but of course there are the inevitable tune-ups one will need as they get older on dental, prescriptions, etc...for now I don't factor anything in for medical at my age.

I track my expenses in Excel and I have a filter for recurring and non-recurring expenses so that over the long run I can have an idea of what they might be. Mainly it will of course relate to housing and I think the 1% of house rule is actually abit high but a reasonable estimate. I basically figure 2K a year over time is about right.

For vehicles, my goal is to buy a slightly used one every 10 years (current car going on year 7) for 20 to 25K. I figure I'll get 5K for trade-in so 2K a year for auto seems about right (which includes unexpected R&M on that) as well.

In my retirement projection schedules (I'm only 33 though...lol) I factor in 5K a year for home and auto "non-recurring" expenses which is the 2K for each plus a bit of a cushion to be safe.

 

[tuixiu]

Most dishwashers I've replaced haven't been because of the washing, but degradation of the racks inside it.

I've looked into replacing just the racks but it always ends up being close enough to the price of a new dishwasher to just get a new one.

 

[Sue J]

Our dishwasher was about 3 years old and the racks were showing a lot of wear. Many of the tips of the tines were rusting and also some of the points on the rack that got the most wear. New racks were pricey. I bought a repair kit on eBay. It had about 80 vinyl tips and a bottle of vinyl paint and for the price it was a good solution. I had to sand down the rusty spots and then glue on the tips (use the vinyl paint) and spot paint the rusty spots with 2 coats.

Here is the same product on Amazon -
Amazon.com: russan enterprises

We have very hard water here. Dishwashers and water heaters just don't last.

 

[unclemick]

Hmmm - what I've seen so far in Missouri - weather(ice storms, tornados and floods if you're a flatlander) and big time medical. One can sort of lay off the bet with insurance - but there are always 'I never thought of that' expenses lurking.

House, car and pets you can sort of guess worst case and plan.

I even saw an ad for pet insurance the other day.

heh heh heh - The Pug gets his booster shot Monday.

 

[Khan]

I made a list once of the things that can require repair/replacement in my house:
Roof

Replaced 15 years ago

Doors

Replaced 10 years ago

Windows

20 years ago

Paint

Vinyl siding 15 y a

Furnace

On borrowed time: 1979

Water Heater

Replaced Jan '09

Air conditioner

Window unit summer '07

Dishwasher

Apr '00

Garbage Disposer

Ancient, removed and not replaced in '05

Fridge
Stove
Microwave

Apr '00

Garage door and opener

'98

Clothes Washer

Borrowed time: '93

Dryer

Never had

Plumbing (3 stools, two showers, 4 sinks), both fresh water and drains

stools '94 '98, shower '98, sinks '94 '95 '98

Electrical lines (many)

Whole house rewired '97

A person who's even more analytical than me could look up life expectancies at sites like this Appliance Life Expectancy, do a worksheet with replacement costs, life expectancy, and come up with some expected average annual cost. That still doesn't include funerals and catastrophies.

Don't do funerals, Hurricane Ike didn't cause permanent damage, house is slowly collapsing.

 

[Khan]

Shouldn't refrigerators last 20+ years? My parents bought a new one when I was about 5 or 6 years old and still have it today, i'm 29. Same stove that they bought at the same time too. The refrigerator and stove in the condo I bought last year are both original(1986). So is the waterheater.

Been here 30 years, 3rd fridge, second stove (was still working), 3rd or 4th water heater.

 

[Nords]

We don't have so many emergency expenses as we do infrastructure issues. Things may not completely stop working but they have pieces break off or they become unreliable or we can live without them for a while. We can fix many things on our own (for the price of the repair parts) but it seems as if we have a list of 400+ annual maintenance tasks.

I don't worry as much about appliances as I used to. After replacing a half-dozen dishwashers and fridges (ours, tenants, relatives, neighbors, whoever), it's frequently easier to buy a Craigslist replacement than it would be to fix the problem. Craigslist has been particularly good pickings over the last year or so.

Our dishwasher was about 3 years old and the racks were showing a lot of wear. Many of the tips of the tines were rusting and also some of the points on the rack that got the most wear. New racks were pricey. I bought a repair kit on eBay. It had about 80 vinyl tips and a bottle of vinyl paint and for the price it was a good solution. I had to sand down the rusty spots and then glue on the tips (use the vinyl paint) and spot paint the rusty spots with 2 coats.

Yikes. For that kind of detail work, I hope that's the best dishwasher ever and that you get another 10 years out of it.

We have very hard water here. Dishwashers and water heaters just don't last.

A whole-house water conditioner will go a long way toward helping solve that problem.

 

[TromboneAl]

I include an unexpected expense line in my budget but nowhere near this much. I wonder how common this is?

I think you had an unusually bad year.

 

[cinman2000]

I know this is an old post, but wanted to comment on its value. This is probably the most uncertain area of my plan right now. So much that I am solving for this number and using that to measure the level of risk to pulling the trigger on RE. I currently can afford $3,000 per year which is just over 1% of the value of our house. I also have in the plan $200/month for smaller housing issues, car replacements every 5 years, 2 weddings for daughters (1 each) , and one RV purchase. Getting so close to pulling the trigger!! Any other approaches?

 

[arky]

I know this is an old post, but wanted to comment on its value. This is probably the most uncertain area of my plan right now. So much that I am solving for this number and using that to measure the level of risk to pulling the trigger on RE. I currently can afford $3,000 per year which is just over 1% of the value of our house. I also have in the plan $200/month for smaller housing issues, car replacements every 5 years, 2 weddings for daughters (1 each) , and one RV purchase. Getting so close to pulling the trigger!! Any other approaches?

Strictly speaking, I don't have a budget. I just go about my business and spend as I go. Five years into retirement, my annual spend rate is remarkably consistent. So far, the approach I have taken is to have ~ 20K in a savings account that is tied to my checking account (transfers take seconds online). I use it to smooth out my cash flow and plan to use it for any "big" expenditures that arise (so far, nothing really big).

 

[FUEGO]

I think it makes lots of sense to expect the unexpected. Something will happen every year, but everything bad isn't likely to happen all in one year. Pick a number to cover these expected unexpected expenses, plan for it, and hope you don't exceed it too often.

Our expenses have been very consistent the last 3 years since I started tracking them in great detail (every dollar spent). Having a baby, new appliance/toy purchases, major car repairs/maintenance, etc all averaged out to about the same each year.

As for unexpected house expenses - plan on replacing the roof, painting inside and out, carpeting/flooring, appliance replacement, HVAC replacement/major repair, replace hot water heater, major plumbing work. These things will be recurring expenses - some every 5-10 years, some 15-20 years apart, but you can estimate pretty well on average. I figured out on our house, these recurring replacement costs will run about 1% of the house value on average each year. That is on top of more routine housing related operations and maintenance expenses.

 

[ERhoosier]

+1 on keeping a "rainy day fund" for unexpected expenses. Housing is one issue, but medical bills must also be considered. Most seem to have little idea what their "out of pocket maximum" med expenses might be should they (or family member) suffer serious illness/injury.

 

[panhead]

I have an R&R line item in my budget of $250/month. When I retire, I will stuff this money into a safe account and let it build for house/auto repair and replacement items. I also have a line item for "fun" which I hope to be pretty substantial when I retire. My thinking is, if something big happens, I can also use this money, since it's discretionary. If the monthly amount doesn't cover the full bill, there is always a HELOC (taken out before retiring, of course) or credit card in worst case scenario to float yourself a loan. I mean, if I have a multi-thousand dollar medical procedure, I'm probably going to want to hang around home and spend money from my "booze" line item as opposed to flying to tahiti or what not.
Hmph, with that being said, is it 5 o'clock yet?

 

[Katsmeow]

I know this is an old post, but wanted to comment on its value. This is probably the most uncertain area of my plan right now. So much that I am solving for this number and using that to measure the level of risk to pulling the trigger on RE. I currently can afford $3,000 per year which is just over 1% of the value of our house. I also have in the plan $200/month for smaller housing issues, car replacements every 5 years, 2 weddings for daughters (1 each) , and one RV purchase. Getting so close to pulling the trigger!! Any other approaches?

I used YNAB for budgeting and this issue gets discussed a lot on the YNAB forums.

You Need A Budget

You can conceive of irregular expenses of several different types:

1. Those that are irregular in terms of not being monthly expenses but fixed or nearly fixed in amount - Ex: HOA fee due each January. Those are easy to budget for.

2. Those that are variable in amount but occur regularly throughout the year - Ex: Groceries or auto fuel. Determine an average amount and budget it each month, carrying over unused amounts in low months for the occasional high month.

3. Expenses that are variable in amount and occur irregularly through out the year, but tend to be a certain amount over the course of the year. An example for me would be veterinary expenses. Another example might be "regular" home maintenance or auto maintenance.

4. Expenses that will surely happen at some point, but are very large and may only occur once in several years (or even many years). Example: New car, new roof. Best handled through a separate sinking fund category that is saved up over the course of years.

5. Expenses that may or may not happen or that will happen but have a chance to be much higher than anticipated. You might go through the entire year with none of these, but might have more than one. It is extremely unlikely you will have all of them all at once. Examples that happened to me: Hurricane caused tree clean up that cost several thousand collars. The year that auto repair costs were 6 times what I typically spend in a year. The year that home repair expenses were several times the usual amounts mostly due a non-typical well expense.

If I tried to assume in each category where this could happen that it would happen in every year I would be saving way too much on each one: Auto, home, veterinary, etc. What I do instead is have an Irregular expense category where I park $X in it at the start of the year. I still allocate $X a year for home repair for example based upon "typical" expenditures. And I allocate $Y for auto repair based upon "typical" expenditures. However, if there is an expense that goes way beyond that I typically expect then I pull it from the irregular expense category (and then work to build that category back up). Since I started doing this it has worked well for me, since you don't usually have all those freak events happen in one year.

 

[Alex in Virginia]

I'm beginning to think I should expect huge unexpected expenses. Just over the last 12 months I've had the following:

New heat pump compressor $1200
Plumbing leak damage above insurance reimbursement $5000
Share of funeral expenses for close relative $2500
Window glass repair $750
Replacement microwave $1080
Replacement water heater $380
Fallen tree removal $250
Total $11,160

I include an unexpected expense line in my budget but nowhere near this much. I wonder how common this is?

I am a big believer in having a home warranty policy. I pay around $500 per year and then have a $100 deductible per repair incident. If I had had those same expenses you had, I would have paid a total of $300 for the heat pump compressor, window glass and water heater (instead of your $2380).

I'm a little surprised no one has brought this up yet in the thread. I have held home owner warranty policies since 2000, and every year I have at the very least broken even. I've had biggies, too -- major furnace repair, well pump replacement, water line do-overs, etc.

An additional advantage is that when I have a problem, I call the service request line and the company provides me with a qualified repair outfit to call (which the warranty company stands behind).

Alex in Virginia

 

[kyounge1956]

I am a big believer in having a home warranty policy. I pay around $500 per year and then have a $100 deductible per repair incident. If I had had those same expenses you had, I would have paid a total of $300 for the heat pump compressor, window glass and water heater (instead of your $2380).

I'm a little surprised no one has brought this up yet in the thread. I have held home owner warranty policies since 2000, and every year I have at the very least broken even. I've had biggies, too -- major furnace repair, well pump replacement, water line do-overs, etc.

An additional advantage is that when I have a problem, I call the service request line and the company provides me with a qualified repair outfit to call (which the warranty company stands behind).

Alex in Virginia

Where does one get such a policy? Is it an add-on to your ordinary homeowner's insurance? Are home warranties available for existing houses or only new construction? How do the premiums compare to the various ways of handling unexpected expenses already mentioned in the thread, such as setting aside a percentage of house value every year?

 

[REWahoo]

They are stand alone policies and you can buy one for an existing home. Check out the premiums and see if you think it might be a bargain - I don't but others obviously do or they wouldn't still be in business. Home Warranty Company | Home Protection Plan | AHS