Costs/cycle for expected replacement items

[samclem]

Rich_in_Tampa started a thread a while back that asked how people managed and thought about their "reserve" fund for the types of "expected unexpected expenses that happen to everyone.

I've been putting a finer touch on our long-term budget, and would welcome thoughts /feedback on my categories and replacement timeframes for some of the common things that periodically need to be replaced.

Car-Mine $10K/10yr
Car- Hers $15K/10yr
Washer/dryer $500/8yr
Water heater $400/12 yr
Air conditioner $2000/15yr
Furnace 1500/15yr
Kitchen appliances $400/5yr
My Computer $500/4 yr
Her computer $500/4 yr
Printer replacement $400/4yr
Furniture/rug replacement $800/yr
Roof $6000/30yr
Television $2000/10 yr
Stereo/audio equipment $400/6yr
Lawn Mower $250/8yrs
String trimer $125/8 yrs
Floor refinishing $2000/10 yrs

Some notes: All prices will be expected to go up at the general rate of inflation.
- Cars--I might have under-allocated for these, but we don't put many miles on our cars and don't need to have the latest. My 86 Toyota suits me fine now.
- Washer/dryer: That's all for the dryer, since my Staber washer will never die
- "Kitchen appliances" includes refrigerator, dishwasher stove, garbage disposal, microwave oven.
- Floors are all hardwood. If we had carpet, I'd budget for replacing it.

There's no money in here for a kitchen/bathroom "updates"--that's not a priority of ours. I just put new floors/cabs/counters in the kitchen--that'll do for a LONG time. This budget reflects (I think) our moderate LBYM lifestyle--not as efficient as many here, but with fewer frills than my neighbors.

"You cheap SOB!" comments solicited . . .

 

[Khan]

Don't leave out such things as: sheets, towels, shoes...

After 15 or 20 years they tend to disintegrate.

 

[Gotadimple]

Rich_in_Tampa started a thread a while back that asked how people managed and thought about their "reserve" fund for the types of "expected unexpected expenses that happen to everyone.

I've been putting a finer touch on our long-term budget, and would welcome thoughts /feedback on my categories and replacement timeframes for some of the common things that periodically need to be replaced.


Kitchen appliances $400/5yr


Printer replacement $400/4yr

- "Kitchen appliances" includes refrigerator, dishwasher stove, garbage disposal, microwave oven.

Hmmm . . . I'm just getting ready to do some of these replacements (or have recently done some).

I think you're low on the Kitchen appliances -- I was surprised how prices have shot up with the cost of gasoline (i.e., transportation). So Microwave - $200 (10 year life), Refrigerator $800 (not side-by-side, and consider it a 20 year life), garbage disposal ($90 - 3 year life), dishwasher ($400, 10 year life), stove ($750 - 20 year life -- but it depends: gas or electric?).

I just replaced my ink jet printer with an all-in-one for under $100. I expect it will last about 5 years as I don't use it heavily. YMMV.

Also, your estimates for water heater and furnace look too low, but I'm not looking to replace those yet.

-- Rita

 

[Nords]

"String trimmer"?!? Isn't that getting a little, well, "down in the weeds"? Heh. Sorry.

Speaking from personal experience and considering that your car is old enough to drink liquor, $10K might not be enough of a replacement cost. We thought $8100 was a lot of money for a used Taurus in 1999 but $22K was barely enough for a used Prius in 2008. Or if you're buying "cigar-butt" cars-- good for a few puffs and then thrown away-- you might spend considerably more in maintenance/repairs while saving a lot of insurance.

I don't know how stringently you track home improvement vs home repairs, but maybe that'd give you a feel for the lifespans of your appliances, windows, and roofs. It might be easier to budget a generic amount every year instead of hoping that something doesn't die ahead of schedule.

Other unique event/replacement expenses: Kid's weddings? Grandkid accounts? Birthday/anniversary/graduation gifts? Fantasy vacations? Root canals & bridgework? Cosmetic surgery? Hurricane damage? Other transportation like bicycles, ATVs, boats, RVs, airplanes, or personal jet packs? Clothing? Replacement hobby equipment (or upgrades)?

I know that the ESPlanner retirement software looks at "consumption smoothing", but I don't know how much that'd help your planning & assumptions.

Hey, CFB, somewhere in the lower half of your first 20,000 posts, didn't you have a list like this? We could search for it here, but it'd save us all a lot of time & effort if you happen to have it on one of your own hard drives...

 

[kyounge1956]

(snip)
Speaking from personal experience and considering that your car is old enough to drink liquor, $10K might not be enough of a replacement cost. We thought $8100 was a lot of money for a used Taurus in 1999 but $22K was barely enough for a used Prius in 2008.

I don't know if it's still the case but when I bought my Prius two years ago, demand was so hot that used ones cost more than new, because you could drive away in a used one, but might have to wait several months for delivery of a new one.

 

[Nords]

I don't know if it's still the case but when I bought my Prius two years ago, demand was so hot that used ones cost more than new, because you could drive away in a used one, but might have to wait several months for delivery of a new one.

With $4 gas, it's probably worse.

The "Toyota 50th Anniversary Prius" Hawaii edition sold out all 50 cars before they were built, and rumors insist that most of them are leaving the state to be shipped to the Mainland. Over $30K retail plus another $1K+ for the containership.

A dealer on the Big Island just sold his last 2009 (that's a nine, not a typo) Prius...

 

[ohfrugalone]

I called for a quote on floor refinishing and I think that would be $1.75 to $2.00 square foot now.

When I bought the house 13 years ago, I had to replace 3/4 of the roof - that was $4,000 in 1996 - I waited a few months. And darn if the water heater didn't go out at just like the one year, one week date - that was $400 back then. What kind of computers can you get for $500. The refrigerator I bought 5 years ago was over $600 and it had no frills - freezer at the top, no icemaker (but tops on energy efficiency and repair record).

I think you should check some of those prices - you probably don't go to the mall much.

You could definitely get a WAY cheaper TV than that though!

 

[samclem]

When I bought the house 13 years ago, I had to replace 3/4 of the roof - that was $4,000 in 1996 - I waited a few months.

Yep, I think a new roof (depending on how many layers need to be removed) costs about $275-$300 per 100 sq feet. More if you get better shingles, or if it especially steep, has a lot of peaks/valleys/dormers, etc)

What kind of computers can you get for $500.

The last two I bought (a laptop and a desktop) cost less than that, I certainly don't buy cutting-edge hardware. I'll bump it up a couple of hundred bucks.

The refrigerator I bought 5 years ago was over $600 and it had no frills - freezer at the top, no icemaker (but tops on energy efficiency and repair record).

I think you should check some of those prices - you probably don't go to the mall much.

What is this "mall" of which you speak? The last fridge we bought was from a Sears clearance facility (about $900 and 40% off the regular price).

I probably should break out the appliances separately. We just bought new everything, and i wonder if a stove ever wears out, so hopefully we won;t be spending money on new stuff for awhile.

Originally Posted by Nords
Speaking from personal experience and considering that your car is old enough to drink liquor, $10K might not be enough of a replacement cost.

You're right, I'll re-look that. I found a lot of cars online for less than $10K that I'd be happy to drive, but they might not last 10 years. And, when I get to be 70, I might want something a little cushier

Originally Posted by Nords
Other unique event/replacement expenses: Kid's weddings? Grandkid accounts? Birthday/anniversary/graduation gifts? Fantasy vacations? Root canals & bridgework? Cosmetic surgery? Hurricane damage? Other transportation like bicycles, ATVs, boats, RVs, airplanes, or personal jet packs? Clothing? Replacement hobby equipment (or upgrades)?

Dang! I''ll have to w*rk forever! All good points. How could I remember to include a weed whacker but forget to include $$ for DD's wedding? Okay, I've put in a hundred bucks

I also forgot to include replacement for our well pump and pressure tank, so I added that.

Thanks to all.

 

[W2R]

Some thoughts (better late than never? lol):

A water heater doesn't cost $400 any more, at least not in New Orleans. Mine cost $850 this year.

Do you really replace kitchen appliances every 5 years? I'd say more like 20 years. But maybe that's just me.

I had been figuring on a roof lasting 20 years instead of 30, for some reason. I don't really know but thought they wore out faster.

Great thread!

 

[cute fuzzy bunny]

Some roofs last 50 years, some 15. Depends on what paper and covering you use.

Dont forget to factor in sales taxes, inflation and all the little things.

 

[free4now]

Overall the numbers sound low to me. They sound appropriate for bottom-of-the line items with no labor/install costs, but I often find better value buying a bit higher on the hog. And sometimes find it's easier to pay $80 for an install if it saves me the hassle of renting a truck and finding someone to help me move the item.

I think my numbers would be about 1.5x the prices you listed for most things.

$800 for all your furniture and rugs sounds very low to me... most people pay that just for a new mattress and frame.

 

[plex]

I would think it could be assumed that at least inflation and maybe taxes would be automatically taken care of by investments (as long as you stick to the 4% rule...)

Can buy the furniture and rugs on craiglist for $800 easy. I have seen decent furniture sets for a room go for $500 on there. If you want things that match exactly though, the costs go up drastically.

As a computer nut, I can confirm that it should be pretty easy to get a decent computer for $500 (never buy used, way to many breakable parts involved, much worse than a car for what can go wrong). You would have to know what a good baseline computer is though, around the $500 mark you get some computers that actually aren't that great. The difference between a standard and a gaming computer is huge though, probably would say about $1300 for a gaming computer. New computers have actually been deflating in price over time.

I guess you aren't including the normal variable costs here (food, gas, utilities, etc.).

You'll need a holiday/birthday gift fund

 

[Lakedog]

And darn if the water heater didn't go out at just like the one year, one week date - that was $400 back then. What kind of computers can you get for $500. The refrigerator I bought 5 years ago was over $600 and it had no frills - freezer at the top, no icemaker (but tops on energy efficiency and repair record).

Just replaced a 40 gal electric water heater ($263) but did the install myself. Replaced a laptop four months ago with a Dell Vostro on sale for $499 -- more than adequate for my needs but may not be a fit for everyone. Also, had my Maytag fridge go out last week, and I replaced the side by side with a slightly smaller Frigidaire (freezer on top with icemaker) for $533 on sale at Lowes. There are often deals on most appliances if you are willing to shop around, which I don't mind doing to save some $$.

 

[samclem]

Do you really replace kitchen appliances every 5 years? I'd say more like 20 years. But maybe that's just me.

You are right, I was just lumping all the appliances together and going with a more frequent replacement rate. Here's how I will break it out on my spreadsheet:

Refrigerator: $900/12 years
Stove: $500/25 years (Hey, it's white! I'll never get sick of looking at it!)
Dishwasher: $500/10 years
Garbage Disposal: $150/12 years
Hood/microwave: $250/8 years

Inflation: I'll keep increasing the set dollar figure set aside for all these things every year by the inflation amount for the previous year. I don't plan on having a separate physical account, just a running total of what is in there. [(total from prev year times average growth of my nest egg) + new contribution each year - amount spent during the last year] I'll figure my annual withdrawal amount on my total nest egg >minus< this set-aside money--hopefully the phantom account will grow at a rate at least as fast as inflation (like the rest of the savings).

We budget separately for annual vacations and gifts, so that stuff won't go into the multi-year "account".

 

[FANOFJESUS]

I guess I am a real cheap skate for the Costs/cycle for expected replacement items.


Car-1994 paid $4500 used
Washer-1982 paid $50 used
Water heater- 1990 paid $150
Furnace- 1990 paid $800 scrach and dent
AC-1973
Kitchen appliances-Stove 1961 Refreg. 1982 bought used
My Computer-$550 Just replaced old one eight years old
Printer replacement-$50/8yr
Furniture/rug replacement $3000 in the last twenty years
Roof-Replaced by insurance 10 years ago
Television $200 in the last twenty years
Stereo/audio equipment $600 in the last twenty years
Lawn Mower $1700 in the last twenty years
String trimer $125/8 yrs
Carpet $500 in the last twenty years

 

[freebird5825]

what a great list!
would you be willing to share the categories (text only and we can substitue our own local area price estimates) with us when you're done?
i would love to add that to my pre-FIRE budget spreadsheet. i did a general category for this but didn't have the fine detail.

here's some lowball data for a new roof - $6500 for 30 year shingles for a 24' x 48' raised ranch with attached 20'x20' screened porch in 2006, the year before I FIREd. i live in a low cost, high sales tax (8.75%) area so adjust that price for your local area.

 

[Hobo]

The question that screams out to asked is, "What kind of lifestyle do you want or need?" If you must carry on the same lifestyle that you are living right now, then all you have to do is look at your Quicken account and see how much you are spending each month. These lists are missing a lot of major items - such a property taxes, new gadgets (hand phones, etc.) and once a year items such as travel and Christmas costs.

I think the question that needs to be answered first is, "What am I willing to give up?" In other words, are you willing to sell the house and move into an apartment? If yes, then you suddenly drop a whole lot of extra expenses. Are you willing to move to a part of the country where prices are lower - or to a different country where prices are a LOT lower?

His and hers computers and cars can be a luxury or a necessity, depending how important ER is to each of you. Don't forget, you will have a lot more time to share after retirement.

Take a good hard look and see if you really need that big house that you bought when you were making the big bucks. A whole lot of people live very happy lives in a 2 BR/ 1 BA apartment with a Hotel 6 in town to put up the guests.

 

[Kronk]

If you must carry on the same lifestyle that you are living right now, then all you have to do is look at your Quicken account and see how much you are spending each month.

Um... that's that point of the thread. Your monthly statements tell you how much you're regularly spending, but they don't give an idea what you'll need for these long-term periodic expenses. The metric I use most often in figuring my own spending patterns is tracking a rolling 12-month average, since my month-to-month spending is variable. But that 12-month average doesn't include these once-a-decade purchases.

 

[Andre1969]

Roofs...

With roofs, I always heard that 30 years was a good rule of thumb for the original roof. Upon the first re-roof, it's more like 20-25 if you just put new shingles down on top of the old. Or another 30 if you strip the old shingles first.

Other factors that come into play are the pitch of the roof, and how many trees are around. Trees tend to drop leaves, branches, etc on the roof, keep wet roofs from drying out, encourage moss, lichen, mold, bird poop, etc, all of which will make a roof wear out faster. As for pitch, I've heard that the shingles on steeper roofs tend to last longer...but replacement costs will most likely be higher when the time comes.

FWIW, my grandmother recently had her house re-roofed. I think the whole bill was about $9,000,but that included all new gutters as well. Her house is a ~24x33 foot cape cod. No dormers, but there's an addition on the back that's about 11x22 with a pitched roof, and a front porch that's about 14x33, which has a fairly flat, shed roof. That cost also included taking off two layers of shingles. The house was last re-roofed in 1978, so they got 30 years out of that re-roof, but it's been needing it for some time now.

 

[Urchina]

I also forgot to include replacement for our well pump and pressure tank, so I added that..

Two thoughts:

1. $800/year for rugs & furniture seems high to me, but that's because I'm in the "buy classic, use forever" camp of furniture acquisition. I tend to think of furniture as a durable good, even though we've got pets and small kids.

2. A new well in our area runs $50,000. The likelihood of you needing a new well might be very small, but if your area is rapidly urbanizing it might be a possibility, or you might be required to hook up to city water/sewer. Which way is development heading in your neck of the woods?

3. Since you're on a well, I assume you're on a septic. How old is the system? How often do you have the tank pumped? How much would a new system cost you?

Thanks for the list -- we'll be making our own next year (still hammering out an asset allocation this year...)

 

[Hobo]

Um... that's that point of the thread. Your monthly statements tell you how much you're regularly spending, but they don't give an idea what you'll need for these long-term periodic expenses. The metric I use most often in figuring my own spending patterns is tracking a rolling 12-month average, since my month-to-month spending is variable. But that 12-month average doesn't include these once-a-decade purchases.

As an Engineer, I have done a zillion life-cycle cost estimates. If you have just changed your lifestyle and have no past data, then trying to itemize each item and calculate the replacement costs and annual depreciation is the only option.

However, if you have lived in a house for a reasonably long time, then empirical data (ie, the money that you have spent in the past), will be a pretty good indicator of the money you will spend in the future (adjusted for inflation). The assumption is in the course of a year you have replaced items on a regular basis because your income has come in on a regular basis. That is, you will not buy a new washing machine or TV if the roof is starting to look old. Conversely, if the roof suddenly needs to be replaced, then you will delay the replacement of other items around the house.

I am curious. Does your rolling 12-month average changes significantly over time?

Just to emphasis the main point of my post, you can significantly alter your annual costs simply by making some rather modest lifestyle changes. For anyone looking at ER, a lifestyle change can shave 5 years or more off your retirement age. Trying to keep your current lifestyle with all the trappings makes ER unnecessarily difficult. The cost of clothes alone will drop significantly, not to mention all those things you buy on impulse - simply because you have the money to buy them.

 

[FUEGO]

Looks good to me. I did some quick math on it and it appears to be $4,772 per year in "capital expenses". Most of the items on your list are around what I would use, except the tv at $2000, which I might put back to $1000. Although my car expenses might tend to be a little higher, preferring new(er) cars.

I don't remember the budget number I used, but I lumped all these "one time" purchases (that are really recurring purchases that happen very infrequently) into one category that also includes things like expensive dental work or unexpected medical bills. In all likelihood, these "one time" expenses will tend to spread themselves out by themselves. And some are elective expenses that can be deferred if other urgent expenses must be covered first (ie - root canal = not optional, but replacing a 10 yr old car can wait another year typically).

My theory on lumping these expenses into one realistic line item is that I'm just guessing anyway. I'm probably off by +-25% on costs and +-50% or more on durations/life expectancy.

 

[Gotadimple]

Water Heater

I know there is another thread about installing a new heater, but I just priced replacing a gas direct vent WH, so you're $150 is waay low.

For Gas Direct Vent (which are more economical to run than standard gas)
-- $1545 plus tax installed.

For Gas Tankless (even more economical, and include rebates/tax credits)
-- $3450 plus tax installed.

Rita

 

[samclem]

I know there is another thread about installing a new heater, but I just priced replacing a gas direct vent WH, so you're $150 is waay low.

For Gas Direct Vent (which are more economical to run than standard gas)
-- $1545 plus tax installed.

For Gas Tankless (even more economical, and include rebates/tax credits)
-- $3450 plus tax installed.

Rita

Well, in fairness, Rec7 told us he paid that $150 in 1990. So, right now that water heater probably looks a lot like soupxcan's water heater. Also, my figure was for a regular (non-direct-vent) gas water heater that I install myself. Four years ago, when I crunched the numbers regarding a high-efficiency direct-vent model, even assuming some increase in NG costs, it didn't make sense to me to buy one.
I doubt I'll be wanting to manhandle a water heater onto my flatbed trailer when I'm 80, so it would be wise to maybe include some increase in costs down the road for instalation. When we finalize this list, we'll need to include some comments regarding this point.

 

[Gotadimple]

Four years ago, when I crunched the numbers regarding a high-efficiency direct-vent model, even assuming some increase in NG costs, it didn't make sense to me to buy one.

Samclem,
I agree. I just crunched the numbers and even with a $350 rebate from the utility and a $300 tax credit, it doesn't make sense -- maybe in another 10 years (). Additionally, I was told that should there be a power outage, with a tankless model, you have no hot water and it requires electricity to ignite the gas (unlike standard or direct vent tanks).

-- Rita