I have noted the remaining lifespan of these items, and priced out an estimate for replacing them. According to what I calculated, I should be saving $583 per month (not considering inflation so would likely need to tweak this amount each year or something) in order to have cash on hand to replace these items when they are likely to fail:
A/C, gas furnace, water heater, roof, washer, dryer, fridge, dishwasher, pressure vessel, water softener, septic system, windows, skylight, etc.
I am also saving an emergency fund which would be for unexpected repairs and/or lost employment, so about 3 months of expenses is my goal.
Am I overthinking this? Should I just save a bigger emergency fund and not budget separately for major replacement costs?
Any advice?
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I tried replacing my 30 year old rotting wooden fence, but my one neighbour would only help repair them 
. As I just moved here I don’t have a ton of cash on hand, but it will definately be all me paying for a new fence when this crappy repair job fails in another 5-10 years.
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I have a home repair fund, a car repair fund/replace fund, and a separate emergency (job loss) fund. I am very debt adverse - our household has no debt and plans to never have debt. At times I think the money we have “waiting” to be spend is a little crazy - but at the same time it gives me a huge peace of mind. If our car died tomorrow - we could go with cash and get a replacement the same day (not brand new - but good enough for our needs). If the furnace died in the middle of the night we could call an emergency repair company and have it fixed/replaced immediately. To me - having this available is well worth loss of keeping up with inflation.
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Hey Brown, Do you have an idea of what your typical cash flow is? Car maintenance, house maintenance, etc should have an average cost over time and you should just set your savings and debt thresholds so that you smooth this out over time. Keeping large amounts of cash around is expensive.
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I don’t do one line item per appliance but I do make a line item on by budget for “new appliances / repairs” and throw about $100 a month into it so it grows over time. The chances of all of your appliances failing at the same time are very slim.
For example: Our Washer and Dryer were on the fritz a couple of months ago, still worked but not very well. Wife and I happened to see a new set when we walked into Costco one day for a really good price and thanks to the budget we didn’t even need to think about it.
I expect about 1% of the value of the house to go into maintenance every year and plan my finance accordingly. But I don’t have a specific dedicated budget, depending of rates and my investments I either pull out some equity with an HELOC or cash out some investments when I got big maintenance item popping.
It’s not like you really have a choice when it happens or can precisely predict what maintenance will cost in the coming year
I don’t go to that point, but I do have a “Renovations” fund because Tangerine lets me make way to many savings accounts. It’s pure guesswork when an appliance will actually go. Lifespan is an average. I just replaced a dishwasher that last three years longer than I expected it to. I also had to replace a fridge eight to ten years earlier than I would have expected. Both simply came out of the “This is money I earmark for fixing house stuff” fund.
Definitely budget for them. Best way for me is to figure out the amortization period, then “lease” them from myself by paying a monthly fee. If it dies early, emergency fund covers the balance. If it exceeds the expected lifespan, the extra goes towards an upgrade.
I don’t do this for luxury items though. I need a fridge, I can do without a deep fryer if it’s not in the luxuries budget.
You should save for this , For me I have my emergency fund, and then a separate about $5000 in another account for anything appliance/repair related related to the house/car.