So you bought real estate. Now you’ll be broke — unless you make a plan to do battle with bills
You stretched to save your down payment.
You stretched more to pay for the closing costs, which ended up costing more than you thought.
You stretched even further to complete some unexpected repairs the week you moved in.
Somehow you managed to pay that first massive mortgage payment and set of utility bills ... and now you are out of money and tired.
Good news: you can put a smart financial system in place right now to help ease the continued pressure of home ownership and start saving again. Here’s how.
Save on utilities
Heating, cooling, water, electricity, waste pickup, internet and cellphone: These items can easily add up to half of your mortgage payment. Traditional utilities costs be trimmed by keeping your home a few degrees cooler in the winter (wear a sweater) and running the air conditioner less in the summer (open the windows). Take shorter showers and draw a bath a few inches lower in the tub. Turn the lights out and unplug what’s not being used. If you pay per garbage bag, waste less by meal planning, reusing and recycling. Then negotiate your internet and cellphone bills and cut the cable for the time being. (It can help to bundle your telecom services together.)
Now, automate ALL your bill payments! That way you won’t forget to pay them ... there are A LOT when you’re a homeowner.
Maintenance for the win
If your weather stripping has seen better days, prioritize replacing it in order to regulate the temperature in your home. Budget in a maintenance check on your furnace (duct cleaning can help) and hot water tank (turn this down a few degrees, too). Fix any water leaks and replace old, inefficient shower and sink faucet heads and fix your running toilet, too. According to NerdWallet, these quick wins to save water can easily trim your water bill — and are helpful to the environment. Also, if you have extremely old appliances (which definitely impact your electrical and gas costs), you may want to plan to replace them with energy- and water-efficient ones — try the second-hand market for these.
Throughout your property, maintenance is going to be key. If you let something linger too long, it’s inevitable that the problem will get worse and cost you more. Pick away at repairs and maintenance each month.
Save on insurance
You probably rushed to find some home insurance in order to close on your real-estate transaction, right? Well, your policy may be costing you more money than necessary if you didn’t do your research. Two money savers with insurance. according to Onlia and Ratesdotca, are to bundle up your home and auto policies (savings of between $500-$750) and try going directly to the insurance company online to get your quote.
Save for your rainy day because it’s coming
Statistically, emergencies happen every seven years to homeowners. Be ready for anything — like raccoons living in your attic and causing uninsurable damage — at any time. In your new homeowner budget, which I highly recommend you put together pronto, you’ll want to allocate money to an emergency fund. Aim for five per cent of your take-home pay until your fund reaches the equivalent of three to six months’ worth of essential living expenses. You can make money on this money by putting your fund in a high interest savings account, and then tuck it in a TFSA to save taxes. (I like the savings-account comparison tool on ratehub.ca.)
Consider a bigger money move
If your cash flow is so tight you’re about to bust, you might need to pull the trigger on bigger money moves like getting rid of a car, renting your garage or basement, getting a higher-paying job or even selling your PlayStation. Sites like Kijiji and Facebook Marketplace make it easy to sell almost anything. Go easy on yourself if you feel like these are desperate moves — they’re not. Freeing up some money so that you can get on top of your finances now that you’re a homeowner is a good thing.
Save on still living your life
Have you earmarked five to 10 per cent of your take home pay for your fun and wellness? Research from Harvard and Warwick universities shows that spending money on what brings us wellness and joy can make us happier.
Now, I get it. You’ve just moved in and there are barely two nickels you can rub together. But over the next four months or so your cash flow will level out and you’ll find ways to be frugal with your spending like by meal planning, shopping at a discount grocery store, curbing spending on clothing and maybe even consolidating your other debts to a lower rate solution. All of this trimming you’re going to do will free up money you can put toward what really matters and makes you happy, which hopefully includes your new place.
This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.
