This post is by staff writer Honey Smith.
In May, Jake and I bought a house and moved in. We've been loving it so far! People who have always lived in a place with decent structural integrity may not appreciate it, but considering the many problems with our previous rental, it feels like we live in a palace now.
At the time of my last post on homeownership, we had about $10,000 in liquid savings. Beefing up our emergency fund even more was on our list of priorities. I was hoping to start saving for that in earnest in 2015. However, a situation arose this weekend that will cause us to reprioritize our financial goals.
Air conditioner repair
On Saturday afternoon, I noticed it seemed a bit warm in the house. When I looked at the thermostat, it said 82. Since it was set at 77, something was obviously wrong. I went outside and looked at the drip spout that comes off of the roof, and there was no water dripping. I assumed this meant that our air conditioner had frozen.
Jake concurred that was a possibility. You're supposed to change the air filter every 3 months and we hadn't done it since moving in, so we were slightly past the date. In ordinary climates that's probably not that big a deal, but it was 108 that day. We turned the A/C to “off,” turned the fan on, and left the house to grocery shop and run errands so we didn't have to be home while we waited for the unit to defrost. Unfortunately, when we got home and turned everything on again, it wouldn't start up at all! So we called in a repair company to check it out.
The repair person got us up and running again sometime around 11 p.m., but we ended up paying about $1,000. However, it wasn't due to our lack of routine maintenance. The repair person recommended that, based on the unit's age, we should think about saving up for a replacement. The ballpark estimate, which was based purely on his look at our existing unit and the square footage of our home, was $7,000. Wowza! This was something that was already on our radar after our home inspection. Now “on our radar” has morphed into “our most important priority.”
The hope is to get the new unit during the winter, before next year's A/C season cranks up again. We are also hoping that a new unit will drive our electricity costs down in the future. We have double-paned windows and a brand new roof, but I can only imagine how inefficient our HVAC unit is at its age. And while a new air conditioner may not be one of the 10 easy ways to lower your electric bill, the part of me that loves spreadsheets can't wait to start crunching numbers after we get our new unit. In the short-term, however, this means that I will be cutting back on my aggressive student loan payments for the next few months as we set aside money for our new goal.
Other house projects
Now that we've lived in our house for awhile, we're starting to get a sense of other projects that need to be completed and how to prioritize all our goals. We can't afford to do everything at once! Here is a prioritized list for tasks that we either can't or don't want to DIY.
Replacing the A/C. First priority, anticipated timeline six months. Amount: $7,000 (just in case our midnight estimate was a little off).
Demolishing the shed. Second priority, anticipated timeline six months. There's a corroded metal shed in the backyard that isn't safe to use or really even be near, and we don't need it because everything fits in our garage. Amount: unknown, but this shouldn't be too expensive.
Resurfacing the back deck. Third priority, anticipated timeline between six months and one year. Amount: $3,500.
Installing solar panels. Fourth priority, anticipated timeline 18 months to two years. Amount: $10,000 out of pocket, according to other folks we know who've had this done.
There are also some rooms that won't be fully furnished for awhile, but we're in no hurry for a few reasons. First, it takes time to get a sense of what we really like and what will actually fit in the space. We also want to save up and buy nice things that we love. I think new furniture will probably end up between “resurfacing the back deck” and “installing solar panels” in terms of our prioritized list above.
Coming to terms with adjusting my goals
In the early part of the year, I was making extra payments of $300 per month toward my student loans. It was important to me to make extra payments, but I also wanted to save up to buy our house. Since moving into our new house, I've been making extra student loan payments of $500 per month. Additionally, I've also been making the regular payments. In all, I've been paying close to $1,000 a month!
I'm on a graduated repayment plan where the amount of the regular monthly payment goes up every two years. However, apparently the resets are not based on calendar years, but on payment years. What does this mean? Let's say the regular payment on the smaller balance is $100. (It's actually more; this is an example.) Two years' worth of payments at that rate is $2,400, so my rate would reset after two years or after paying $2,400, whichever comes first.
So not only have I been making larger extra payments recently, the amount of my regular payments has gone up as well. Additionally, more of my regular payments goes toward the balance as opposed to accumulated interest. So even though I plan to cut back on the extra payments for the time being, I'll still be making progress. And the sooner I reach my larger house-related goals, the sooner I can start making those satisfying big payments again.
One of the most challenging adjustments in all of this is allocating savings toward something I'm not all that excited about. I mean, by the time we got the A/C working again, I was pretty darn excited to start cooling our 97-degree house down. And of course having a crane putting things on our roof is just plain cool! But outside of that, it just seems like a lot of money.
How do you prioritize when you have several larger financial goals that take time to save for?