Planning for expenses Related to Houses and Children
Property taxes and insurance premiums on your house can rise with virtually no notice, but when people are figuring out how much they can afford for a mortgage, they rarely think about those expenses. And babies — well, they always cost a lot more than you think they will.
There are many joys in home ownership, and there are lots of expenses, too. Beyond the regular maintenance required, you should plan ahead for major repairs, renovations, and higher tax and insurance costs:
✓ Structural issues: Will you need a new roof, new eaves, or a new gutter system in the next five years? How old are the plumbing and wiring? How long can you reasonably expect the furnace to last? Do the windows need to be replaced?
✓ Renovations: If you add a family room, a garage, a screened-in porch, or any enclosed space, your property taxes and insurance premiums may go up;check it out when you’re planning these kinds of projects so you don’t get blindsided.
✓ Insurance rates: After Hurricane Katrina hit the Gulf Coast in 2005, the cost of lumber and other construction goods skyrocketed, and that increase translated into higher home-insurance premiums across the country. If you pay your home owner’s insurance through an escrow account, your monthly mortgage payment will go up to reflect higher insurance premiums. If you pay the insurance separately, you’ll have to come up with the extra cash whenever you pay your premium.
✓ Tax rates: Local governments nationwide are just as strapped for cash as individuals, and the only way they can get more is to raise taxes. Your tax bill also may rise as the value of your home increases. Either way, you’ll pay more on a monthly basis if you have an escrow account through your mortgage company, or you’ll have to come up with the extra cash when your tax bill arrives.Many states have programs that lower your property-tax bill, such as exemptions for veterans and seniors. Check with your local government the town or city clerk’s office is a good place to start to see if your area has any programs like this and how you can qualify for them.
For such small creatures, children sure use up a lot of resources. Diapers, formula, strollers, car seats, toys, clothes, and accessories are only the beginning; there are also doctor visits and day care, birthday parties and play dates, swimming lessons and music lessons and soccer practice and drama rehearsal and the college savings fund. There’s no way to anticipate every expense you’ll encounter on your child’s behalf; all you can really do is brace yourself for the unexpected. How? Try setting up a separate savings account specifically for child expenses. That way, when these unexpected bills come up, you won’t have to scramble to rearrange your budget.