With just a few smart decisions, you can save money now and get more out of your investment later. Here are five essential New Year’s resolutions for home owners.
1. START AN EMERGENCY FUND
Home ownership has a funny way of costing more than you think. An emergency savings fund provides a financial safety net, and the new year is the perfect reason to start one.
Remember, if the furnace quits on a cold night, there’s no landlord to call. Laid off unexpectedly or surprised by major car repairs? Mortgage payments are still expected on time and in full. Without an emergency fund, these expenses could force you into credit card debt or worse.
Ideally, your emergency fund should cover several months of expenses, but it’s OK to start small. Set aside a portion of every pay cheque with the goal of saving $500 as quickly as possible, and then contribute as much as you can moving forward.
2. TAKE A CLOSER LOOK AT YOUR HOME OWNER’S INSURANCE
Just because a standard home owner’s insurance policy satisfied your lender doesn’t mean you’re adequately covered.
Home owner’s insurance isn’t one-size-fits-all. There are unique coverage options and, more importantly, ‘exclusions’ that home owners need to be aware of. Does your policy cover the full cost of your jewelry or other valuables? Are disasters like earthquakes and floods excluded? Will the policy pay if your dog bites the new mailman? Spend a few minutes reviewing your coverage and exclusions, and ask questions so you understand your policy.
3. GET AN ENERGY EFFICIENCY AUDIT
Heating, cooling and powering a home isn’t cheap. Why be uncomfortable or spend more because your house wastes energy? After the dust settles, you may notice more about your home, particularly if you bought new construction. Maybe the air smells funny or one bedroom is colder than the others. Energy audits measure air leaks and detect air infiltration or missing
insulation. Audits are performed by utility companies, city governments and some contractors. An energy audit is an inexpensive way to get real information about your house. They’ll tell you which fixes will deliver the best bang for your buck. In addition to lowering your utility bills and making you more comfortable, a more efficient home may end up putting free money in your pocket, thanks to local, provincial and federal rebates.
4. CREATE A DISASTER KIT WITH A HOME INVENTORY
Your new home is your castle, but it’s not indestructible. A disaster kit that includes financial documents and a home inventory will speed up recovery if the unthinkable happens. A home inventory can be as simple as snapping pictures of big-ticket items in your home, or you could record items, brands, original prices, ages and condition in a spreadsheet. No matter which method you choose, a home inventory is the best way to make sure you have enough insurance coverage to replace your valuables. Store the inventory, along with copies of your personal identification, credit card information, vehicle records and other important documents, in a fireproof safe or another place that’s easily accessible if you have to evacuate.
5. MAKE A PLAN TO BUILD EQUITY
Unless you bought your home with cash, it will be many years until you own it outright. Make plans now to build equity faster so you can unlock more benefits of home ownership even sooner. Equity is a fancy word for “how much of your house is paid off”. Home equity is a valuable asset; accrue enough and you can use it to finance major renovations or pay off student loans. You can build equity slowly just by making your monthly mortgage payments, or you can find ways to speed up the process. For example, switching to biweekly payments can get you “equity rich” even faster.
Need a plan? Give me a call today!