Can you cover the cost of home repairs without busting your budget?
Housing costs make up more than 30 percent of the average budget. That means about one third of your family income is used to ensure you have a roof over your head – covering everything from mortgage payments to insurance and HOA fees and even your home decorating budget. Unfortunately, a new study finds many Americans are unprepared when that head-covering roof starts to leak.
According to a new infographic from HomeServe USA, 25 percent of American households have no money set aside to cover the cost of emergency home repairs. Of those who do have savings, over half (52%) have less than $1,000 saved for these kinds of unexpected expenses. Unfortunately that may not be enough, depending on the type of emergency you might face. So while you’d easily be able to cover a leaky faucet repair that costs $97 to $330 on average, hiring someone to fix issues caused by ice damming could eat through your emergency fund with a high-end cost of over $1,300.
And when you consider the most common types of home repairs that consumers faced in the last year, it’s sadly often not the little things that usually end up breaking:
- Faulty heating or air conditioning system
- Blocked / overflowing toilets
- Blocked / overflowing sinks
- Leaking water
- Faulty electrical circuits
- Issues with water heater
Keep in mind that almost half of homeowners (48%) experienced some type of emergency in the past 12 months. So chances are fairly good you’ll be shelling out at least a few bucks on home repairs in the near future.
“One-off expenses like home repairs have a high tendency to lead to financial trouble if you aren’t prepared,” says Gary Herman, president of Consolidated Credit. “That’s why it’s so critical to have an emergency fund on hand in case something breaks. Otherwise, you wind up with more high-interest credit card debt you have to pay off.”
With essentially a 50/50 chance that you’ll have a home repair sometime in the next 12 months, it’s in your best interest to start an emergency fund. This is a set amount of money you leave in your savings account (so it doesn’t get spent in checking) that you can use if something breaks or you have an unexpected expense. At minimum, you should aim to have at least $1,000 in your fund – although more is better to cover bigger emergencies or those times when everything seems to break all at once.
“There’s solid wisdom behind the adage that you should save for a rainy day,” Herman encourages. “Otherwise, a rainy day can turn into a deluge when you end up paying interest charges on an expensive repair you had to put on a credit card.”
If unexpected emergencies are causing issues with your budget, we can help. Call Consolidated Credit today at 1-888-294-3130 or complete an online application to request a free, confidential debt and budget evaluation from a certified credit counselor.