How to mitigate against the rising cost of homeownership
By now, you’re probably intimately familiar with inflation, which has been at the highest rate since the 1970’s. And, it probably won’t come as a surprise that things related to homeownership are also more expensive. You’ve seen it in your bills, I’m sure.
But what can you do to ease some of the effects of the rising cost of homeownership? Here, I discuss a number of successful strategies in different categories that can be used to address the rising cost of homeownership.
Cost of repairs and home maintenance
Certain materials like lumber and steel are up considerably, driving the cost up for many repair-related items.
But this doesn’t mean that you shouldn’t address needed repairs. Quite the contrary. Not fixing an issue, such as a roof repair, can lead to even greater expenses.
Here are some strategies you can use:
- Don’t delay essential repairs and home maintenance, because doing a little now will save you a lot, potentially, later.
- Prioritize needs over wants. Focus on the most important repairs and do them in the order that’s most critical.
- Get more than one quote, preferably at least three. If you’ve ever done this, it is shocking how much different people and companies will charge for the same job. Last year, I had a door removed and drywalled over and the quotes were $6,000, $4,000…and $550. Guess which one I went with?
- Ask your contractor how you can reduce the cost of a job by doing some yourself. Can you prepare the site, do the painting, shop around for the materials? You can save a lot of money simply by doing the priming and painting yourself, for example.
- Learn how to do simple repairs yourself. Personally, I enjoy doing a number of home repairs. I stay away from anything electrical, though! Getting up to speed on caulking, and even sheet rocking can come in very handy. A number of years ago, I documented this recaulking of my tub, and I’ve caulked many a surface since.
Cost of homeowners insurance
Homeowners have seen huge jumps in the cost of their homeowners insurance. The reason homeowners insurance has gone up is due to the higher cost of replacing a home. My insurance increased by 20% this year (!), so I feel your pain if you are in the same boat.
In fact, rising homeowner insurance costs are outpacing the rate of inflation.
Never has there ever been a better time to shop around for insurance. This article and accompanying video tells you how.
Which makes it all the more important to shop around. Since homeowners insurance is expensive, reducing the cost of your policy can go a long way in addressing the rising cost of homeownership.
When you do, make sure that you are in touch with your mortgage company about what the minimum replacement value you need to have on your insurance is. Some companies offer bare bones policies that don’t meet the requirements of your mortgage company. For example, my mortgage company told me I had to have $1 million in home replacement cost insurance, whereas the insurance company was offering me a reduced policy with about $200,000 less than that in coverage. Also, they required that I have wind damage and hurricane protection with specific percentages.
You want to make sure that you have coverage for total home replacement and due to increasing costs, this is a moving target. So it’s a good idea to review your homeowners insurance every year in general.
Cost of energy
Energy costs are up in some places by 30%. But there are ways to make sure that you don’t have runaway costs. For example, you can have an energy audit done, which is often covered in full by state government programs. This will help you identify where energy is being wasted.
You can also look at strategic upgrades, so that if you have any major systems that need to be replaced, that you can get an alternative that saves you more money.
Make sure your windows and doors are sealed properly. It literally cost me less than $30 to seal my front door, for example, which was a major source of heat loss due to its antique age, which you can read about here.
Google “[your state] energy rebates” and see what rebates are available in your state. In NY State for example, they were offering a 50% rebate on switching to electric heat from gas last year, until the rebate ran out. So if you switched out your boiler and it cost $10,000 normally, you’d save a whopping $5,000. Not bad, if a boiler is something you’d be scheduled soon to replace anyway!
More and more people are looking into solar as prices rise. Make sure you do a thorough ROI before committing. Here’s a guide for what to look for.
Solar panels are also getting a lot more attractive. I saw these in Massachusetts near the beach this summer. Quite sleek!
Cost of property tax
Property tax is perhaps the most irksome of all the costs, as you feel powerless as a homeowner, and it just seems to go up and up.
Once my property tax jumped $3000 in one year, while my house appreciation stayed flat. It can be really frustrating. Here’s an article on ways to appeal or contest property tax increases that’s very much worth pursuing.
Be extra aware of your bills to mitigate the rising cost of homeownership
You may be able to find more places to save if you really look through your household bills regularly and brainstorm areas where you can trim back.