Gail Vaz-Oxlade, host of ‘Til Debt Do Us Part: Home Edition offers her tips on how to avoid being house poor – and what to do if you find your dream home has become a financial prison.

 

Many new homeowners rush to buy expensive kitchen appliances and then forget to use them. The average family can save hundreds of dollars a month just by cooking their meals at home. The money you save from actually using your fancy new stove can be used to pay down those appliances.

 

Upgrading to more space simply creates pressure to fill those rooms with brand-new furniture. You may be tempted to go for buy-now, pay-later plans, but don’t. The interest rates are usually sky-high and those companies start charging you interest the day you pick out the furniture, not when you start paying it off. You’ll be in your house for many years, so take your time to save up for new furniture. If you have opted for a buy-now, pay-later plan, switch to a lower interest rate, either through a credit card or a line of credit, and pay it off fast.

 

Heating and powering up your new home is way more costly than when you were living in an apartment or a condo. Take this into consideration when you calculate your new budget as a homeowner. It’s also a worthwhile investment to make your home energy efficient. The money you save on utilities will pay for the money you spent upgrading your furnace, water heater, insulation or windows.

 

There’s large-scale maintenance and small-scale maintenance associated with being a new homeowner. For large-scale items, such as roof repair, driveway upkeep, foundation repair, you should factor these expenses into your initial purchase of a home. Get a home inspection before you buy. If the inspector says you’ll need a new roof, take that expense off the purchase of your home. But even if you don’t need these major repairs right away you may need to pay for repairs down the line. Start an emergency savings account just for your major home repairs. This should be between 3% to 5% of the value of your home. You’re in no rush to build these savings, but you should put away as much as you can and start saving the day you close.

Small-scale items often catch new homeowners buy surprise too. Lawnmowers, snow shovels and home security are things you need right away. Factor these expenses into your closing costs as well.

 

Face it: you need to insure your home and its contents. You can control your insurance costs. Combine your home insurance with insurance policies you already have, like car insurance. Plus, you can raise your deductible. This will lower your monthly payments. You won’t get as much money if you make a claim, but if you have your emergency fund for large-scale repairs you won’t need as much money from the insurance company. So why pay more when you don’t have to?