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How Much Should You Save For New Home Expenses?

By on October 11, 2011

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So you want to buy your first home.  (Exciting!)  You start saving for a down payment.  (Smart thinking.)  You begin your house hunt and find your dream house. (Yay!)  You put an offer in and it’s accepted.  (Congrats, home owner!)

Moving day comes and you haul the furnishings from your small, one-bedroom apartment to your new house.

You look around and realize you’ll probably need to buy living room furniture, a kitchen table, outdoor furnishings, possibly office and guest room furniture, new TVs, new decorations, and more.  Oh, and you’ll need a lawn mower.  And maybe kitchen appliances.  And definitely a gas grill.

That’s a lot of stuff.  And then it hits you: You probably should have saved for these things before you bought your house.

I’ve always been a big advocate of saving a New Home Expense Fund prior to buying your first home, but I’ve never really discussed just how much you should save.  Samantha asked me in a comment last week:

Samantha New Home Comment

I don’t really share actual dollar amounts on my blog anymore (since I go by my real name and all), but I will tell you that we did save a substantial amount for new home expenses prior to saving for our down payment fund.

I don’t think there are any percentage guidelines out there, so, based on the estimates we used, you might consider saving anywhere from 3% to 5% of what you expect to pay for your house – especially if you’re upgrading substantially in size.

But if you don’t like using percentages, you could even create a mock budget.  You probably already know many of the new things you’ll need (a new L-shaped couch is on our list and we know that will cost ~$1,500).  You can also scour the web to research the amounts other people have spent on new home furnishings (this recent post at Young House Love was helpful to us since they bought all new kitchen appliances).

Our new home expense fund is much smaller than our down payment savings, which is why we knocked it out first.  In fact, we probably saved too much (especially now that we don’t have to drop $1-$2k on a new king mattress).

But, having too much saved is never a bad thing and it removes a GREAT deal of stress from the home-buying process.  Going furniture and décor shopping it going to be SO much more fun knowing that we have the money ready to spend (and we’re not relying on credit cards!).

Thanks for your comment, Samantha!  I hope that helped!

Did you save for new home expenses when you bought a house?  Or do you plan to save for these items before you buy a house?

Categories: Buying Our First Home, Dollars, House, Planning20 Comments

Buying Our First Home: Starting A Decorating Inspiration Folder

By on August 8, 2011

buying our first home series image2

Long before G and I started saving for a down payment on our home, we saved a pretty sizable New Home Expense Fund.  It was really G’s idea to save for that prior to a down payment and it really worked out for the better.  Had we saved our down payment first, we would have been tempted to buy a house without saving anything to furnish, decorate and maintain the house.

We’re still saving for our down payment, but we have met our savings goal for our New Home Expense Fund.

Since we’re skipping the starter house, our first house will be pretty big.  Much bigger than the 2 bedroom apartment we’re used to.  We’ll have to spend a ton of moolah to furnish and decorate the new pad.

The biggest items we’ll need to purchase are:

  • master bedroom furniture (yay, king bed)
  • living room furniture
  • dining room furniture
  • patio furniture
  • many, many decorations*
  • house maintenance stuff (lawn mower, outdoor stuff)
  • a grill!
  • possibly kitchen appliances (if they don’t come with the house or need replacing)

*I say many, many decorations because I haven’t decorated in years.  Our wall hangings are the same ones we had in college and the ones I bought when I moved out on my own almost 6 years ago.  So … we’ll need to decorate and I’m pumped about that!

As you can see, that’s a lot of stuff.  I am so proud of G and myself for saving for expenses like these before our down payment.  It will be a lot of fun to go shopping for furniture without worrying about accumulating any debt in the process.  Financial freedom win.

Since we’ll have so much to buy for our new casa, I’m planning to start an inspiration folder.  After years of planning and saving, I want our house to look really nice and reflect our personalities.  I’ve already started perusing home design blogs.  Here are my current favorites:

madebygirlblog censationalgirlblog 

younghouseloveblog

(I so obsessed with home design blogs right now, I’m even thinking about starting one when we buy a house.  Crazy, I know.  Especially since I am FAR from a designer.)

There are two reasons I want to start looking for design ideas right now:

1. Since I have no design experience, I have a feeling putting together a nice home is going to be a lot of work for me.  Gotta start early.

2. I look at pictures of homes for sale almost every day now.  Probably 80% of those houses showcase horrible interior design.  Like, it’s time to step out of the ‘80s, people.  I really don’t want my house to look out-dated, uncomfortable, or embarrassing.

So, that’s where we’re at in home-shopping/buying process right now!  We’re planning to get out and REALLY look at houses in December!  Only 3 more months!

Where do you get home design inspiration?  Blogs, magazines, websites, etc…

Categories: Buying Our First Home, Design, House18 Comments

Buying Our First Home: How To Save Money For A House

By on July 11, 2011

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In my last post in the Buying Our First Home series, I mentioned that G and I are saving 50% or more of our income for our future first house.  A reader e-mailed me and asked me how to save money for a house, so I thought I’d fill you in on how G and I got to a place where we can put 50% of our income into our house savings.

First things first, there are some major reasons why we are able to save so much of our income:

  • We opened up an Ally Bank Online Savings account.  Having an online savings account helps us from spending that money and online savings accounts offer better interest rates than most offline accounts.
  • We became debt-free a couple years ago, paying off about $60,000 in debt (mostly student loans, a car loan, and a minimal amount of credit card debt)
  • Although, I have been a victim of some sort of lifestyle inflation since I became debt-free (mostly in the form of freer spending), we still live quite modestly.  Our fixed monthly expenses (rent, phones, utilities, gym membership) account for less than 15% of our take-home pay.  It definitely helps that I’m not a fashionista and I’m not into many expensive habits. :)
  • After being in the corporate business world for 6 years (both of us), our income is more than double what it was when we were entry-level.  Had we tried to buy a house right out of college, it would not have been pretty.

As I mentioned above, I have fallen victim to a bit of lifestyle inflation since I became debt-free.  I haven’t started spending like a mad woman though, as evidenced by my still-debt-free status and my ability to save a good chunk of money each month.  But I have noticed that I shop at more expensive grocery stores because they’re more convenient, I don’t bother myself with looking for deals on groceries as much (which is GOING to change), and I’ve become much more generous in gift-giving (still working on increasing my charitable donations, though).  The gift-giving thing is FUN.  My younger brother is still in college, and it makes me all giddy to send him a $25 Visa gift card during finals.  I also love giving more expensive shower and wedding gifts now that I’m debt-free.  So, although I still consider it lifestyle inflation, it’s good lifestyle inflation.

Still, although I’m spending more on some things, many of my old frugality habits still remain:

  • I hardly ever shop for clothes.  I went shopping for some new clothes for our honeymoon and afterwards I felt torn between wanting to buy more and feeling guilty for spending money on clothes.  Luckily, I didn’t have a chance to shop again after that since the wedding madness immediately followed.
  • I don’t have any expensive habits or hobbies.  If anything, this blog is my most costly habit, but it also generates a small amount of income.  Plus, it brings me a great deal of happiness, so I’d probably blog no matter how much it cost me.  My other hobbies are free or fixed expenses:  I can get books from the library, I can run outside or at the gym, I can visit with friend for free (or at the pool!), and so on.  I know some people have regular hobbies or interests that cost quite a lot, so I’m happy I’m interested in things that don’t cost much.
  • On that note, sometimes I think you have to learn to like things that don’t cost much.  Or, put another way, discover some new interests that don’t cost much or are free (especially if you’re trying to pay off debt!).
  • As Gretchen Rubin puts it in the Money chapter of The Happiness Project, I’m an under-buyer.  I hate buying things with one use or that I can use another item for (like her, I HATE buying Kleenexes!  Hellooo, toilet paper accomplishes the SAME thing).  Although I always feel like I’m missing something at home, I don’t buy a lot of useless things or one-use items.
  • As far as entertainment goes, G and I don’t go to movies anymore.  We got sick of paying so much – movie prices are rising like crazy!  We’ve limited ourselves to one or two per year.  The last time we saw a movie was around Christmas.  Now we Netflix everything.
  • Overall, the only “extras” we spend money on are eating out and that’s definitely our biggest budget buster.

Since we combined finances (right after we returned from our honeymoon), we’ve been extra sensitive to spending, too.  Not only are we figuring out each other’s spending habits, we’re also really trying to pinch pennies even more since we’re going to seriously start house-hunting in the fall.

How do you save money for a home? is a very personal question that varies with every situation.  For us, becoming debt-free and minimizing our “extra” expenses as much as possible has been extremely helpful.

How do you save money for major expenses, like a home, a vacation or a car?

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P.S. Your comments on Friday’s post — How Do YOU Define Balance? — were amazing!  They were so helpful to me and I can’t wait to use them for inspiration in the future!  If you haven’t commented yet, please check out the post here!

Categories: Buying Our First Home, Dollars, House, Saving17 Comments