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You Are Wasting Money and You Don't Even Know It: Houses

Wasting money is easy to do, but sometimes we waste money and we don’t even know that we do it.  Todays topic is houses.  Because houses are most people’s biggest and most expensive asset, this one can really cost you.  Here are some of the ways you can waste money on your house and not even realize it:

  1. Not taking advantage of low interest rates: Many of you listening were alive in the 1980s, and can remember thinking, “if I could only get my parents interest rate, we could afford a much better house.”  Did you ever think you would see interest rates below 4%? Even 3%?  Probably not.  However, they are still here, but probably not for much longer.  We just refinanced our house at 3.375%, and over the life of the mortgage this will save us tens of thousands of dollars.  If you currently have a mortgage that is over 4.5%, you really need to look at refinancing, now.  We may or may not see money this cheap ever gain in our lifetime, so jump on these rates while they are still here!
  2. Homeowner’s Insurance: Not that long ago in Florida, through a series of blunders in Tallahassee by our former Governor, many people were forced into using Citizens insurance, which is the state-run insurance that is by law the most expensive insurance you can buy.  However, this is no longer the case.  The market for homeowners insurance in Florida has really opened back up, with several more providers coming back into the market.  Take a few minutes to contact an independent insurance agent and review your policy.  You might be surprised how much money you can save in just a few minutes. 
  3. Regular house maintenance:  Some people are guilty of ignoring small maintenance items around their house because they cost a little money or they are too much trouble to deal with.  However, routine maintenance on your home can save you big money down the road by avoiding big failures in the future.  For instance, routine maintenance on your heating and cooling system can extend the life of your equipment, delaying a big out of pocket cost to replace your system by several years.  Regular tree trimming can avoid future roof damage from large limbs falling on your house during storms.  Cleaning and maintaining pool equipment can keep your pump running more efficiently and extending its life.  Regularly painting your house can help prevent water intrusion and wood rot.  These small things don’t take a lot of time, but can save you hundreds or even thousands of dollars. 
  4. Doing small repairs by yourself: Many household repairs are actually pretty simple if you are handy.  Youtube has videos to show you how to do just about anything these days. For instance, if your water heater stops heating but isn’t leaking, it might be your heating element.  A heating element can be purchased for about $20 and takes 10-20 minutes to replace, where a new water heater can cost $500 and take 4-5 hours to replace. 
  5. Buying all of your big-ticket items with an American Express card: I can’t tell you how much money this one has saved me in the last two years.  We had lightning strike near our house a while back that came into our house, frying three of our televisions.  Luckily, two of those had been purchased in the last two years. They only had one year warranties, but because I had purchased them on an American Express card, the warranty was extended by an extra year, and I got both TVs replaced for free. 
  6. Ineffective insulation: If your house is drafty or not well insulated, you could be paying hundreds of extra dollars per year to heat and cool your home.  The most obvious places that this happens are windows and doors, attics, and beneath your house if it is built off-grade.  Make sure your windows doors are well insulated and sealed, your attic insulation is efficient, and you have the proper insulation beneath your house.
  7. Owning a house that is larger than you need: This one is a very personal decision, because people buy different homes for different reasons.  However, a big house can cost you money in so many ways that you have probably not even thought about.  From the big mortgage payment, to the higher tax bill, to the extra heating and cooling costs, to the added maintenance, the bigger the house, the more expensive it is.  Buy what you need, but don’t splurge just because you can.  In reality, you will probably only end up using a small percentage of the house you buy to actually live in, and the rest will just be a really expensive storage unit.