Couple in their sixties overspending by $30,000 a year

[kfire20]

http://goo.gl/bPAkEr

Eg., $1,755.00 per month in car fuel, repairs and loan.

[Cassie]

Lots of very easy places to cut. Who spends 1K /month on house maintenance? 

[horsepoor]

Holy shit, getting a $755 a month car loan in your sixties!?!?!?!

[ambimammular]

And it looks like they left the fox watching the hen house.
2.5% in management fees, plus an annual fee. Damn.

[BlueMR2]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

Heh.  I have a small house and I spent $600/mo average last year on house maintenance.  I've not yet tackled the crumbling driveway, crumbling siding, nor the old roof yet either.  I can see $1k a month pretty easy on those typical suburban homes that are 3x the size of mine.  I'm just hoping I can get the monthly average down eventually, but every time I turn around there's some new ridiculous expense looming.

[TheGrimSqueaker]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

Heh.  I have a small house and I spent $600/mo average last year on house maintenance.  I've not yet tackled the crumbling driveway, crumbling siding, nor the old roof yet either.  I can see $1k a month pretty easy on those typical suburban homes that are 3x the size of mine.  I'm just hoping I can get the monthly average down eventually, but every time I turn around there's some new ridiculous expense looming.

$1k a month makes for $12k per year, which depending on your region and materials might work out to:
- One new roof (every 25 years)
- One new fence, some trees, an occasional major project such as a dead tree removal, and some sod or landscaping rock (every 25 years)
- A new driveway (every 25 years)
- Replacement siding (every 25 years)
- One new set of appliances (fridge, washer, dryer, dishwasher, oven, furnace, A/C, microwave, deep freeze, water softener, sump pump, thermostat) every 25 years
- One new set of screen windows, a sliding glass door or replacement window, and a screen door (every 7-8 years)
- Enough paint and wallpaper to completely refinish the interior of the house (every 10 years)
- Flooring (every 25 years; some things such as carpet may wear out more quickly)
- Cabinetry in a kitchen or bathroom (one of these every 5-10 years)
- Major electrical upgrade (every 25 years)
- Major plumbing rework (every 25 years or when something breaks)
- Re-insulate the house two to three times within 25 years)
- One year at $12k pays for 25 years of maintenance related to flooring: cleaning supplies, sanding, refinishing, recaulking tile, shampooing carpets, etc.
- New rain gutters, catchment system, and underground sprinkler system (every 25 years)
- New plumbing hardware including toilets, sinks, faucets, drains, hoses, pipes, and water lines for A/C (every 25 years)
- One year at $12k easily pays for 25 years of plumbing maintenance and emergencies, including flapper valves, floats, drain snaking, line cleanout, clog removal, rescuing your wedding ring from the U-bend, regular septic tank and cistern service if that's how you roll
- Interior doors, trim, and edging (every 25 years)
- New garage door and/or opener, exterior doors, exterior trim (every 25 years)
- 25 years' worth of house and yard care and cleaning supplies, ranging from water softening crystals to yard fertilizer to Windex
- 25 years of "nice-to-haves" such as wiring for sound, intercom systems, security systems with their associated connectivity and monitoring fees
- Solar panels, anyone?
- 25 years of garden supplies including materials to build a raised bed system and/or greenhouse

Oops, I went over $12k per year over a 25-year span. That wasn't hard.

There's probably a bunch of stuff I've forgotten but this is just off the top of my head. For some items I've guessed high, but for some I most likely guessed low. A lot depends on whether you want to pay less for something but then re-purchase it sooner when it wears out, or buy something just once and never purchase it again.

Moving into a new or nearly-new house, doing diddly-squat to maintain it, and gradually wearing the house out to the point where it requires major upgrades or repairs to make it sell is penny-wise but pound-foolish. Real estate requires maintenance.

[StockBeard]

Moving into a new or nearly-new house, doing diddly-squat to maintain it, and gradually wearing the house out to the point where it requires major upgrades or repairs to make it sell is penny-wise but pound-foolish. Real estate requires maintenance.

One more data point confirming that renting might be the cheaper way out...

[Cassie]

WE have owned homes our entire lives and never spent anywhere near that amount to maintain or fix a home on a monthly basis. we have bought fixer uppers and totally re-did them and bought new homes and kept them up.  I think I read that you should plan to budget 1% of your home value yearly to pay for maintenance.  Yes some years you will drop a bundle but other years you won't.

[soupcxan]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

How do you cut this? If your HVAC breaks, you have to get it fixed. If your roof is leaking, you have to get it fixed. If your hot water heat breaks...etc... It's easy to rack up several thousand dollars in home maintenance if you hit a string of bad luck with HVAC, plumbing, roof, and so on.

[MgoSam]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

How do you cut this? If your HVAC breaks, you have to get it fixed. If your roof is leaking, you have to get it fixed. If your hot water heat breaks...etc... It's easy to rack up several thousand dollars in home maintenance if you hit a string of bad luck with HVAC, plumbing, roof, and so on.

I absolutely agree, but will say that unless they are hosting family every weekend, it may be worth looking into downsizing or moving into an apartment. I've broached the topic with my parents because they live in a huge ass house that is mostly empty now that only my parents are living there. My parents don't want to downsize, which is ok, it's their decision and they have the money, but for a couple  that is living beyond their means while working, I shudder to think about their post-retirement fiances.

[Clean Shaven]

.  I think I read that you should plan to budget 1% of your home value yearly to pay for maintenance.

I've read this too, but it doesn't make sense, because real estate pricing varies so much depending on where you are. A $1 million home in California might be 1000 square feet, but in Alabama that same home might be $50,000.  Is maintenance going to be $10,000 in CA but only $500 in AL?

[MgoSam]

.  I think I read that you should plan to budget 1% of your home value yearly to pay for maintenance.

I've read this too, but it doesn't make sense, because real estate pricing varies so much depending on where you are. A $1 million home in California might be 1000 square feet, but in Alabama that same home might be $50,000.  Is maintenance going to be $10,000 in CA but only $500 in AL?

That's a good question, I've read the 1% rule as more of a guideline than a rule. But to answer your hypothetical, generally places that have high housing costs also have higher labor costs so maybe it would be appropriate. Then again, labor in California can be cheap with the influx of immigration, so I don't know.

[I'm a red panda]

Holy shit, getting a $755 a month car loan in your sixties!?!?!?!

What does age have to do with car loan size?

[horsepoor]

Holy shit, getting a $755 a month car loan in your sixties!?!?!?!

What does age have to do with car loan size?

It's an insane amount for anyone, but one should be  have the capital to buy what they want at that age, and especially when planning to retire. 

[Jack]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

How do you cut this? If your HVAC breaks, you have to get it fixed. If your roof is leaking, you have to get it fixed. If your hot water heat breaks...etc... It's easy to rack up several thousand dollars in home maintenance if you hit a string of bad luck with HVAC, plumbing, roof, and so on.

You cut it by learning to fix your HVAC yourself, and then eventually replacing it with a more reliable system. Or by patching your roof  yourself, and then eventually replacing it with a more durable one. Or by actually replacing the sacrificial anode in your water heater (which hardly anybody does) so that it lasts longer before breaking.

Or by moving to a smaller house that has a smaller (which correlates with cheaper) HVAC system, roof and water heater in the first place.

[Cassie]

My point was we have lived in big houses and small ones and never spent close to 1k/month in home repairs most years. Yes sometimes you have a big repair that comes out to that but not every year.  Sometimes we fixed things ourselves and sometimes we hired out. But it does not cost 12K every year to maintain a house. If it does then obviously you can't afford that house.  Before we retired we did big things like paint our house, roof, remodel, landscaped etc because we bought a foreclosure cheap and it was a dump.  So the first 2 years we spent 55K getting everything done so the home is perfect.  Now going on year 5 there is nothing left to do but sit back for a lot of years and enjoy.

[aFrugalFather]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

Heh.  I have a small house and I spent $600/mo average last year on house maintenance.  I've not yet tackled the crumbling driveway, crumbling siding, nor the old roof yet either.  I can see $1k a month pretty easy on those typical suburban homes that are 3x the size of mine.  I'm just hoping I can get the monthly average down eventually, but every time I turn around there's some new ridiculous expense looming.

$1k a month makes for $12k per year, which depending on your region and materials might work out to:
- One new roof (every 25 years)
- One new fence, some trees, an occasional major project such as a dead tree removal, and some sod or landscaping rock (every 25 years)
- A new driveway (every 25 years)
- Replacement siding (every 25 years)
- One new set of appliances (fridge, washer, dryer, dishwasher, oven, furnace, A/C, microwave, deep freeze, water softener, sump pump, thermostat) every 25 years
- One new set of screen windows, a sliding glass door or replacement window, and a screen door (every 7-8 years)
- Enough paint and wallpaper to completely refinish the interior of the house (every 10 years)
- Flooring (every 25 years; some things such as carpet may wear out more quickly)
- Cabinetry in a kitchen or bathroom (one of these every 5-10 years)
- Major electrical upgrade (every 25 years)
- Major plumbing rework (every 25 years or when something breaks)
- Re-insulate the house two to three times within 25 years)
- One year at $12k pays for 25 years of maintenance related to flooring: cleaning supplies, sanding, refinishing, recaulking tile, shampooing carpets, etc.
- New rain gutters, catchment system, and underground sprinkler system (every 25 years)
- New plumbing hardware including toilets, sinks, faucets, drains, hoses, pipes, and water lines for A/C (every 25 years)
- One year at $12k easily pays for 25 years of plumbing maintenance and emergencies, including flapper valves, floats, drain snaking, line cleanout, clog removal, rescuing your wedding ring from the U-bend, regular septic tank and cistern service if that's how you roll
- Interior doors, trim, and edging (every 25 years)
- New garage door and/or opener, exterior doors, exterior trim (every 25 years)
- 25 years' worth of house and yard care and cleaning supplies, ranging from water softening crystals to yard fertilizer to Windex
- 25 years of "nice-to-haves" such as wiring for sound, intercom systems, security systems with their associated connectivity and monitoring fees
- Solar panels, anyone?
- 25 years of garden supplies including materials to build a raised bed system and/or greenhouse

Oops, I went over $12k per year over a 25-year span. That wasn't hard.

There's probably a bunch of stuff I've forgotten but this is just off the top of my head. For some items I've guessed high, but for some I most likely guessed low. A lot depends on whether you want to pay less for something but then re-purchase it sooner when it wears out, or buy something just once and never purchase it again.

Moving into a new or nearly-new house, doing diddly-squat to maintain it, and gradually wearing the house out to the point where it requires major upgrades or repairs to make it sell is penny-wise but pound-foolish. Real estate requires maintenance.

I'm a new house homeowner but I'm not sure what maintenance is really required.  You mention how this is important but none of the items seems preventative?  Everything in your list above seems to be repairs when something breaks, not sure what preventive maintenance really needs to be done, the only thing we've done here is cleaned the gutters. 

[Scandium]

My point was we have lived in big houses and small ones and never spent close to 1k/month in home repairs most years. Yes sometimes you have a big repair that comes out to that but not every year.  Sometimes we fixed things ourselves and sometimes we hired out. But it does not cost 12K every year to maintain a house. If it does then obviously you can't afford that house.  Before we retired we did big things like paint our house, roof, remodel, landscaped etc because we bought a foreclosure cheap and it was a dump.  So the first 2 years we spent 55K getting everything done so the home is perfect.  Now going on year 5 there is nothing left to do but sit back for a lot of years and enjoy.

From my experience $1,000/month does seem like a lot. Even with all the things on Squeker's list. We did hardwood floors on 1/2 our (fairly large, 2100sqft) house and it was $8k. New HVAC and furnace the year before was the almost as much. So not even these two major things got us to $1k/month over those years. Oh, we did a fence install; $2500, fridge $1400. Roof and siding could be a lot, but even with that I find hard to think will average to $12,000/year. Redoing kitchen or bathrooms can obviously run you $30k+ if you go nuts, but not sure I'd call that "maintenance"

[Jack]

Half the stuff on Squeaker's list is either unnecessary to begin with or wildly pessimistic in terms of replacement intervals. For example, kitchen/bathroom cabinetry, interior doors and trim, exterior doors and trim, siding, insulation and windows all have a replacement schedule of "never" unless they're (a) substandard to begin with, (b) not maintained properly, or (c) become functionally obsolete, and the latter condition doesn't happen nearly as much as Squeaker implies.

[TheGrimSqueaker]

Half the stuff on Squeaker's list is either unnecessary to begin with or wildly pessimistic in terms of replacement intervals. For example, kitchen/bathroom cabinetry, interior doors and trim, exterior doors and trim, siding, insulation and windows all have a replacement schedule of "never" unless they're (a) substandard to begin with, (b) not maintained properly, or (c) become functionally obsolete, and the latter condition doesn't happen nearly as much as Squeaker implies.

Until you try to sell the house. Residential real estate doesn't automatically appreciate or hold its value anymore, especially when there's such a glut of it on the market. Everyone selling a pre-owned home has to compete not only with the new properties being built but with other homeowners who have made ongoing purchases to maintain or upgrade the property.

A warped door or a window that doesn't open or close, or a DIY plumbing or electrical job that doesn't meet code is fine if you're living in a house, but when you try to sell it the home inspector comes back with a list of dozens of things that have to be fixed on a deadline, or the sale falls through. Also, when it comes to plumbing and electrical work most homeowners who don't work in the building trades can't DIY well enough to meet building codes or pass an inspection. There's a learning curve, and it's not cheap or free to acquire the knowledge and skills necessary to ensure a repair job doesn't have to be undone and then redone properly in order to pass an inspection. If all the homeowner is doing is working on their own house, the time/money cost of learning how to do the work has to be factored into the price of getting the work done.

The vast majority of appliances, sinks, plumbing fixtures, and flooring used in new homes built after the 1980's are in fact substandard and designed to wear out. Modern home manufacturers are notorious for using flimsy construction techniques and the cheapest possible materials and labor, especially on small houses that get marketed as "starter" homes. For example, I've got two enamel-coated bathroom sinks that have rusted through after less than 20 years of daily use despite careful cleaning and maintenance. Why? Because the enamel was so darn thin that water was able to get to the metal part of the sink, which rusted.

[Dicey]

One more data point confirming that renting might be the cheaper way out...

Wow! I knew someone would say that, but that was fast! Label the same expenses "Landlord" and you'll understand soaring rents...

As an owner, your fixed rate mortgage remains constant, you get to choose all your finishes and the timing of your upkeep and improvements, and you only have to consult your budget for "permission". You can also minimize these expenses by improving your DIY skills and practicing routine maintenance, as GS points out. But, hey, I'm a homeowner and a landlord, so y'all keep on renting, please. I also like to buy poorly maintained houses for well below market prices...

[JLee]

Lots of very easy places to cut. Who spends 1K /month on house maintenance?

Heh.  I have a small house and I spent $600/mo average last year on house maintenance.  I've not yet tackled the crumbling driveway, crumbling siding, nor the old roof yet either.  I can see $1k a month pretty easy on those typical suburban homes that are 3x the size of mine.  I'm just hoping I can get the monthly average down eventually, but every time I turn around there's some new ridiculous expense looming.

$1k a month makes for $12k per year, which depending on your region and materials might work out to:
- One new roof (every 25 years)
- One new fence, some trees, an occasional major project such as a dead tree removal, and some sod or landscaping rock (every 25 years)
- A new driveway (every 25 years)
- Replacement siding (every 25 years)
- One new set of appliances (fridge, washer, dryer, dishwasher, oven, furnace, A/C, microwave, deep freeze, water softener, sump pump, thermostat) every 25 years
- One new set of screen windows, a sliding glass door or replacement window, and a screen door (every 7-8 years)
- Enough paint and wallpaper to completely refinish the interior of the house (every 10 years)
- Flooring (every 25 years; some things such as carpet may wear out more quickly)
- Cabinetry in a kitchen or bathroom (one of these every 5-10 years)
- Major electrical upgrade (every 25 years)
- Major plumbing rework (every 25 years or when something breaks)
- Re-insulate the house two to three times within 25 years)
- One year at $12k pays for 25 years of maintenance related to flooring: cleaning supplies, sanding, refinishing, recaulking tile, shampooing carpets, etc.
- New rain gutters, catchment system, and underground sprinkler system (every 25 years)
- New plumbing hardware including toilets, sinks, faucets, drains, hoses, pipes, and water lines for A/C (every 25 years)
- One year at $12k easily pays for 25 years of plumbing maintenance and emergencies, including flapper valves, floats, drain snaking, line cleanout, clog removal, rescuing your wedding ring from the U-bend, regular septic tank and cistern service if that's how you roll
- Interior doors, trim, and edging (every 25 years)
- New garage door and/or opener, exterior doors, exterior trim (every 25 years)
- 25 years' worth of house and yard care and cleaning supplies, ranging from water softening crystals to yard fertilizer to Windex
- 25 years of "nice-to-haves" such as wiring for sound, intercom systems, security systems with their associated connectivity and monitoring fees
- Solar panels, anyone?
- 25 years of garden supplies including materials to build a raised bed system and/or greenhouse

Oops, I went over $12k per year over a 25-year span. That wasn't hard.

There's probably a bunch of stuff I've forgotten but this is just off the top of my head. For some items I've guessed high, but for some I most likely guessed low. A lot depends on whether you want to pay less for something but then re-purchase it sooner when it wears out, or buy something just once and never purchase it again.

Moving into a new or nearly-new house, doing diddly-squat to maintain it, and gradually wearing the house out to the point where it requires major upgrades or repairs to make it sell is penny-wise but pound-foolish. Real estate requires maintenance.

Who actually does that...? That's insane.

[Jack]

A warped door or a window that doesn't open or close, or a DIY plumbing or electrical job that doesn't meet code is fine if you're living in a house

Who said anything about stuff that doesn't work or doesn't meet code? Clearly, that stuff would fall under the "substandard to begin with" or "not maintained properly" exceptions.

The vast majority of appliances, sinks, plumbing fixtures, and flooring used in new homes built after the 1980's are in fact substandard and designed to wear out. Modern home manufacturers are notorious for using flimsy construction techniques and the cheapest possible materials and labor, especially on small houses that get marketed as "starter" homes. For example, I've got two enamel-coated bathroom sinks that have rusted through after less than 20 years of daily use despite careful cleaning and maintenance. Why? Because the enamel was so darn thin that water was able to get to the metal part of the sink, which rusted.

Okay, sure -- if you're buying some piece-of-shit '80s (or newer) tract house then you deserve what you get. Again, I already noted an exception for "substandard to begin with!" Of course, even then somehow the (cheap) interior doors and trim in e.g. my parents' 1993 McMansion have managed to survive just fine so far. Even the driveway is perfectly fine, except for one crack that it's had almost since it was new. Admittedly, the windows and siding didn't fare as well...

A well-built house, such as the ones in my neighborhood (built between the 1900s - 1950s), will tend to have lots of stuff made out of good old-fashioned wood, which lasts indefinitely as long as it keeps getting repainted every half-decade or so.

[TheGrimSqueaker]

Okay, sure -- if you're buying some piece-of-shit '80s (or newer) tract house then you deserve what you get.

Which, in most big cities, is all the housing that's available under 2000 square feet, unless you want a roach infested dump that's falling to pieces no matter how frequently it was painted.

Many of the older neighborhoods with smaller houses were razed to build McMalls, McBusinessparks, McTrailerparks, and McMansions. Others became a magnet for people displaced from more fashionable areas when real estate prices started their climb. Many were spoiled by being turned into rentals during the big investment real estate boom in the 1980's.

Once a building has been rented out for a few years, it's going to be in need of major repair. Even though most tenants don't trash the place, very few clean or maintain what they rent as well as they would if they owned it, and they don't own up to minor dings or nicks they cause or report repair problems until they become a crisis. Many landlords also try to make a property cash flow positive even with a mortgage, which is possible but rare. They effectively take money out of the property, and at the end of 5 to 10 years the property is in poorer condition and is worth less than it was before unless by some economic stroke of good luck the overall property prices increased during that time. This is one reason depreciation on rental properties is still allowed by the tax code. Ongoing loss of rental property value is real. It's also one of the reasons owners of residential real estate routinely forbid prospective buyers to visit the property unless they've already made a binding offer. Having something to hide from a buyer was so common that it became an industry standard.

A well-built house, such as the ones in my neighborhood (built between the 1900s - 1950s), will tend to have lots of stuff made out of good old-fashioned wood, which lasts indefinitely as long as it keeps getting repainted every half-decade or so.

OK, count yourself lucky that you live in a place where wood was plentiful enough to build with, where real estate developers went through a phase where they used quality building materials, where there was never significant demographic change, and where the ground freezes enough in the winter to deter termites.