I am not talking about going into the wilds of Australia for six months until you come out a man. I am talking about literally walking about your home, apartment, car, and life in order to examine the things that allow your life to run smoothly and at the level of affluence you have become accustomed to.
Two weeks ago on the Suze Orman show, Suze offered up what I thought to be great advice. It was a segment called “Get Real”, and she basically said that even if you are doing well financially—you have emergency savings, your cars are paid off, your IRAs are funded—before you think about splurging on a large purchase, do a walkabout in your life and figure out what could go wrong next.
I took this advice and walked around our own home in the middle of the show. I must admit, after doing this for awhile, all of our appliances and belongings started looking less like fixtures, and more like liabilities. My eyes first rested on our washer and dryer, which were a nice leftover from the previous owners. Granted, the washer and dryer have been working great for the last three months, but they show some serious signs of aging (not least of which is the rust cutting through the paint like metal shards). We don’t know how old these appliances are, but we do know that our current budget has factored in that these appliances will last forever.
Other Areas that Will Need Money in the Future
- We have a newly bought used vehicle with 113,000 miles on it, so should definitely start saving specifically for when this vehicle dies, or for car repairs in the next few years.
- Our water heater is over 8 years old. Average life of a water heater? 8-10 years.
- Our mattress was gently used when I traded my desktop computer with my sister for it back in 2005 after graduating college. Granted it is still extremely comfortable, but average life span of a mattress is around 10 years. That is only 4-5 years away!
- Laptops only last a few years (my last one was great for 5 years, which I have heard is considered ancient to many people), so we can expect to have to replace ours in the next 2-3 years.
Needless to say, I need to begin thinking about starting a “When Things Go Wrong Fund” outside of our emergency savings fund account, in our overall how to save money strategy. Why do I want two of these types of accounts? Well, I view our emergency fund account as covering our day-to-day basics and necessities should either of us lose our job, get hurt, etc. This new account would specifically cover large, “unpredictable” expenses that are sure to creep up, such as home maintenance, car repairs and the like.
Another great idea is our home warranty, which has been particularly helpful thus far as our ancient heaters stopped working several weekends ago when the temperature dropped into the 30s, and our dishwasher just died on us Thursday night. Our real estate agent had the great foresight to write into our contract that the previous owners would pay for a serviceplus package at American Home Shield (AHS) home warranty company for the first year in our home. This covers not only the basic things, like water heaters, furnaces, A/C units, etc., but also items that were installed incorrectly, out of code units, and dishwashers (hurrah!). We have all ready called our service twice, and paid $60 each time to have work done on our home. What a relief it was! Granted, there are varying reviews about home warranties, and I think that would make a great article, but thus far we have been satisfied with ours.
Go ahead and do a Walkabout in your own home. How are things measuring up? What could go wrong next?