When you have mortgage payments, savings becomes more important than ever. You can't control the weather or how other people drive. Accidents happen, trees fall, pipes burst, appliances break. Homeowners insurance doesn't cover everything. No matter what the uncertainty of the world throws your way, you'll still have to make your mortgage payments. If you don't, you lose your house, your equity, and everything you put into it to make your house a home.
Here are three ways new homeowners can save money:
Not in stocks – in your home. If you're a new homeowner but your home isn't brand new, it may be beneficial to spend money to save money. Take a new walk through your home with eyes targeted towards savings. Utility bills will be with you for as long as you reside in your home (unless perhaps you're living off-the-grid). It's time to analyze your home's energy efficiency, plumbing systems, and potential for big problems.
Home Energy Investments
But first, do the math. Check the age of your furnace, heating and cooling system, and hot water tank. Is it time to get a new one? Do you have a maintenance schedule in place? According to Canadian statistics, 60% of energy costs are spent on heating and cooling. Being energy efficient doesn't necessarily mean you have to invest in the newest, latest and greatest energy efficient appliances. It may or may not be cost effective. How many years will it take to see a savings? Would you have to charge the new appliance and pay high interest? Get down to the nitty-gritty of kilowatts per hour.
Lower the thermostat if you can. Invest in some quality curtains or window treatments to reduce heat loss. Seal your windows and doors or invest in new ones. Insulate your attic and basement- this can save you 20% of your annual heating costs according to Natural Resources Canada statistics. And don’t forget to shut the hot water tank off when you go on vacation with the money you’ll be saving.
Watch for Water
Check the plumbing through the entire house for leaks. If there's a leak, a drip, or a running toilet, stop procrastinating and fix it. Otherwise, you're just flushing potential savings down the toilet. Immediately fix any leaks coming from the roof. A leaking roof will lead to rot in structural beams, and that just leads to a host of expensive problems that will surely interrupt your daily living. Is there water accumulating at your home’s foundation after a rainfall? Fix your gutters or build a water retaining wall to protect your home.
Every improvement you make in your home is an investment in a lower utility bill or home maintenance bill - and an increase in long-term savings potential. The more well-taken care of your house is now, the more it will be worth in the future.
2. Consider your Credit Cards a Savings Account
Stop charging, and pay them down instead. The interest is killing you. When an emergency does roll around, your credit card will be available and in good standing. The best way to stop using them? Stop carrying them with you, and never have them handy when you're online. Use a no-charge debit card for your POS and online transactions, or only use cards with 0% interest that you can pay immediately. You don't have to cut the credit cards into pieces, just never charge more than 20%, and always pay whatever you charge within 30 days.
3. Examine Your Food Shopping, Your Fridge, Eating-in and Eating-out Habits.
Do you get a large coffee every morning and grab a candy bar when you fill up your gas tank? Start a new habit. Grab a bulk-bought candy bar from home before you get in the car, and see if a medium coffee gives you the kick you need. (Hide the bag of candy bars if you can’t resist the temptation of having them at home.)
Do you shop spontaneously for dinner or plan your shopping trips? Make a list of what you typically buy for food in a month, and then for one-month chart how much actually gets thrown out. Are you buying the cheapest unit-priced item for foods and beverages that you regularly consume? Would you save gas by shopping less often, or more by having less waste and shopping more often?
You can maximize your savings by preplanning meals and cooking ahead. Keep in mind slow cookers and microwaves use less energy than ovens. You loved that new kitchen when you bought your new home, now is your chance to spend more time in it planning cost-effective meals and devising new cooking and eating habits.
Investing in your home and taking an itemized look at your home and lifestyle spending habits will position you to save money on the monthly expenses you can't ignore. Take that extra money and sock it away to an employer-matching contributor program, or save up to buy some real estate for investment property. You'll either have double what you put in, or steady income and equity from your investment property. But it won't happen unless you start saving. Grab a pencil and paper, and start your savings plan now.