Emergency Fund This

It’s June in Texas…and we’re hot.

We just bought our first home and we haven’t even finished unpacking all the boxes when the original A/C unit decides 16 years of quality service is enough and gives up the ghost.

This is exactly the kind of thing you should be warned about before you jump headfirst into homeownership.

Stuff breaks. Expensive stuff.

You’ve now been duly warned. You may proceed.

Renting Wasn’t So Bad

As renters, maintenance was something we never had to deal with. There was always a maintenance crew at the ready to fix any one of these expensive comfort-giving appliances. And it was all paid for by Not Us, which was really nice.

Our budget had never even heard of this “home maintenance” concept. Ignorance truly was bliss.

Renting also helped overshadow my own inadequacies when it comes to fixing…well…anything. My poor wife had no idea how inept I was when it came to fixing house type things.

Buyer Beware

But owning a home came complete with the “joy” of providing – and paying for – any necessary maintenance ourselves.

If you’re in the market for your first home, stop right now and think about this. Close your eyes if you must.

What will you do when the dishwasher breaks?
What will you do when the water heater breaks?
What will you do when the garage door opener breaks?
What will you do when the A/C unit breaks? In the middle of summer. (Or furnace in the middle of winter, if that’s more your style.)

And that’s the shortlist of everything than can require instant and unexpected repairs in a home.

But none of this should be a surprise to you. You know that nothing lasts forever. Stuff breaks. Expensive stuff. (You read that somewhere, right?)

So your best preparation when moving into your first home, or even your next home, is to have a healthy pile of cash just lying around waiting to be employed in an effort to fix some broken stuff.

This looks like a safe place to store some cash.

Making Our A/C Unit Good-er

One of the decisions we made when we bought our house was to have the seller pay for a 1-year home warranty to help cover the cost of any kind of significant repair that might occur during our first year of ownership.

We didn’t expect we’d be using it just months after moving in. In fact, we didn’t expect to use it at all, but…and you may have heard this before…stuff breaks.

If you’re not familiar with home warranty companies, you should know that they are mostly great because they can save you a lot of money on high-dollar repairs, from replacing a broken pipe to replacing the entire A/C system.

But Home Warranty companies also kind of suck because there is a process that must be followed, and from what I can gather, that process was developed by professional bureaucrats who outsourced it to a handful of much less professional bureaucrats.

It is not quick.

And did I mention it was June…in Texas….without air conditioning? I’m sweating now just thinking about it.

In our situation, it was going to take the home warranty company several days to approve and schedule an independent repair company just to come out and assess our A/C unit.

And that didn’t include actually doing the repair work to get our in-home temperature back down from triple-digit range.

We were also just 2 days from leaving for a week-long trip to Panama.

(Things only break down at the most inconvenient times, right?)

That meant the repairs would have to wait until we got back, which meant two hot steamy days and nights to get through.

Not cool. (See what I did there?)

So what we were going to save on price, we were going to pay for in sweat.

I repeat, home warranty companies are mostly great.

We scheduled the repair company to come out the day after our return from Panama. They quickly diagnosed the problem and informed us the entire A/C system would need to be replaced. That included the outside compressor plus the inside air-handler unit.

It was a 16-year-old system, so this was not unexpected.

The cost of replacing the entire system was several thousand dollars, but with our home warranty, we only had to pay our $400 deductible.

Not a bad savings right there.

But the saving money part is probably the only not bad thing about home warranty companies.

The independent repair company did an excellent job replacing our system, but they were restricted by the warranty company on what type of equipment they could install – basically the cheapest A/C system available on the market.

So instead of getting a high-quality unit that could provide another 10 to 15 years of great service, we were told that the ultra-cheap unit we got would be lucky to last 5 years in our brutal Texas heat. #awesome

That meant we needed to start saving now to replace our A/C unit again in the future. Yea for homeownership!

Making Our A/C Unit Great-er

We immediately started saving every month in our budget for a new A/C system.

We had already started building up our full emergency fund before we bought the house, and had plenty to pay the $400 in cash for this first replacement. But we wanted to get our emergency fund into the $10k to $15k range as fast as possible.

We diligently saved month after month, and finally hit our goal within a year.

Fast forward 6 years and 3 months (just past the warranty period, of course) and A/C unit number 2 bites the dust. But this time we were prepared with cash on hand.

And without the home warranty process, it’s as simple as calling a few companies to get quotes and choosing the one we liked best.

The new unit was installed the next day. The total cost was $6,333…paid for in cash.

Next step? Sit in our cool comfortable house as we work to refill our emergency fund so we’re ready for the next slice of “joy” that homeownership decides to throw our way.

Home Ownership 101

When buying a home, your emergency fund is your best friend.

It is separate from your down payment.
It is separate from your kitchen remodeling fund.
It is separate from your new furniture fund.

It is a pile of cash that just sits in your account doing absolutely nothing until one day…the unexpected happens.

And if you’ve owned a home long enough, you know that home maintenance isn’t really unexpected.

What kind of “joy” has homeownership brought into your life? Did you have a cash cushion to cover you? If not, how did you handle it? I’d love to hear your “joy” stories in the comments.

Read Also: 5 Ways to Buy a House Without Destroying Your Future