The new year is fast approaching (and for those of us trying to shake off 2020, not fast enough!). That means it’s time to start looking ahead and dreaming big about the future for your home and family.
No matter where you are in your homeownership journey – whether you’re a new homeowner or you’re on your third house – setting goals for your household helps you prepare for whatever the coming year may throw at you.
So make some room on your resolutions list – these are goals for every homeowner.
1. Start an Emergency Fund
Right now, 37 percent of Americans do not have a fund to cover a $1,000 emergency and would need to use a credit card for the expense, according to a 2020 Bankrate poll.
Life is unpredictable and full of unexpected costs. Owning a home is no different. An emergency fund can help you meet hurdles with a plan rather than panic.
So if you suddenly need to fix a leaky roof or a broken water heater, your fund can help save the day and keep you from putting the expense on a credit card.
Aim to have six months’ worth of expenses sitting in a savings account, but start somewhere. Sock away any money you get for the holidays. Add a portion of every paycheck to this savings account. Make your emergency fund part of your household budget in 2021.
2. Get a Better Rate on Your Home Insurance
The new year is a great time to get your finances in order. That also means making sure you aren’t leaving money on the table.
Our survey found that 40 percent of Florida homeowners don’t know the cost of their home insurance. A surprising 36 percent said they hadn’t shopped for home insurance in more than five years. Both are a recipe for overpaying on your homeowners insurance.
If it’s been a few years since you’ve shopped around for coverage, request some quotes and see what’s out there. It’s also smart to review your policy and make sure your coverage is up to date with your needs. For example, if you live in a flood-prone area in Florida, it might be time to consider flood insurance.
3. Reduce Your Energy Consumption
Energy bills can be super expensive depending on where you live. Make a goal this year to find small ways to reduce your energy consumption or to consume smarter without sacrificing comfort.
For example, you might install a smart thermostat that adjusts the temperature of your home at just the right times to save on heating or cooling. Energy Star appliances can help you use less water and less electricity. Or you might simply unplug devices that aren’t in use – it adds up!
Many utility companies offer a “home energy audit” to show where you use the most energy. Ask for one and make some small adjustments. And here are more other energy saving tips to get you started.
4. Shop for a Home Warranty
The average cost of an appliance repair is $175, but costs can often range from $50 to $500. Luckily, these are costs a home warranty can cover.
If you don’t have a home warranty or yours expired, it could be a worthy investment. Many are less than $100 a month. In fact, Kin policyholders can save up to 15 percent on a Cinch home protection plan to cover the cost of unexpected breakdowns. All plans offer a 180-day workmanship guarantee on covered repairs.
When shopping for home warranties, look for a company that has a low monthly contract fee, low trade service fee, and covers as many systems and appliances as possible, including plumbing, electrical, and HVAC systems.
5. Make an Emergency Kit
Natural disasters like hurricanes, floods, wildfires, and tornadoes affect millions of people each year. Prepare an emergency kit in case the day ever comes that your family needs to shelter in place or evacuate.
Your emergency kit should have enough food and water to last for at least three days. It should also include medications, chargers, maps, emergency radios, flashlights, first-aid supplies, and a copy of important documents like IDs and house deeds. Get more tips in “How to Make a Disaster Preparedness Plan.”
6. Refinance Your Mortgage
Mortgage interest rates are currently at historic lows, so now’s the time to refinance your mortgage if you’ve been considering it. Shop interest rates among local banks, credit unions, and internet mortgage brokers. Not only does a lower interest rate save you on monthly payments, but it can also save tens of thousands of dollars in interest payments over the course of the loan.
Say you have a $300,000 mortgage at 4.5 percent for 30 years. That will cost a total of $547,220, and $247,220 of that is all interest. Dropping your rate to 3.5 percent can save you $173 every month and $62,252 in interest over the course of the loan. It’s worth it to see what you can do to reduce your interest rate.
7. Pay Down Your Mortgage
According to Capital One, if you have an emergency fund, you’ve paid off your credit cards, and you consistently put 10 to 15 percent of your income toward retirement, your next big financial goal should be paying down your mortgage. Paying off your mortgage early can save you thousands of dollars in interest.
For example, say you have a 30-year mortgage on a $200,000 house with a 4 percent interest rate and you put 10 percent down. If you paid your mortgage off nearly four years early, you could save more than $15,000 in interest charges. To accomplish that, you would need to put about an extra $86 a month toward your mortgage.
8. Minimize Belongings
A clutter-free home is easier to manage. Why? You’ll have fewer things to move when you need to clean. Just think about kitchen countertops: you’re more likely to wipe down counters when you don’t have to move vases, salt shakers, and fruit bowls first.
You don’t have to go all Marie Kondo to get more organized, either. Just store things you don’t use frequently and do an honest assessment of what can be donated.
Plus, there are psychological benefits to reducing stuff around the house. According to Dr. Robert T. Muller in Psychology Today, “Materialism is associated with loneliness.” By minimizing, you can focus your energy on experiences and time with friends rather than upkeep.
9. Check Carbon Monoxide and Radon Detectors
You probably know that a carbon monoxide detector can save your life, but when was the last time you tested or replaced that $40 alarm? The last thing you want is a malfunctioning detector.
Radon is another dangerous gas, and few homeowners have radon detectors. Nearly 21,000 lung cancer deaths occur each year because of radon poisoning. Get a radon detector (they’re usually less than $30) to help keep your home safe.
10. Make a Home Inventory
A home inventory is a record of your possessions and a true game changer if you ever make a claim. Because it documents all your belongings, you’ll know exactly what’s missing or damaged after a break-in or a natural disaster. That helps you get replacements faster. Your inventory can also help you make sure you have enough coverage for your personal belongings.
Your inventory doesn’t have to be all inclusive, either. You can simply snap a few photos of the most valuable items in your home. But if you want extra credit, record your items with their original prices, receipts, serial number, age, and condition in a spreadsheet.
Store a digital copy of your home inventory somewhere safe, and make sure the hard copy is in a fireproof safe or envelope with other important household documents.