Quote:
Originally Posted by Sliver
$24k seems unrealistically low. Even if your house is paid for, it's still going to need maintenance. I've read about 5% of the value of your home per year should be budgeted as your maintenance expense. Not sure what the exact number is, but they don't maintain themselves and there are plenty of home repair and maintenance items that are far from free and aren't optional. A furnace replacement is going to be 20% of your yearly budget? What if the roof goes the same year? I mean, $24k just isn't enough. I can't see it.
And that doesn't even touch on any of the other expenses you could face in a year. You need to go to the dentist. You need to repair your car/bike/replace your shoes. Clothes, furniture, carpet, linoleum all wear out. What if you have a house fire? You have insurance, but there are still going to be costs and deductibles. Car accident? Speeding ticket? Need glasses? What if you get sued and need a lawyer? What if you need a wheelchair?
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I think 5% is very high. .5% for day to day plus another .5% for major seems sufficient if you aren’t doing major renovations. That’s still 5k per year on the average Calgary house though.
I don’t think you need to be concerned about concurrent failures because statistically the costs average out overtime and you are sitting on a large sum generating a passive income. So if the furnace goes and the roof goes that year is a little larger but the next 5 are less. The mistake the average person makes is not Saving the money in the good years.