Home Maintenance Planning: Saving for Repairs and Replacements

Homeowners should enhance their emergency reserves to prepare for future AC and hot water heater replacements.

### Planning for Home Maintenance: Smart Financial Strategies for Repairs
* 🏠 CM raises a common concern about needing to **replace a hot water heater and AC unit** in the next five years, asking where these expenses fit into the **financial order of operations**.
* 💰 The recommendation is to **enhance your emergency reserve**, aiming for **3 to 6 months of living expenses** plus the estimated costs of the upcoming repairs, rather than halting contributions to other financial goals.
* 📊 It's crucial to maintain contributions to retirement accounts and health savings accounts while gradually building this reserve, especially since you may have **3 to 5 years to prepare**.
* ⚠ If an AC unit fails unexpectedly, especially in a hot climate, accessing emergency reserves for immediate repairs becomes necessary, emphasizing the **importance of having extra funds set aside**.
* 🔍 Researching potential tax credits for energy-efficient replacements, such as heat pumps, can also **offset costs** and should be part of your **planning process**.
* 🔧 Additionally, when purchasing new units, consider the warranty options available; investing a little more for an **extended warranty** can save you from **unexpected costs down the line**.
* 🛠 Awareness of warranty terms and the potential for better models can significantly impact long-term costs, making it **essential to approach these decisions with a strategic mindset**.
* 📝 Overall, planning ahead for home maintenance can **mitigate financial stress** and ensure you are **prepared for necessary repairs** when they arise.

[Music] We've got some more home ownership questions. We're going to go to one right now from CM. He says, Going off the home ownership Horrors theme, we are more than likely going to need a new hot water heater and AC unit in the next about 5 years on the foo. So, in the financial order of operations, where would this fall on step four, four on step eight? Um, if you do have a little time to plan for these things, how would you go about that? Yeah, I think this is an interesting question because a lot of people ask, How do I save for interim term or intermediate term goals? Whether that goal be replacing a hot water heater or replacing an AC. And as I think through it, those things don't have a specific timeline around them, but you know that it's coming. It seems very likely that you're going to have to do these home maintenance repair projects. So, in my mind, what I would try to have that be is I would try to beef up my emergency reserve. I would try to beef up

step number four, but I would try to do it in the margins, meaning what I don't want to do is shut down all of my other St. I don't want to like shut down my WTH, shut down my HSA, shut down my 401k contributions until I fully funded that replacement, especially if I know that I have 3, 4, 5 years. I still want to be able to do those other things, but rather than only carrying an emergency reserve of 3 to 6 months of living expenses, I think that I would probably shoot for having 3 to 6 months of living expenses plus the value of whatever that thing is I might need to replace. But I would try to do the best of both worlds, continue building, continue saving, and beef up step four. So, by the way, when we say step four, if you go to money.com/resources, you can download our non-eps of the financial order of operations, and cash is so important that it actually has two steps. Step one is highest deductibles covered, and then step four, which is your

traditional 3 to 6 months. My answer on this is, look, AC goes out down here in the South. It's an emergency immediately, especially if you have children sleeping in that house. So, you're definitely going right to the emergency reserves to pay for that replacement or that repair ASAP. Now, if somebody like CM realizes that they just had a repair, and maybe it was only a $200 repair, but the technician told you, Hey, this thing's probably on its last leg, so I would think in the next 18 to 24 months, you're going to need to replace this unit. There is nothing wrong with your emergency reserves having a kind of an extra tank for planning, and that's what so take your 3 to 6 months that you normally keep if you have the luxury of time, and maybe use some Flex of expanding that. Start saving a little bit extra for the replacement of whether it's the hot water heater, whether it's the AC unit, but if you have time on your

side, there is nothing wrong with taking advantage of that so that you can plan accordingly. And then, here's some other things you ought to pay attention to. I noticed this, um, on one of my houses. We had to put a new water heater in there. There are still credits out there when you look at the heat pump varieties and other things, especially like in the neighborhood for one of the houses we have. It's all electricity; they don't have gas in the area. So, it made sense to take advantage of even if the heat pump and the credits and the other things that come from it. So, do your research on that too to see if there might be some money that comes back to you so that you get the full cost of the replacement, and you can really choose out your decisions and then make a decision. Here's something I found out on an AC unit on my primary residence. The at had a great Builder, but even with the great Builder, um, we had a problem with our air unit that it went bad after seven years. That

seems that seems Quicks really quick. Even the tech was like, Man, you're just unlucky because this, this, this happened, that this thing's a complete failure. Um, the problem I have is that the AC only had a 5-year warranty. I found out later that if the Builder would have paid, and if I have known this, I would have paid. Um, it was like $300 to $400 more. They make a model that—no, they make a little bit nicer model that has a 10-year warranty. So, pay attention when you are getting into those decision m—you know, Matrix of what's the next thing to do on like my heat and air unit. Have a long-term Outlook and then ask the question, Hey, if what's the warranty on this? Is there something that's $200 or $300 more expensive that get it extends that warranty by two? So, 5 years to 10 years. Because that's the stuff that I think most people don't realize, and you just—you want to go into it with your eyes open and give yourself where

you can make this a minimal how much mental calories you have to put in this as possible, and extend that warranty is a powerful thing. It's great.

5-Year Plan for Water Heater & A/C Upgrades

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The Money Guy Show

Replacing a hot water heater and AC unit in the next five years requires financial planning.

It's advisable to beef up the emergency reserve while still contributing to other financial goals.

Aim for 3 to 6 months of living expenses plus the value of the potential replacements to ensure adequate savings.

Planning for Home Repairs and Replacements

In the South, a broken AC unit is an immediate emergency, especially with children in the house.

It's advisable to have extra savings in your emergency reserves for planned replacements, like a hot water heater or AC unit, if you have time on your side.

Additionally, researching available credits for energy-efficient replacements, such as heat pumps, can help offset costs.

Importance of Long-Term Warranty in AC Units

The speaker experienced a complete failure with their AC unit, which had only a 5-year warranty.

They later discovered that a slightly more expensive model with a 10-year warranty was available.

The speaker emphasizes the importance of considering long-term warranties and making informed decisions when choosing heat and air units.

Extended warranties require minimal mental effort to consider but can be very beneficial.

They provide added security and peace of mind for consumers.

Overall, extended warranties are a powerful tool for protecting investments.