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Like many other people, during my formative years I was a renter. When the sink was leaky, I called the maintenance people. When the stove wasn’t working, I would call the maintenance guys. When there wasn’t any hot water — well, you get the idea. Then, when I was 25 years old, I bought a house. Of course, it wasn’t just any old house, it was a brand new one, with a warranty. So, my cycle of “free” repair and maintenance continued for a couple of additional years. Yet, I wasn’t doing an adequate job of saving during that time to prepare for when my free repairs and maintenance dried up.

Home repair budget

As with many other things in my life, I learned the hard way. After paying for several things myself, I wised up and purchased a home warranty plan. I pay about $400 per year into the plan, and a $60 deductible that takes care of repair or replacing broken things in my home, including appliances, my air conditioner and hot water heater. For this, I budget the $400 annually for the premium, and then an additional $240 per year, anticipating four service calls (one each quarter at $60 apiece). To make it easy on myself, I split the premium and deductible equally over 12 months. Each month, I put $54 in a high yield savings account and earn interest, until the payment comes due.

On top of this, I make sure that I have enough to cover my homeowner’s insurance deductible at all times. While I’m not saying you have to go out and get one, I can say that my online savings account keeps me organized; allowing me to set up goals and allocations for my money, so it doesn’t feel like it’s in one “giant pot” for no good reason. I have a special account named, “Home Repair” and in this goes my home warranty deductible in addition to $84 per month toward my homeowner’s insurance deductible. Each time that account goes over $2,000, I put $1,000 toward my investments, making it a win/win for me.

Maintenance and upgrades

One thing they don’t tell you in Home buying 101 is that it will cost you approximately one percent of the value of your home in maintenance costs each year. What are maintenance costs? Paint, lawn care, landscaping and all of those little items that wind up on the “honey do” list.

For example, if your home is worth $200,000, you should be saving at least $2,000 a year ($166 per month) toward your maintenance costs. However, you should also account for appreciation of home value, between one to three percent annually, and adjust your savings for that.

I once again created a goal in my online account for home maintenance and upgrades. Whatever I don’t use for maintenance annually, I put into upgrades, avoiding the costly expense of a home equity loan or second mortgage.

The lesson here is that before you buy, you should account for these expenses and not max out your monthly budget on your mortgage payment. Scale it down a notch or two and budget for how much home you can afford after putting money aside for repairs and maintenance, and factoring that in to your monthly payment. You might wind up with “less house” but will undoubtedly wind up with a house you can afford to keep.

More from this contributor:

Home Improvement Grants Fact vs. Fiction

Successfully Contesting Property Taxes

My Home Warranty Has Saved Me $1,600… So Far