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When Your Budget Blows Up in Your Face

blown budget

If you have been following me on Frugal Rules, then you know my wife and I are buying a new home.  It has been a crazy ride so far, but we are making strides.  I wrote some time ago how to budget for buying a home.  I was really excited about creating a great budget for the process.  I am not a big budget kind of person, but I do have a general one which I follow.  I do really well with numbers on the fly, so a general/overall budget works well for me.

We have been looking for a new home since the end of March.  The real estate market in our area is hot.  People are going crazy to get in certain areas and overbidding in order to do so.  Because of this trend, it appears that my original budget has been busted, big time!

My Budget Blew Up!

Before we started searching for homes, I knew it was going to take a lot of money.  I get it. It costs money to buy a house. I am not naive.  I understand the process of buying a home because I have done it before.  Everyone in the process wants their cut.

My wife and I knew we would need to pay for an inspection on any home we found, we also knew we would have to get an appraisal done.  These are standard parts of the home buying process.  We also knew about paying for the due diligence period and our earnest money.  We easily had all of that.  The problem is we didn’t budget for the little things that are included in buying a new home.  Specifically, these things.

Storage

We rented a storage unit before we put our house on the market.  In order to properly stage our home, we had to get rid of some items.  We had a small storage unit and we had the money in our budget for it.  The issue came after we actually found a home to buy.

We are in the middle of the due diligence process on a home we hope to purchase.  We are going through all of the steps in that process and it is going OK at this point.  We will be able to close a few weeks after our current home closes, but that means we have to move our stuff out of the house.

Due to this problem, I had to purchase a much bigger storage unit at about 2x the cost.  We had some other plans with our stuff that wouldn’t have required storage, but those plans fell through, leaving us with a much larger storage bill.

Inspections

I recommend everyone get a house inspection for any property they want to purchase.  They can be very helpful, but they do come at a cost.  We had originally budgeted for the home inspection.  The issue came in when we needed to inspect more than just the home.  The home we like has a septic tank and is also on a well.  Inspectors make their money when they add on additional services.  We had to pay over double the original inspection fee when we added Radon, termite, water quality, and septic services.  While they were very worth it, inspecting for these items wasn’t in our overall budget.

On top of the inspections are the secondary inspections.  General inspectors will tell you there could be an issue with this or that.  They are not experts in all fields, so they might tell you to call an electrician to check this system out or call a plumber to look at that.  These are added expenses that you as the buyer have to pay.  Boo!

Moving Supplies

I knew we would need moving supplies. Those are essential when you are moving.  The issue is we have way more things than I thought we did.  We really collected a bunch of stuff over the seven years we have lived at our current home.  We purged some stuff when we had our yard sale, but it wasn’t enough. My wife worked hard on finding used boxes from her employer.  They gave us a lot of boxes, but not enough.  This means we have had to purchase more moving materials, where we originally hadn’t budgeted much.  My wife thought we would have been able to score more things from her office, but that didn’t pan out as well we had hoped.

Time Off Work

It is really hard to budget for time off work.  I knew there would be paperwork to sign and all of that stuff.  The problem is the process has changed considerably since we got our home in 2007.  The lenders want a lot more information on you and probably need your first born as well.  While I am glad they are being more stringent with borrowers, they really might be going overboard on some things.  I have had to take some time off work in order to get the information the lender needs along with meeting up with all of the other people.  The loss of income wasn’t in the budget for sure.

While I attempted to budget appropriately for this process, it appears that I have failed.  I don’t like to fail, but it does provide me with a genuine learning experience.  Luckily for us, we had extra funds in our account to deal with these “unexpected” expenses, but it still doesn’t make you feel good.

One thing you should remember when your budget gets busted is to just get right back on the horse and ride.  Compose yourself and put your budget back together for the next month.  You are going to spend and make money each month, so make sure you solidify your budget and put yourself back on track.  You don’t want to continue busting your budget every month as that would lead to a bad situation.

 

Have you ever busted your budget in a bad way?  What did you do to fix the problem? If you’re a homeowner, what was your purchase experience like? What unexpected expenses did you incur?

 

Image courtesy: StockMonkeys.com

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Grayson is the owner of Debt Roundup and co-owner of Sprout Wealth and Eyes on the Dollar. After going to battle and winning against consumer debt, he decided it was time to learn how to use credit wisely and grow his wealth. He discusses all things personal finance and is not afraid of being controversial. He also is a freelance personal finance writer and offers blog owners technical blog management services.

21 Comments

  • Buying a house can really smash the budget. My wife and I are looking at buying another house in the next few months and so we have gone right back into full on budget mode to ensure that we can afford everything.

    The last time I seriously busted my budget was when we had our son. We really didn’t have a clue just how much stuff we needed to have a child. Fortunately should number 2 ever come along, we will have the bulk of the stuff that we need thanks to child number 1.
    Glen @ How To Save Money recently posted…Making Extra Mortgage PaymentsMy Profile

  • It’s interesting how easily home-buying (and selling) budgets can be blown out of the water by small unexpected costs, even to the most prepared family. Our last home was our first home so no staging or storage-related costs and just one inspection. We SHOULD have bought more moving materials, but we made due with the free boxes we had. Let’s just say we were making a few additional trips after our initial “move” to pick up the rest of the stuff!
    DC @ Young Adult Money recently posted…The Benefits of Spring Cleaning Your FinancesMy Profile

  • We sold our first home on our own…we figured how hard could it be? It was *crazy* always trying to keep the home in “viewing” state, and trying to find time during the work day to run home and allow people to look at the house (you never want to say, “No.”). There’s always little time crunches and expenses that will eat at you if you’re not ready for it!
    Travis @debtchronicles recently posted…How Delinquency and a Debt Settlement Program Can Affect the APR on Your Credit Card (Part 2)My Profile

  • Moving is so expensive. I know-I’ve done it twice in the past year! It really is easy to forget about all of the little moving expenses that add up quick. Hopefully those costs are behind you now.
    Holly@ClubThrifty recently posted…Las Vegas: Thoughts on Gambling, Smoking, and Cheap StuffMy Profile

  • E.M. says:

    What a hassle! Thankfully, our apartment move wasn’t as bad as I thought it would be, so we actually came in around budget on that. Obviously, buying a home is much more involved. Thanks for sharing what you’ve learned with us. Also – have you checked grocery stores for boxes? That’s how we got ours, and how my parents got theirs as well. Most are willing to help out. I’ve also heard of people offering free boxes on Craigslist after they’ve finished moving in.
    E.M. recently posted…Are Student Loans Affecting Your Plans?My Profile

  • Ouch!!! Yes, when we moved, we forgot to factor in moving expenses too. Luckily, it was only a couple of hundred dollars, so not too bad. Our biggest budget bust lately was last July. I wrote about it on the blog, and it was due to a number of factors, starting with unexpected expenses and ending with emotional spending because we were freaking out about the unexpected expenses. That makes a lot of sense. :-) But we did get back on track in August by being super frugal.
    Laurie @thefrugalfarmer recently posted…Why You Should Strongly Consider Eating Organic FoodMy Profile

  • I can see where that would happen. I think moves of any kind always have some kind of sneaky expense. :(
    Tonya@Budget and the Beach recently posted…Addicted to Busy?My Profile

  • Kim says:

    Small towns are great for moving. I think when we moved in we had like five people who showed up with trucks and we just threw it all in and it took about half a day. Of course, everyone has a truck where we live too. Liquor stores have lots of boxes if you haven’t tried there. They aren’t huge, but for smaller things, they work great. I think we blew our budget several times when we built our house. It’s hard to know just what you might want in the beginning when you are looking at the house on paper. I’d never build again. It’s too stressful.
    Kim recently posted…Maybe We Should All Move To North DakotaMy Profile

  • Our budget was definitely busted when we purchased our home two years ago. We estimated a lot of the costs, but like you, it had been a while since we purchased a home and A LOT had changed since we last went through the process. It was painful and costly and we will not be going anywhere until I recover or my son graduates high school.
    Shannon @ Financially Blonde recently posted…What if your family is the Joneses?My Profile

  • Lauren says:

    I’ve never bought a home, but I can imagine that there would be a lot of little unexpected costs coming up here and there. At least you were pretty prepared for most of the big expenses.

    I live in Pennsylvania, home of state controlled liquor stores, and the only upside to this outdated arrangement is that we can always get free boxes from them. So there’s a little tip for anyone in PA- if you need free boxes, go to the liquor store. They are more than happy to let you take empty boxes off their hands!
    Lauren recently posted…Recent Financial Highs and LowsMy Profile

  • We sure did busted our budget when we bought our home most of it for the renovations we did on our fixer upper. During the process of buying we also encountered the “add on” expenses from the inspection. As you mentioned the inspectors are not experts on everything so they will make suggestions on additional items you should check out. I would say on inspections alone I spent about $1000. We’re recovering now by spending less to rebuild our emergency fund and pay off our debt.
    Raquel@Practical Cents recently posted…Consuming Less in Moderation = Living LongerMy Profile

  • Kathy says:

    Home inspections just came about within the last 10-15 years and probably because of the house hunter shows in television. Most of the things they look at can be done by the home buyer if they just look beyond walk-in closets and granite counters. Flush the toilet, turn on the faucets, look to see how old the furnace is (it is usually on a sticker attached to the side of the furnace). Look into the crawl space or basement to see if there are signs of water damage. Look at exposed beams to see if there is termite damage. Unless your lending institution requires it, you can get by without that expense, especially if you don’t have a septic tank to deal with. Inspectors have to justify their cost by finding things wrong. One inspector we encountered when selling our house made the comment that everything was up to code and operational, but he preferred that it be better than code. Since when does the inspector get to decide that up to code isn’t good enough?

  • House selling/buying isn’t for the faint-hearted. The housing market is hot where we are looking too, so right now we need to get to the stage where we’re paying for inspections, etc. :) But this is a good reminder to maybe boost our budget for those things because there is always something extra that pops up! And I agree wholeheartedly – when you bust your budget, you got to dust off yourself and get back on track.
    Shannon @ The Heavy Purse recently posted…The College Conversation: 3 Important ComponentsMy Profile

  • I’ve never purchased a home, but I’ve definitely had my fair share of budget busts. The worst was when I had just quit my job. Freelancing slowed for about 2 weeks and income wasn’t where it needed to be. It took me a little over a month to catch up after that. I did what any good freelancer would do. I slept very little while I looked for new, steady work!
    Josh @ CNAFinance.com recently posted…How To Earn More Rewards With Your Credit CardMy Profile

  • Abigail says:

    We have health problems so our budget gets busted a lot with unexpected things. I’m a depressive and the CFO, so the main issue for me is to calm down once it happens. Then I can figure out how to stem the worst of the outflow and get back on track.

    Our purchase was harrowing. It was a foreclosure property and we had to bring it up to FHA standards. That meant about 3 weeks of work on various projects. Meanwhile, my husband went up to Washington to get his parents (we bought early to avoid them being homeless) and help them finish packing and get down here to Arizona.

    So I was alone in a 400 sq ft guest house — with terrible cooling — in early September (90s to the low 100s), trying to work at home (need a secure connection) and trying not to dehydrate. Oh, and there were no working toilets, so I had to use the park or a convenience store. Ugh.
    Abigail recently posted…Two days, three hours and 34 minutes (but who’s counting?)My Profile

  • Miriam Kearney says:

    Not sure where you live but here in Ontario the LCBO is a great source of boxes for moving. Granted they are usually smaller boxes than ‘moving’ boxes but that makes them easier to lift and load. They are strong since they were made to hold bottles of wine and liquor. And best of all they are free. Last time I moved I went to the store ahead of time and asked when they got their deliveries. Since they usually break down any left over boxes I knew I had to get there on the day of delivery. By alerting them that I wanted a lot of boxes they saved them for me; I drove up to their load ramp and filled my car several times!

  • It’s so impossible to think of everything. I know that at least for us, something ALWAYS comes up that we did not budget for when we are buying a house.
    Dee @ Color Me Frugal recently posted…Cost of the American Dream: Are Your Costs Rising? [Infographic]My Profile

  • Cat says:

    I hear ya. We had a lot of unexpected expenses with moving, mostly restocking the kitchen and not having any time to cook. We’ve had takeout almost every night up here!
    Cat recently posted…Do You Make These 5 Renter Mistakes?My Profile

  • Oh, man, buying a house is expensive, especially if you already have a house that you have to put on the market and move out of and try and sell. When we bought our house, the costs added up quickly; even the gas to view different houses, etc. I do find moving in general an expensive endeavour, too.
    Daisy @ Prairie Eco Thrifter recently posted…What Has Your Money Done for You Lately?My Profile

  • We’re planning on buying a place too…hopefully the budget won’t really be too busted. We’re renting so we don’t have the burden of selling a place…plus we’re buying a co-op so it will require less costs than buying a house. But there will definitely be closing costs, moving costs…painting/minor repairs, etc.
    Andrew@LivingRichCheaply recently posted…Price of the American Dream: Are your costs escalating?My Profile

  • I think it is OK if your budget gets busted unexpectedly from time to time as long as it doesn’t happen too frequently and you immediately make that necessary change to get right back on track. Life happens so we shouldn’t be beating ourselves too much for unexpected twists and turns. Just make sure they are not self inflicted. :)

    For our family, things got a little rough when we decided to put my daughter in day care. We had to re-adjust other items within our budget to eventually make it work but the first month or two we definitely busted our budget. Booo!
    A Frugal Familys Journey recently posted…Recent Buy – Target (NYSE: TGT)My Profile

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