When Your Budget Blows Up in Your Face
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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.
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.
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!
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?
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