How much do you save vs house spending?

[ktzmoh]

H and I are going back and forth about how much we should save as opposed to putting money into the house.

Do you have a fixed % of your income that you save as a rule? How do you prioritize savings versus house spending?

[kaylie]

Are you including retirement savings in this percentage?

Our retirement savings are put away through payroll deduction and employer matches and we do about 20% of our annual income. We really wouldn't consider doing less because we have it set up so that we're getting the maximum amount of matching funds from our employers. It doesn't make sense not to take the free money.

We keep an emergency fund, but since we just moved in we haven't been adding to it in the last few months. We'll probably start doing that again at the beginning of next year when bonus season gets here. We plan to increase our emergency fund by 25% each year to account for the fact that the house is only getting older.

As far as how much to put into the house, we're still figuring that out so I'm curious to see what others say. We're in no danger of over improving the house and there are several big ticket projects we'd like to do, but we also want to take a few pricey vacations before we start having kids. The only way to get it all is going to be to win the lottery.

[gtkim]

We max our 401Ks and have a fully funded efund already so my answer might be a bit skewed. We still put some money away every month into a liquid fund in the event an A/C goes out or something like that, but it is probably only about 8% of our take home each month. We do little maintenance things throughout the year and we have a line item in our budget to acct for that.

We usually pay for bigger house expenses or renovations with bonus money. Before DH and I were married and I had a house on my own I would just set a specific savings goal for a project I wanted to do and put money away every month towards that. I didn't fully fund my 401K then, but I did enough to get my full match. I know my answer was sort of vague but I hope it helps.

[FishChicks]

I agree with others. We target the federal max for our 401ks each year, and aim to always have a 9 month e-fund. Beyond that, we just build up savings slowly and have a timeline for home expenses (e.g., roof replacement last year, sewer replacement this year, partial yard remodel 2013/2014, master bath remodel 2015/2016, etc.).

If we haven't saved enough for the efund and the intended projects, then the timeline gets pushed out. Structural house expenses always come first (e.g., roof and sewer), followed by cosmetic.

[Deleted]

50% of my paycheck (about 20% of total income) goes into a savings account. However, if we need money for home repairs or vacations it comes out of that savings.

[Deleted]

We have a 9-month emergency fund. Once that was funded, we didn't put more in there (unless we use it for something, then we replace from our "slush fund" ASAP). On a monthly basis we max out our tax-advantaged retirement accounts and we transfer a set amount of funds to two dedicated savings accounts: new car and vacation. We never finance vehicles, so we're constantly saving up for when our car will need to be replaced. It's a lot easier to save $150 a month over 10 years than come up with $20K+ at once. The vacation thing is new b/c we've decided to do a blow-out 10th anniversary trip in three years, so we're using the slow and steady approach. Everything on top of those is "slush fund" for us. We spend it however we want. We do some investing with it, but we don't really have a purpose for it.

As far as how much we spend on the house, we have an end goal/master plan of restoration. Once that is finished, we plan to be finished pretty much forever except for maybe new bedding and/or paint now and then. My goal is not to keep my house on trend. We also aim to DIY as much as we can to save and because we enjoy it. So far, we've been constrained more by our time/energy than we have by our slush funds.

All of this would change if we weren't DINKs. I'd feel obligated to fully fund private school + a 529/other college savings over doing things to my house. See: Why I don't breed.

[vanillahip]

I think that I approach house projects in a totally different way... we can't do too much to our current home because financially it's just not worth it. So we save and save and I happen to put my spending money into the house only because it's my hobby- I like to redecorate/ change flooring/ repaint/ change light fixtures/ etc. I don't expect to get dollar for dollar out of the house in the end, I'm living here and enjoying it and enjoying my hobby. But I'm also not doing anything crazy expensive like putting on additions or gutting the kitchen.

The next house (we're house hunting now) will be more of a set renovation goal. We'll set our plans before starting, we already have a budget in mind, we're just looking for the right house to fit what we're hoping to do (and by we I totally mean me. He doesn't care at all about reno, actually doesn't like it. The plan is to live in the current house until the biggest projects are complete in the next one so he doesn't go crazy lol)

But again- that's with a set budget, we already have the cash, we're just looking for the right house. We have a 9 month e-fund that's not going to be touched for the house, our retirement savings are just about maxed out each year, then we pay our bills and everything else is 50% savings 50% spending (my house projects, his x y and z)

[ktzmoh]

Ok, so here is a follow up. When you all say you have a 9 month e fund, do you mean 9 months of your present income? Or 9 months of your expenses?


Currently, we are maxing our employee contribution to 401ks, and saving about 13% of our gross income into rebuilding our emergency fund (we used so much of it for the down payment). We'd like to ideally have a 'house fund' too for whatever breaks or needs to be done in the house, but I feel like our house to-do list is so long that for sure we'll have a hard time doing the upgrades we want to do to the house and funding the 'house slush fund'. I guess I'm wondering how big does the emergency fund need to be to be responsible, but not over the top.

[kaylie]

Our e-fund is three months of expenses.

I hear you on the to do list. I think e-fund size is a matter of personal comfort. I think I'd ideally like to have six months, based on what I know about our financial/employment/family situation but I'm comfortable working up to that over the next year or two.

[Deleted]

Ours is baseline expenses (includes none of the for-fun spending we do right now). If I lost my job, we could go on indefinitely without too much hardship. If DH lost his job, we'd probably make it three years with my income and bare bones spending. Those two scenarios are the most likely, and we're very comfortable being able to hang on indefinitely/for three years. If something catastrophic happened and we both lost our jobs, we'd have to figure something out within 9 mos. I'd flip the fuck out if that happened, and definitely wouldn't feel comfortable with less time, but we consider it a pretty unlikely scenario. If we were both in the same industry/at the same company, I think it would be a higher probability, and I'd want more in the e-fund, personally.

When I used to hang out on MM, I think most people were doing 6 mos. Maybe they can give you an idea of what the going suggestion is these days. We used to have 6 mos., but we upped it to 9 w/ DH's last bonus because we were uncofortable with the worst-case scenario of 6 mos. It depends on your priorities and comfort level with risk. The older we get the more risk-averse we become because we can afford to be more risk-averse now, we have more to lose and we have less time to recover.

We had a less-than-ideal e-fund when we bought our house. We had to wait several years before we could do anything more than paint. Such is life.

[ssmjlm]

The average efund suggestion is 6 months of income, which when you need it would equate to longer expense wise b/c you would be making cuts ASAP.

We have about 6 months of expenses saved. That's probably more than we need as my job is 100% secure and we could live off my income if needed and some cuts.

As for house savings, we sort of have a 3 step approach.
1-Save for a big project with its own fund
2-Use DH's OT pay
3-Efund (since it's not just for job loss, but other emergencies)