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Budgeting Basics for Homeowners

A new home often means making significant adjustments to how people spend their money. Expenses such as mortgage payments, property taxes, insurance, utilities, and maintenance add up quickly and can easily throw the best of financial intentions out of whack. Creating and following a budget is a great way to stay on track while cutting down on financial stress at the same time.

Having a budget gives homeowners a roadmap for their financial needs and goals. Yes, their monthly home-related expenses need to be met, but they’ll also need to consider much more: food, clothing, education, healthcare, transportation, and savings for both retirement and emergency expenses.

Homeowners will definitely have unexpected costs that arise at inconvenient times – the water heater needs replacing, or the roof needs repair right away. Having a way to cover these expenses is critical not only to the home but for peace of mind.

Homeowners should start budget planning by examining their household income against expenses. First, list the monthly income – take-home pay if they get a paycheck, self-employment income, and any other outside sources of income. This amount will form the basis of the budget.

Next, make a list of the monthly fixed expenses. These include the mortgage payment, car payments, phone and internet service, trash collection, etc. For expenses that are typically billed less frequently, such as property taxes, home insurance, and school tuition, divide the total yearly amount by 12. Fluctuating costs such as gas and electric bills can be averaged to a monthly total and added to this list as well. If there are carried balances on credit cards, those payments will need to be factored in, too. Importantly, savings should be considered fixed expenses – making this commitment to the future will pay off, literally, in the years to come.

Next, list the variable expenses. These are expenses over which homeowners have some control: food, clothing, cable or satellite TV, online subscriptions, gasoline, entertainment, gym memberships, and even haircuts are some typical examples. Track these expenses for a few months to arrive at accurate numbers to work with. It’s very important to be realistic about what is currently being spent, because once the overall expense budget is developed, they may need to look for reductions in these variable items.

Add the fixed and variable expenses together and compare them to the total monthly net income. If the income is enough to cover everything, homeowners can still look for ways to budget in their favor. Reducing some variable expenses and shifting the difference into savings, for example, is a great way to boost one’s financial situation without making major changes.

And if expenses exceed income?  If an increase in income isn’t on the horizon, they’ll need to reduce expenses so that they’re in line with what they can actually afford. First, go to the list of variable expenses and closely consider each line item. Is that upper-tier cable TV package really necessary? Can more meals be prepared at home? Go to the movies less often? Reducing expenses in these categories can really add up on a monthly basis.

If reducing the variable costs still isn’t enough, they’ll need to look at the fixed expenses. Consider trading down to a car with affordable payments and raising the deductibles on home and auto insurance. Check into cheaper plans for mobile devices. The differences can be significant over the course of a year.

No matter how careful the budget planning, it won’t work if the budget isn’t followed. Personal finance software can be helpful in tracking cashflow, and adjustments can continue to be made over time. By keeping to a budget, homeowners will come out ahead and sleep better at night, too.

Why Test for Radon? What You Need to Know

Any home can have a radon problem – old or new homes, well-sealed or drafty homes, homes with or without basements. Health Canada estimates that 1 in 14 homes in Canada has an elevated level of radon. Prolonged exposure to unsafe levels of radon can increase the risk of lung cancer; in fact, radon is the second leading cause of lung cancer after smoking. Lung cancer caused by avoidable radon exposure is preventable, but only if radon issues are detected and mitigated prior to prolonged exposure in homes and buildings. There is real risk in not knowing if a home has a high level of radon.

WHAT IS RADON?

Radon is a naturally occurring odourless, colorless, radioactive gas formed by the ongoing decay of uranium in soil, rocks, sediments, and even well or ground water. While radon that escapes into the atmosphere is not harmful, dangerously high concentrations can build up indoors, exposing occupants to possible health risks.

HOW DOES RADON GET INTO A HOME?

Radon can migrate into the home in several ways. Openings or cracks in basement walls, foundations or floors are common avenues. Sumps, basement drains, and spaces between gas or water fittings can also allow radon into the structure. Other entry points can include gaps in suspended floors and cavities within walls.

HOW CAN I MAKE SURE MY CLIENTS AND THEIR FAMILIES AREN’T AT RISK?

We encourage homeowners to add radon testing to the home inspection process. Your Pillar To Post Home Inspector will set up the monitoring equipment in the home and report on the results. If an elevated level of radon is detected, steps can be taken to reduce the concentration to or below acceptable levels inside virtually any home. This can include a relatively simple setup such as a collection system with a radon vent pipe, which prevents radon from entering the home in the first place. Professional mitigation services can provide solutions for a home’s specific conditions.

Contact Pillar To Post to schedule radon testing when you book your next home inspection.

Carbon Monoxide: A Deadly Danger

With winter coming on to cool much of North America, it’s worthwhile to address a potential hazard that arises with increased use of fuel-burning appliances such as furnaces and water heaters: carbon monoxide. Carbon monoxide (CO) is an odorless, colorless gas produced by the combustion of fuels such as natural gas, oil, and propane in devices including furnaces, water heaters, and stoves. These items are normally designed to vent the CO to the outside, but harmful interior levels of CO can result from incomplete combustion of fuel, improper installation, or blockages, leaks or cracks in the venting systems. Very high levels of CO can lead to incapacitation or death, with victims sometimes never having been aware they were being poisoned.

Homeowners can take action against potential carbon monoxide poisoning by taking the following steps:

  • Never use gas stoves or ovens to heat the home, even temporarily.
  • Have all fuel-burning appliances professionally inspected annually, preferably before the start of the cold weather season when heaters and furnaces are first used.
  • These appliances include gas stoves and ovens, furnaces and heaters, water heaters and gas clothes dryers.
  • All such devices should be properly installed and vented to the outside.
  • If repairs are necessary, be sure they are performed by a qualified technician.
  • Always use the proper fuel specified for the device.
  • Have flues and chimneys for gas fireplaces inspected regularly for cracks, leaks, and blockages that may allow a buildup of CO to occur.
  • Do not start a vehicle in a closed garage, or idle the engine in the garage even when the garage door is open.
  • Gasoline-powered generators and charcoal grills must never be used indoors.
  • Purchase a CO detector (either battery operated, hard wired or plug-in) and follow the manufacturer’s instructions for proper location and installation. Installation of working CO detectors in residential properties is now required by law in most states.
  • Learn what to do if the CO alarm activates. If anyone in the home experiences symptoms such as fatigue, dizziness, blurred vision, nausea, or confusion, everyone should leave immediately and seek medical attention. If no symptoms are felt, open doors and windows immediately and shut off all fuel-burning devices that may be potential sources of CO.

Enjoy the comfort and safety of home this winter and all year long.

Smoke Alarm Smarts

Smoke alarms are an important defense against injury or death in house fires. Statistics from the National Fire Protection Association show that nearly two-thirds of home fire fatalities occur in homes with non-working or missing smoke detectors. Most building codes now require smoke detectors in all residential structures, which has resulted in a steep drop in fire- and smoke-related deaths. Homeowners should check with their local public safety office or fire department for specific information on these requirements.

  • As in real estate, location is key! Smoke alarms should be in installed every bedroom, outside every sleeping area, and on each level of the home.
  • Alarms should be placed high on a wall or on the ceiling. It’s best to follow the manufacturer’s instructions for placement. High, peaked ceilings have dead air space at the top; in these instances smoke alarms should be placed no closer than 3 feet from the highest point.
  • For areas close to the kitchen, use a detector with a “hush button” that can be used to silence nuisance alarms triggered by cooking smoke or steam. Alternatively, consider installing a photoelectric alarm near the kitchen, which will not be triggered by cooking. No matter which type is used, never remove the unit’s battery to stop or prevent nuisance alarms.
  • There are two primary types of smoke alarm technology: ionization and photoelectric. According to the National Fire Protection Association, ionization alarms are more responsive to flames, while photoelectric alarms are more sensitive to smoldering fires. For the most comprehensive protection, both types or a combination unit should be installed.
  • Test each alarm unit monthly. It’s helpful to put a reminder in your calendar to do this on the first or last day of the month, for example. The units have a test button that will sound the alarm for a moment or two when pressed. Any alarm that fails to sound should have the battery replaced. If the test button fails with a new battery, replace the entire detector immediately. Monthly testing is also an ideal time to dust off the unit so that it continues to work properly.
  • Replace the batteries at least once a year. A common rule of thumb is to do this when changing to or from Daylight Saving Time in fall or spring. Remember, a non-working alarm is no better than no alarm at all. Many newer alarms now come with 10-year lithium batteries that eliminate the need for new batteries, but the unit itself must be replaced after its stated lifespan.
  • If the alarms are hard-wired to the home’s electrical system, make sure they are interconnected for maximum effectiveness – meaning that if one alarm is triggered, all of the others will sound as well. Any hard-wired alarms, interconnected or not, should be installed by a licensed electrician for safety and proper operation.
  • The newest type of interconnected smoke alarms are wireless. This technology allows detectors to communicate with one another and, like their hard-wired cousins, will sound all of the units at the same time even if just one is triggered initially.

Early alerting is key to surviving a fire. Following these simple but important measures allows occupants to be warned, helping to prevent injuries and fatalities.