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This article is reprinted by permission from NextAvenue.org.
Let me share with you my laptop tale of woe and what I learned from the experience that can help with your personal finances (and the life of a laptop you own).
Recently, my wife and I spent a few pleasant days in a New Jersey beach townhouse of someone we know and I did some work out of its home office. One morning during the stay, I went to retrieve my open, 3-year-old MacBook Air only to find that it was drenched due to a leak in the ceiling the night before.
The laptop was inoperable, the townhouse’s roof needs repairing, if not replacing, and the home office ceiling requires replastering and patching up.
Homes and wallets: 5 lessons
As one of my “Friends Talk Money” podcast co-hosts, personal finance columnist and author Terry Savage, said on our episode about taking care of your home and your finances: “Homeownership expenses can come as a shock.” (You can hear the whole episode wherever you get podcasts.)
Before I tell you what I did about my laptop (spoiler alert: there’s a mostly happy ending), I’d like to offer five money and home maintenance lessons from the “Friends Talk Money” episode with co-hosts Savage and Wealthramp founder Pam Krueger, along with smart advice we heard from our guests: financial adviser Lazetta Rainey Braxton and Paul Hope, a home and appliances writer at Consumer Reports.
Lesson 1: Keep money in a rainy-day fund for those inevitable unfortunate home maintenance expenses for big-ticket items like a roof or a water heater.
“It all comes back to answering the question: ‘What is the true cost of owning a home?’” said Krueger, who has owned her home for 15 years. “I’ve got my fingers crossed because I haven’t had anything terrible happen yet, but I expect it’s going to come.”
A new roof, for example, costs $4,700 to $9,200, according to the online local-services marketplace Thumbtack.
But, according to a new study from the Employee Benefit Research Institute, less than a quarter of families with working household heads under 65 had emergency savings of more than three months of their family income in 2019.
See: Nearly 25% of Americans have no emergency savings
Rainey Braxton, who runs the Lazetta & Associates financial advisory firm in Brooklyn, N.Y., calls an emergency fund for home expenses a “capital account” and says many of us don’t have one.
“What we fail to do is really think about the roof that needs replacing every 20 years, the furnace that needs to be replaced every seven to 10 years, the oven that may need to be replaced, that type of thing,” she said on the podcast. “I don’t see families often thinking about the life cycle of certain appliances and of certain aspects of their home that, just by the course of living, will be required to be replaced.”
She advises her clients to have cash set aside for these types of things and perhaps to buy extended warranties for costly appliances and computers that may need repairing one day.
“Typically, when we think about an emergency fund, it’s about a job loss. What we’re also saying is: think about those ‘big-ticket oops!’” Rainey Braxton said.
Krueger said she thought Rainey Braxton “hit the nail on the head,” so to speak, and budgets for possible home snafus this way.
A capital account is especially important, Rainey Braxton said, if you’re nearing retirement or in retirement since you won’t be able to count on income from a full-time job to help cover the expenses.
Savage knows all about this kind of thing, recounting on the podcast her own tale of woe about the house she’s owned for 40 years.
Last winter, the upstairs deck had a leak and this is what she was told by a contractor: “If we’re going to fix the leak, we have to tear the upper deck off. The leak came in through the sliding glass door in your bedroom, so we’re going to have to replace that door. And the other sliding glass door should be replaced, too, because they’re about the same age.” And on and on.
Also see: How can I make sure that the money I’ve saved will last my whole retirement?
Savage wouldn’t reveal exactly how much all this work would cost but noted: “Let’s just say that the number is very quickly climbing up toward six digits.” Fortunately, she has what she calls “chicken-money savings” to help pay for it — that’s cash you can’t afford to lose in the stock or bond market.
Having this kind of account, Savage said, can help avoid your dipping into retirement savings to pay for everyday homeownership expenses.
Lesson 2: Hire a pro to regularly inspect your home and tell you what to fix or replace.
Consumer Reports’ Hope said: “Maintenance is one of those things that pays out dividends if you’re good about keeping up on it…There’s countless examples of little things that might be free or even just a few hundred dollars to catch in the moment.”
Otherwise, Hope said, they “can quickly turn into problems that multiply five- or 10-fold, if not more. Roofing is definitely one of those examples.”
Hope said if you’ve had a roof for about 20 years or so (as the townhouse owners of my story do), it’s a good idea to have a licensed roofing inspector see if it needs repairing or replacing and having an inspection annually. The inspector can also estimate the life expectancy of your shingles.
Had the townhouse owner kept the roof in mint condition, my laptop might not have suffered, or perhaps suffered less.
Periodically check your water heater, too, Hope said. The Insurance Information Institute, a trade group for property/casualty insurers, recommends doing a twice-a-year visual check of your tank.
“The good news about water heaters is they’re not a terribly expensive device to repair,” Hope noted. “It’s typically a pretty simple job; maybe half a day’s labor for a skilled plumber.”
A new water heater could cost $500 to $2,000, Hope said. But that beats the cost of dealing with a soaked basement if the old one you have bursts. Also, Hope said, water heaters have become more efficient in recent years, so buying one can be smart for energy-savings, too.
Lesson 3: Keep excellent homeownership records for insurance purposes.
Said Savage: “Make a list of the dates you installed your furnace, your water heater and your air conditioners and your kitchen appliances.” Then, keep an eye on the typical useful lives of these items and prepare to replace them when those dates near.
Consumer Reports just came out with a nifty home-maintenance app to help with this kind of thing: Upkept ($4.99 a month after a 90-day free trial). It provides handy automatic reminders about tasks worth doing and a Home Hub to keep receipts.
Also, if you do run into a problem like a water leak, take photographs of the damage immediately in case you’ll submit an insurance claim for reimbursement.
Lesson 4: Be sure you have the right insurance coverage.
Loretta Worters of the Insurance Information Institute said a computer insurance policy includes coverage for theft, vandalism, fire damage and unexpected accidents like water damage, computer dropping and power surges due to lightning.
More: Think your house is fully insured against hurricane damage? Beware of these policy loopholes
Worters noted that homeowners insurers base premiums, in part, on the age, material and condition of roofs. As a roof gets older, she said, premiums typically rise; if the roof is in disrepair, the insurer may require a replacement for continued coverage. (There’s more on this at the website of the Insurance Institute for Business & Home Safety.)
Lesson 5: If you have a laptop, keep it closed and turned off when you’re not using it. Had I done that, the ceiling leak would’ve caused far less damage than it did.
Speaking of my laptop, here’s how things ended up: After some frantic googling, I learned the best thing to do right away was to turn the computer upside down and stand it up that way for two days (NOT to put it in rice, as you might with a wet cell phone). So I did just that.
Next, I took it to a tech repair shop in town with my fingers crossed. When a laptop gets wet, I’d learned, sometimes it’s recoverable and sometimes it isn’t.
The shop told me that although my laptop couldn’t be salvaged, its technician could transfer everything on it to a similar, used Mac, for $750. I approved the work and bought the new used laptop.
Also see: As mortgage rates hover near historic lows, will Americans be able to take advantage of the savings?
There was one small issue, though: The internal camera from my original laptop was destroyed, so I’d now need to get an external camera and plop it onto the top of my used Mac. Turns out, the video quality of the external camera is actually better than the old internal camera, though this little guy sometimes has trouble doing my Zoom
ZM,
and Teams calls. But we’re working on it.
Richard Eisenberg is the Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and Managing Editor for the site. He is the author of “How to Avoid a Mid-Life Financial Crisis” and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS Moneywatch.
This article is reprinted by permission from NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.
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