You probably already have a financial plan for yourself in place. Most likely you sat down with an advisor at some point to set up a budget and diversify your investments. Or maybe you did it yourself online or at the dining room table. Either way, smart move.
But what about your home specifically, probably the biggest investment you'll ever make in your life? Did you really take everything into account: repairs and upgrades, the mortgage, insurance, and taxes? Probably not.
Your house requires a financial plan of its own. Spend a weekend creating one. Once you have a handle on your home's expenses you can devise a long-term strategy that'll let you live there for years with maximum enjoyment and minimum anxiety. These are the four central elements you need to address.
The mortgage: Paying it---and then some
Yes, you already shell out a lot for your mortgage, but can you pay more? Even a little extra each month can add up. Let's say you have $200,000 outstanding principal and a 20-year fixed-rate mortgage at 5%. Your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you'll save $14,887 in interest.
Run the numbers for yourself.
Alan D. Kahn, a financial planner in Syosset, N.Y., likes the idea of early payoff because lowering debt leaves you free to spend money elsewhere later on. There's an emotional benefit as well. It can feel awfully good to own your house outright as soon as possible. And don't fret too much about losing the mortgage interest deduction come tax time. Toward the tail end of the life of a loan most of your payment is going to the principal, not the interest.
Nevertheless, the same extra $100 might also go into a retirement plan every month, or be put aside for the inevitable home repairs (more on those later). Michael Kay, a financial planner in Livingston, N.J., says while a debt-free life may be enormously important to your peace of mind, an extra $1,200 toward your child's college fund every year may feel even better. It's about what's ultimately important to you, both emotionally and financially.
Insurance: Protecting your property
You'll want homeowners insurance with full replacement coverage in case your house is burned to the ground. This sounds simple, but be careful on the calculation. Remember that you own a house as well as the land on which it sits. So even though you bought your home for $300,000, it may cost only $100,000 to rebuild it. Your policy limits should reflect this.
The differences are regional. Where land is at a premium, like much of Southern California, a higher percentage of the purchase cost is for the property rather than the structure. Where land is cheap, like much of North Dakota, most of the value of a new house is the house itself. Don't be deceived by shifts in market values. You may have bought a $1.2 million townhouse in Florida during the boom that now may only sell for $600,000. But the replacement cost of the townhouse hasn't changed much, so you can't cut insurance costs that way.
Do, however, try to cut costs by asking your insurance agent about discounts. Making structural improvements, such as adding storm shutters, can lead to lower rates. Membership is certain groups, such as AARP or veterans' organizations, entitles some policyholders to breaks on premiums as well.
Repairs and renovations: By choice or necessity
Throughout the life of your house, you'll be making two kinds of changes. The first is the fun kind, like a marble floor for the living room. The second is the essential, behind-the-scenes change: a new water heater. You don't have a choice about when you'll do the latter, but you can prepare for it financially.
It's a good idea to have a rainy-day fund. Start with the inspection report you received when you bought the house. Did the inspector indicate that you would need a new roof in five years? A new furnace in 10? Get estimates on what these repairs will cost and start saving. Consider ongoing non-emergency maintenance too. Do you live in New England? Price a snow blower and get bids from plow services. Resist the temptation to take care of everything with
home equity loans, which defeat efforts to pay off the mortgage early.
As for the discretionary upgrades, act prudently. Matthew P. Havens, a financial planner in Hingham, Mass., has seen too many people rationalizing lavish upgrades as an investment when they really were lifestyle decisions. According to
Remodeling magazine, an upscale major kitchen upgrade, for example, could cost nearly $112,000, but only about 63% of that will be recouped in the home's resale value. This isn't to say you shouldn't upgrade. If you can afford to redo your bathrooms, go ahead. Just don't confuse your necessary repairs (new oil furnace---about $4,000) with your discretionary upgrades (Viking range---$6,000 and up).
Taxes: (Almost) no way around them
Taxes are an essential part of your home's financial plan. The bank that holds your mortgage may already handle your real estate taxes with an escrow account. If so the expense is built into your monthly mortgage payment. Check your statements or call the lender. Otherwise create a dedicated fund for property taxes, which can run into the thousands of dollars annually.
You may be able to reduce your tax burden by getting a reassessment. Do your homework first. Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. Kay, the New Jersey financial planner, researched and then challenged the assessed value of his own home and got a 15% rollback.
If you're in a special group, you might get some help from state or local programs. Check around to see what's available in your area. New York State, for example, has its
Star Program for giving senior citizens some relief from school-related property taxes.
Richard J. Koreto is a freelance writer. He has been editor of several professional financial magazines and is the author of "Run It Like a Business," a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.
had made changes to his unit without first seeking permission of the association and then never had the changes inspected.
The change that the seller made? The seller had installed an overhead microwave and changed a cabinet without seeking any approval from the association. This was indeed a minor change. Furthermore, the seller claimed that he didn't actually make the change. It was his claim that a previous owner made that change and that the seller had NEVER read his condo docs.
My client, the buyer, was a very above-board and by-the-book type of character. It was his position that if this guy "hid this fact" who knows how much else he withheld? Even if he believed the seller's story (he did not) then it would show that this is a very inattentive owner. My client canceled the contract based on condo docs.
At another location and with another buyer and seller, the property went under contract and the seller did not deliver the condo docs, because the seller didn't have condo docs. The seller didn't have the condo docs because the seller didn't order his condo docs. The selling agent explains that the law allows for 14 days for the delivery of condo docs. I replied, "That's why you order docs when you list." Because if you allow 14 days for preparation and 2 days for delivery and then 3 days for review, then the buyer can cancel the sale 22 days after the contract is signed.
Here are the lessons for sellers:
Established in 1937, the Washington Redskins are a professional American football team based in Washington D.C. that plays for the National Football League (NFL). The Washington Redskins play at FedEx Field in Landover, Maryland. The team's headquarters and training facility are at the Redskin Park in Ashburn, a community in Loudoun County, Virginia, near the Dulles International Airport. The Redskins have won five professional American football championships including two NFL Championships and three Super Bowls.
The Washington Wizards
Established in 1961, the Washington Wizards are a professional basketball team based in Washington, D.C. and were previously known as Washington Bullets until 1995. The Washington Wizards play for the National Basketball Association (NBA), and the team plays at the Verizon Center located on 7th Street in downtown Washington D.C.
The Washington Capitals
Established in 1974, the Washington Capitals are a professional ice hockey team based in Washington, D.C. and are members of the Southeast Division of the Eastern Conference of the National Hockey League (NHL). The Washington Capitals play at the Verizon Center in Washington D.C.'s Chinatown neighborhood on 7th Street. Since their founding in 1974, the Caps have won their division title five times and the conference championship once.
D.C. United
Established in 1995, D.C. United is an American professional soccer club located in Washington, D.C. that plays for Major League Soccer (MLS). The team's home field is at the Robert F. Kennedy Memorial Stadium (RFK), owned by the District of Columbia and located near the Anacostia River.
The Washington Nationals
Based in Washington D.C. since 2005 as a replacement for earlier teams which had moved to Minnesota and Texas, the Washington Nationals are a professional baseball team based in Washington, D.C. and are a member of the Eastern Division of the National League of Major League Baseball (MLB). The team moved into the newly built Nationals Park in 2008, after playing their first three seasons in RFK Stadium, also occupied by D.C. United. The new park is located in Southeast D.C. near the Anacostia River.
No matter where you buy a home in 
I was born in 
Just across the Potomac River from 
The tunnel had white branches that were covered in ice. Inside the exhibit the air was a chilly 9 degrees Fahrenheit. All visitors wore special blue parkas over their coats that kept us nice and warm.
My son Stuart and I goofed around at the penguins near the glass-like ice igloo. National Harbor can be seen from Alexandria, but a few nights ago we took a short drive around the Beltway to the Washington, DC Church of Jesus Christ of Latter–day Saints, also known as the Mormon Temple.
The grounds of the Mormon Temple are open to all visitors during the Christmas season. This impressive church and its surrounding grounds shine brightly with nearly a half-million sparkling Christmas lights. Each night, a different local musical group performs a live concert in a state-of-the-art theater. Best of all: all events are free!
It's hard for my little picture to really catch the brilliance of the winter night, but in both of these pictures you can see a representative of the Star of David shining in the distance over a Nativity Scene near the visitors' center.
We grabbed some photos outside and walked the grounds. There were plenty of people there, but the crowds were very polite and nice. The Mormon ushers and parking attendants were very welcoming to all who approached.
It was a chilly night, so we came in the visitor's center to warm up. There were Christmas Trees from around the area, and I took Julie's picture near the Mount Vernon tree. I really liked the trees with contributions from nations around the world. Those trees were themed by continents so there was a tree themed with decorations from Africa, from South American, from Europe and from Asia.
Another great spot to check out is the National Christmas Tree near the lawn of the Whitehouse near the Ellipse in Washington DC.
We parked in front of the Washington Monument and then headed across the lawn toward the National Christmas Tree and National Menorah. On the way we passed an enormous Yule Log burning brightly to warm visitors. There is a parade of free entertainment and there are trees representing all the states and territories of the USA.
The National Christmas Tree is between the Washington Monument and the White House, but very close to the White House.
