Becoming a homeowner is an exciting milestone, but it also comes with financial responsibilities. While it's natural to invest in your new space, it's important to spend wisely and avoid unnecessary expenses. Unfortunately, many new homeowners in the Twin Cities and around the country fall into common traps and end up wasting their hard-earned money on things that don't add much value or benefit to their new home. Here are a few common financial mistakes to avoid.
1. New Furniture and Decor One of the biggest pitfalls for new homeowners is overspending on furniture and decor. Stay away from the furniture store in the weeks leading up to and following your move. New credit accounts before your mortgage is final can hurt your loan approval! Filling every room with brand-new pieces is tempting, but furniture depreciates just like a new car. Instead, focus on the essentials and consider purchasing second-hand or refurbished items after you have the keys, which can save you a significant amount of money without compromising on quality. Additionally, compare prices at different stores before making any major purchases.
2. Impulsive DIY Projects While do-it-yourself (DIY) projects can be a great way to save money, they can also lead to costly mistakes if not approached carefully. New homeowners often get carried away and tackle complex projects without the necessary skills or experience. This can result in expensive repairs or hiring professionals to fix the mistakes. Before embarking on a DIY project, thoroughly research and assess your abilities, and start with small, manageable tasks. For major renovations, it's often best to consult with experts to ensure the job is done properly with permits.
3. Extended Warranties If you're buying a new appliance, there's a good chance that an employee will try to get you to purchase an extended warranty. While these warranties are useful on rare occasions, it's unlikely that a major appliance will malfunction during the warranty period, meaning you'll be spending money on something you'll never use. Home warranties through third parties MAY be worth you money if you bought a home with older mechanical equipment and appliances.
4. Costly Additions Making an expensive addition to your home right after you move in isn't recommended. While your backyard might be perfect for an outdoor kitchen, spending thousands of dollars on a second kitchen that you don't need is a quick way to waste a lot of money. Instead, prioritize improvements with a high return on investment, such as energy-efficient upgrades, or focus on smaller items that will improve the functionality and appearance of your home.
5. Lawn Services New homeowners are often eager to get their yard and home exterior in perfect condition soon after closing. Lawn care services may even send offers in the weeks and months after you purchase your new home, but these services can be costly in the Twin Cities. You can do most of the things that lawn services advertise with some basic tools and some elbow grease. You can even consider hiring a neighborhood kid to help you! Either way, the cost will be far lower.
As a new homeowner, it's crucial to spend your money wisely. A well-thought-out approach to homeownership will not only help you stay within your budget but also ensure that you maximize the value and enjoyment of your new home for years to come.