Simone's Blog: Money Magnet

As the Director of Affiliate Relations at HomeFree-USA, I’ve always been fascinated with how people handle their money. Like everyone else, I’ve had my financial ups and downs. In fact, it took me 32 months to pay off $32,000 in credit card bills and build up a six-month emergency fund. While that was a very difficult period, I am grateful – and wiser -- for the experience.

Through my personal experiences and working at HomeFree-USA, I’ve gained a ton of insight that I feel compelled to share. You’ll find those lessons here. Feel free to take the thoughts and ideas that resonate with you most and put aside the rest for later. I look forward to sharing my journey.

How to know whether you are spending too much (Part One)

Although budgets are meant to fit our personal financial world, I often wonder if the amount I’ve allocated in each category is considered too large, too small, or about average. Suggestions such as how much to save, give, and put aside for retirement can serve as a great guide when designing your monthly spending plan and preparing for future endeavors.

If you’ve ever wondered how much you should be saving and spending, I’ve put together a guide that may provide you with some insight. This week, I’ll provide suggestions on what you should spend on your housing costs.


Check back in future weeks when I’ll discuss what you should be putting aside for such expenses as food, entertainment and debts.


Mortgage.  A good rule of thumb is 25-35% of your monthly take home pay.  This includes property taxes, homeowners insurance and home owner’s association fees.


Home maintenance and repairs. There’s no getting around it. Your house will need repairs and general upkeep. Set aside 1% of your total purchase price each year. For example, if you paid $300,000 for your home, set aside $3,000 per year. Another way to look at it is to put away $1 per square foot so if your home has 5,000 square feet, $5,000 would be set aside each year for maintenance and repairs. These numbers can vary by age of the home and weather volatility. If the home is older and/or certain items will have to be replaced soon, consider increasing that amount.


Utilities. A utility is a service or resource that is used to keep a home functional. This includes water, sewage, electricity, gas, telephone, internet and cable. While you may pay more for utilities at certain times of the year (think heating costs in the winter), you should typically be paying no more than 5 to 10 percent of your take-home salary for utilities.


Home services.  So what about those non-required home maintenance expenses such as the burglar alarm, pest control or housecleaning services? These expenses shouldn’t exceed more than 2-5% of your monthly take-home pay. If they do, consider cutting back on this category since it’s entirely optional.


While these guidelines aren’t set in stone, they can help you to see where your spending may be out of alignment with your priorities. That way, you can get your budget back on track.


And so it is.