Counting the costs is the critical process of creating a budget from our homestead features list. This budget can help us avoid the risks of overpaying for a property and skyrocketing expenses.
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In the previous episode we discussed our core values and homestead features list. While looking for an image for that blog post, I came across an article that may prove helpful in defining our personal core values: Define Your Personal Core Values: 5 Steps. Check it out.
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Starting Our Budget
A spreadsheet (like Excel) should become your best friend. Begin by copying your homestead features list into the spreadsheet. You can simplify the spreadsheet building process by downloading this Free Construction Project Management Templet. It may also give you additional things you hadn’t considered. Your features list has now become the outline for your budget within Excel.
Two Things to Consider
- Add 30% to the bottom line of your projected costs to cover the unexpected. This may even need to be 40 or 50 percent for the inexperienced. We don’t know what we don’t know. We must take that into account.
- Don’t forget to include sales or value added tax to your costs.
Counting the Costs of Time & Intangibles
Time is our most precious commodity. Our options for purchasing a homestead range from raw, undeveloped land to a complete, turn-key solution. Consider a finished homestead. This can save us years of time. It can also save money in the long run, even if your up-front costs are greater. Consider farm estate sales and ex-homesteader properties. Building a house from scratch comes with many frustrations:
- Permits & inspections
- Contractors not showing up – even more so in rural areas
- Cost overages
- Missed deadlines
- Dirt & mess
Counting the Costs of Capital
If a potential property has most of the features on your list, you know the costs up front. Take into account your features list and add the costs of adding these items to your homestead. Some to consider:
- Roads: excavation, gravel, pavement, culverts
- Buildings: house, barns, sheds, pump house, green house
- Septic or compost toilet
- Fuel tanks
- Off-grid and/or utility hook up
- Fruit trees
- Tractor and other tools
Counting the Costs of Expenses
Can we afford to live in our homestead? Our ongoing operational budget is also important. What will be your monthly expenses? Some things to consider:
- Credit cards
- Fuel: LP, oil, wood
- Animal feed
- Maintenance & repairs
- Real estate taxes
- Health insurance
- Home insurance
- Seeds & fertilizer
- Emergency fund
- Auto fuel, maintenance, insurance
One More Thing
Be careful when purchasing a homestead from a family member. It is a business transaction and needs to be treated as such.
Continuing the Selecting a Homestead series, we will cover Choosing a Region.
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