The final days have arrived, and your air conditioning unit has officially come to a rattling halt. There’s no getting around the fact that affording a new air conditioning system can be a significant financial burden for the average person to bear. Some units cost thousands of dollars, and not everyone has the cash sitting around in their savings account.
It’s always best to plan in advance for a potential financial crisis, particularly one that you can anticipate years in advance. You won’t want to get caught off guard when it comes to such a major expense. You can start adding a few of these savvy savings techniques into your budget today.
Evaluate whether you should pay for the repair or replace the unit
Your air conditioner is rattling, squeaking, and grinding to a spectacular halt every couple of weeks. The local AC repair technician has been out more frequently than any of your friends. The repair that he’s proposing may be the cheapest option right now, but is it really going to solve the problem long-term?
This is a dilemma that every homeowner will face eventually. A repair bill is always the least expensive choice in the immediate future, but it could be costing you more in the long run. Keep a detailed record of all the repairs you’ve made to the unit over the past couple of years. When you’re faced with yet another significant repair, review how much you’ve already spent on this unit.
The age of the unit will play a significant role in the decision. If your air conditioner is more than ten years old, it has probably already lived its best years and may be nearing retirement. Consider the age of the air conditioner alongside the number of repairs you’ve made. A sharp increase in the number of repairs on an old unit could indicate that it’s time to officially let it go.
You can continue to opt for the repairs on the air conditioner, but they will grow significantly more expensive as time passes. Eventually, you will end up investing a healthy sum of money into a machine that you’re not going to be able to keep running much longer.
Making a wise investment in the purchase of a new air conditioning unit now could actually save you more money over the next few years, as counterintuitive as that may be. Instead of paying for repair after repair, reallocate those funds to your new air conditioning unit. This is a great way to refrain from depleting your savings account and to help your home run more efficiently.
Make a budget
Do you have every intention of saving up for your new air conditioning unit, but the money seems to disappear each month? For most individuals, this is a simple matter of not telling their money where it belongs when their paycheck arrives each month. A budget can help you to gain more control over your money and plan for financial burdens like a new HVAC system.
Consider all of the bills that you pay on a monthly basis ranging from your mortgage to your groceries. At the end of the month, you likely have a certain amount left over. Create a separate line item on your budget for a new HVAC unit so you are telling a certain number of those leftover dollars to make it into your savings account.
When your paycheck hits your bank, immediately take out the money you set aside for a new air conditioner. You will need to physically remove it from your bank account to keep yourself from spending it on unnecessary items. You could also set up a direct transfer from your checking account into a separate savings account on your payday.
This is a great way to ensure that you are actually setting some money aside each month.
Create a savings account at a different bank
How many times are you tempted to take money out of your savings account for something relatively minor? Maybe you saw a new blouse on the sale rack at your favorite store. Your friends were going out to eat at a nice restaurant without you. A cousin is getting married this weekend and you need a new suit.
If your savings account was more difficult for you to access, you would be less tempted to withdraw your cash on a regular basis. Open up a savings account at a bank other than the one where you keep your checking account. It’s even better if this secondary bank has a location that is inconvenient for you. The branch hours may be more restrictive or it could be on the opposite side of town.
No matter how you choose, you should keep a separate savings account at this bank specifically earmarked for your HVAC funds. When the time comes around to purchase a new unit, you will have to make arrangements to withdraw your funds appropriately. The money will be there and you won’t even think twice about it.
Set aside unexpected money
Every now and again, you probably receive a birthday card from a generous aunt or a bonus from your employer. Both of those are financial windfalls you may not have accounted for in your budget. When you receive extra money that you didn’t necessarily plan for, it’s a great opportunity to beef up your savings account.
Consider how many times each year you end up with a crisp $100 bill burning a hole in your wallet. You could be tempted to spend it all the minute you receive it, but putting it in a savings account is far more responsible. Over the course of a year, you may end up with hundreds of dollars stashed away without even noticing.
Maybe putting the whole amount into a savings account is too drastic for your taste. You may decide to split the surprise funds in half. Half of the money can be spent on something lavish and frivolous right now, and the other half goes into your new air conditioner fund. This allows you to enjoy the unexpected cash and do the financially responsible thing with your money simultaneously.
Take advantage of financing offers
No matter how you prepare, there’s always a possibility that your air conditioner will die before you have the opportunity to flesh out your savings account. You may not have stacks of cash on hand to pay for a new unit that could cost thousands of dollars. Sometimes, you have to take advantage of financing offers that are available to you.
Look for financing options that are available at the lowest possible interest rate. This will help you to keep more money in your pocket for the duration of your loan. Keep in mind that a longer loan term will typically mean lower monthly payments over a longer period of time. A shorter loan term will mean higher payments right now but fewer of them.
The best option is to find an HVAC company that works with a specific financing company to help fund their customer’s needs. This may help your financing to go through smoothly so that you can get your air conditioner much faster.
An alternative would be to seek out a personal loan or a home equity line of credit through a local financial institution. In these instances, a bank would issue you the funds that would then be transferred to the HVAC company to pay for your new unit. While it isn’t complicated, it does add an extra step that could slow things down a bit.
Depending on your credit, you may qualify for all three options so you will want to investigate all of the possibilities. Spend some time talking with representatives from all companies that you are considering in order to receive accurate monthly payment estimates and loan disclosures. Never sign for any loan until you read all of the fine print.
Affording a new air conditioner isn’t a luxury that the average homeowner can manage without advance preparations. According to the research, the vast majority of Americans actually live paycheck to paycheck. This means that having a few thousand dollars tucked away in a savings account for a rainy day seems like an unlikely scenario.
By taking a few of these steps, you can begin managing your money wisely today to prepare for the purchase of a new air conditioner in the years to come. Ensure that you have the savings available to make a wise investment with your next major home purchase. Don’t forget to check what financing options may be available through a local HVAC company like Classic Air Conditioning and Heating if you don’t have enough time to save up for the entire unit!