A few weeks ago, I published an article about the financial surprise of big repairs and expenses around the house. In the comments, regular reader, Thom, mentioned that he forecasts and accrues for these ‘personal capital expenditures’ – which can occur over years and decades – on an annual basis.
The key to his approach is a spreadsheet that lists all of the major components of his house – from the heat pump to driveway – and an expected lifespan & replacement cost for each. Each year, he knows what needs to be accrued to someday re-roof the house, freshen up the landscaping, or even replace the windows/doors.
Since others asked to see it, Thom was nice enough to create a simple version of his spreadsheet to get anyone else started. A screen shot of the ‘Personal CapEx’ Excel file is below and it is also DOWNLOADABLE through the link provided …
You can see across the twenty categories, he shows over $100K in potential replacement costs. I really shouldn’t say “potential” as it is inevitable that all of them will be needed at some point. That’s the point of the personal capex accrual afterall – to be ready for something that will very certainly happen someday!
Thanks so much for sharing, Thom!
Please share your thoughts / questions on the approach with Thom in the comments section below, and I’m sure he will respond.
Image Credit: Pixabay