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
MrFireStation 
Thanks for sharing the spreadsheet Thom. Wondering if you replace the item when it reaches the end of life per your spreadsheet, or wait until you have to?
LikeLiked by 1 person
Sorry for the delay responding! I normally continue to utilize items as long as they reasonably last. Once fully accrued, if continuing to last, I will just shift the monthly accruals to another item not fully accrued or to savings. Thanks!
LikeLike
Sorry for the delay responding! I normally continue to utilize items as long as they reasonably last. Once fully accrued, if continuing to last, I will just shift the monthly accruals to another item not fully accrued or to savings. Thanks!
LikeLike
This is similar to the capital projects ledger for our condo association. They update it annually to ensure that association dues are appropriate given depreciation schedules. This also allocates expense during the assets expected lifespan to eliminate or minimize assessments for capital projects.
This is something that obviously wasn’t done on that high rise condo which collapsed in Florida.
Our country should also do this. Thomas Jefferson didn’t believe in burdening future generations on expenses incurred today. He, like Jesus would not be happy with society today. Apologies to the political statement.
LikeLiked by 3 people
No apologies required. We got to where we are thriving through sensible finances and willing to share with others. Our entire country needs to read this forum and start following it.
LikeLiked by 1 person
Very similar! It’s definitely the same concept.
For me, it comes from too many years in the Pharma industry, accruals are just a part of life in almost any industry. It just seemed normal to do the same thing in life 30 years, when I started accruing for personal items.
…and I agree with your politics! 😉
LikeLike
Thanks, Thom! And thanks for posting, Chief.
LikeLiked by 1 person
Glad you found it worth while! Sorry for my delay responding. Busy past few days enjoying a little local road trip! 😉
LikeLike