I love stuff from the 80’s and one of my favorite bands is INXS! I always liked the line from their song Kick:
Sometimes we kick, and sometimes we get kicked!…
I just got financially kicked!
It is the middle of hot ass summer. My HVAC system just died. I called the repair woman. She said it was the oldest system she has seen from 1972. They won’t even fix it, a few safety codes went into effect the last 45 years. Also come to find out to no surprise, this old system is/was highly inefficient. The ducts leaked like crazy, basically cooling the attic for the mice.
The next day the oven stopped working and I do not happen to be an oven repair guy. Two huge repair and installations bills out of left field! Life! A couple other things in life went south, so we were having a fantastic week. The HVAC installation guy seemed be having a worse week than me, he goes “you gotta roll with the punches,” so true.
bottomline, we needed a new system which as you can imagine runs in the multiple thousands! Here are some strategies deployed.
1. Emergency Fund
Full disclosure, our emergency fund was not as well padded as it should have been. There was some thank goodness, but I realized not enough. If something else like the car broke we would have been in trouble. This was a wake up call. I have decided to spend the next year focused on building a true emergency fund. Otherwise you are scrambling around trying figure out how to mitigate the damage. On the road to FIRE, you want to avoid tapping long term investments as much as possible.
2. Zero percent for 12 months
Although not ideal, the company offered 12 month zero percent payment plan. This is a good way to pay the bill off over time. Make sure there is no pre payment penalty and make sure you can pay it off!
3. Opportunity to sell some stock
We invest to defer consumption today for consumption tomorrow. The market has been going up now for 10 years. Perhaps it was time to take some cash off the table. Another option is to sell losers and claim losses at tax time. Something to consider although not ideal.
4. Think of the long term
Over the long haul, new systems like this are much more energy efficient. This should help recapture the costs over 20 years by cutting the summer and winter energy bill in half.
5. Adding value to an asset
A good modern HVAC system is adding value to an asset, your home. Real estate is a physical thing that requires maintenance and care. If that reality is not accepted then the asset class may not be for you.
There were other thoughts that ran through my mind. What can we sell? What can we cut back on? Etc. I am still contemplating these questions and will try to be better prepared in the future.