to yourself; and your husband will agree with you!! Now you’re out 350-Euros that you never intended to spend. Did you think ahead and plan to have the funds for this one unexpected expense, or the many other unexpected expenses that may lie ahead?
And then, there’s the cost of buying bottled water when you’re touring off the ship, about 4-Euros per bottle, every few hours; and another 1-Euro to feed the turn-style at the rest rooms – and this goes on 3-4 times a day. It’s costing you about $25.00 U.S. dollars just to “hydrate and dehydrate.” That’s double the cost for the two of you; and if your husband is over 50, it may be 50-Euros for him alone each day. Yes, if you want to sing “Oh what a relief it is,” then it will cost you a boat-load of Euros.
These are just a few of hundreds of costs that can come up during your vacation and you’re either ready for them, with planned cash in hand or savings in the checking account; or you’re unprepared, ignorant of what problems lie ahead, and woefully low on funding. “Brother, can you spare a dime?”
So how to avoid the worry, and have “smooth sailing” on your cruise? Plan ahead, figure out your probable expenses, see what you both will need to make the journey a pleasant one, and how much those needs will cost you. In planning you may find that you don’t have enough funds to take this trip and you’ll have to plan for another year, or cut back on the length of the trip, or maybe only be able to afford a weekend at a suburban hotel that has a breakfast bar and offers a free shuttle to the nearby casino. “Yip-e-i-Ki-a – Woo-Hoo!”
Now, here comes the tie-in to living in a community association… Basically, it boils down to planning for expenses to keep the property and buildings in tip-top shape, without breaking the monthly assessment fee “bank” every year:
Planning for a vacation utilizes the similar principal of funding for reserves in your community association when you are in need of roof replacement, asphalt for parking lots, concrete walks, roof top HVAC units, siding, water heaters, building systems, etc., etc.
These are the simple steps to take which will help establish a schedule to allow you to build your reserve funding:
1. Hire a professional reserve study provider, whether a person or group, to prepare a report. This report should include a visual inspection of all common elements and common area components, an evaluation of current conditions which will project how many more “useful” years remain on each component, and the estimated respective costs of replacement. This study becomes a tool to be used each year when you prepare an association’s annual operating and reserve funding budget.
2. Read this reserve study carefully. Look at the spreadsheets and incorporate the information provided into your own annual budget spreadsheet so that you are familiar with each line item.
3. Solicit bids well in advance of the year you plan on replacing any component. For example, if you are going to replace roofs over a three year period and you plan on starting in three years, make sure to have the proper reserve contribution in the annual budget and make sure you FUND this ROOF RESERVE and don’t use it for something else. If you have to dip into the ROOF fund because the garage concrete ceiling, which was estimated to last for 8 more years, is now crumbling and starting to fall down, make sure to go through all of the components again and fund accordingly. Can the roofs wait more than three years? If not, then you have to find a way to fund the roof replacement program and the accelerated repair of the declining garage ceiling.
4. Inspect your property carefully each year to determine if the information provided in the reserve study is holding true, or to determine if there are components which have declined sooner or may be deferred for replacement in a couple of years. Know your property and the physical condition of the components as best you can. Sometimes the best way to obtain this information is by asking your vendors to evaluate the part of the property they service; ie, when your HVAC is out on their quarterly maintenance visit, ask them about how many years they think the boilers will last. A reasonable estimate, or even a practical guess from an expert, is better than ignorance!
5. A lengthy and in-depth discussion about the reserve funds and the components being funded must take place every year during the budget process. At least 1/3 of your annual assessment total may need to be reserve contributions.
Know what needs to be done. Know approximately when it needs to be done. Know how much it will cost when it gets done. Know how much you have to save every year to pay for the projects.
Planning ahead and being prudent in your fiduciary responsibility will make meetings more pleasant and ensure a less worrisome environment within the community. Save for a rainy day, because while you don’t know when it will rain, you should know it will rain sometime. Just like in your domestic life, after a careful review of the finances, maybe you and your husband can take that Mediterranean cruise, but more realistically in three years. If that is what you want to do, then that is what you need to save for. Start your plan to fund that dream vacation, and stick to it. Advance planning for your community association with a reserve study, thoughtful budgeting, and a reasonable reserve fund will make life in your home feel more like vacation all year long!
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