Selling a house isn’t easy, even when the real estate market is hot. Once you’ve finally closed the sale, take a moment to congratulate yourself, but don’t start thinking your work is done. You might think that managing personal finance suddenly becomes easier after receiving an influx of fresh cash, but you’d be amazed by how quickly even that can dry up.
Want to make the most out of every penny you gained? Follow these important steps:
Separate the Gains from the Losses
Selling a house isn’t as easy as just slapping a real estate listing up on the Internet and waiting for the money to roll in. Between inspections, appraisals, marketing, and negotiations, a lot goes into it. And all of that stuff costs money, most of which is taken from whatever you make off the sale of your home. In addition to advertising costs, realtor commissions, and legal fees, you’ll also likely have to pay transfer taxes and title insurance costs.
It can be hard to keep track of it all, let alone get a clear picture of how much profit you’ve actually made. That’s where an online seller closing costs calculator is most valuable. Simply punch in your home’s sales price, your remaining mortgage balance, and the state you’re selling in, and the calculator does the rest.
Update Your Budget with New Info
If keeping track of your finances is important to you, then chances are you already have a weekly or monthly budget to work with. If not, now is a good time to start. A good budget is a record of all the money you have in your bank accounts, how much you can reliably expect to receive from income sources, and how much you need to set aside for utilities, groceries, debt payments, car insurance, and other regular expenditures.
Even when accounting for closing costs, taxes, and other factors, selling a home is likely going to provide a larger-than-usual injection of cash into your resource pool. That means you’re going to have to update your budget ASAP, that way it can more accurately reflect your financial situation.
Beware of “Death by a Thousand Cuts”
Way back in the 7th century, a common form of criminal punishment was called Lingchi, or “Death by a Thousand Cuts,” wherein the victim was sliced into pieces, slowly, just a little at a time. As horrifying as that is, Lingchi lives on today as a scourge not of the flesh, but of resources. People who receive large windfalls all too often dismiss the importance of adhering to a budget or saving up for an emergency. They do this not by overspending on extravagant items, but by giving into smaller impulse buys.
The result? You think “it’s okay, this purchase isn’t that expensive” one too many times and, before you know it, a surprisingly huge chunk of the proceeds you earned from the sale of your home is already gone.
