For every job that must be done, there is an element of fun. Okay, fine. What we call “fun” you call “preparation”. Preparedness – as it’s currently being showcased around the world – can make or break a major life event. Granted, you aren’t bringing new life to this world or even trying to contain a global pandemic, but renovating your home is no small feat, either. At the very least, it’s an expensive investment that can pay off if you do it well. One of the ways to do it well – in fact the way that sets you on the path towards doing it well – is by budgeting. These are our top budgeting tips.
Source Your Funds
Sourcing your funds is integral to figuring out how much you have to spend on your remodel. You may have some money saved away, have a nice tax return headed your way, or need to borrow from a lender. If you borrow, research your options. Home equity allows you to borrow against the current value of your home. A loan will render you a lump sum upfront that you pay off in the agreed amount of time. A line of credit is just like a credit card. Spend as you need it, pay as you go, purchases accrue interest. Interest rates (and deals) and monthly minimum payments deserve as much scrutinizing as anything.
The most important rule of thumb when borrowing for home improvements can be whittled down to one simple phrase: don’t bite off more than you can chew. Unless you’re investing in a home improvement project like new insulation, solar, or geothermal HVAC – which will reduce your overhead and garner savings instantly – upgrading something like your kitchen will never be worth the investment if the payoff puts you in the red each month.
Always Be Prepared
That’s the theme, isn’t it? While no one can predict what types of emergencies might arise during a renovation, the likelihood of one happening will always remain high. Now, you could tempt fate and not set aside an emergency fund and see what happens. But the second you spring a leak or stumble upon termite damage, you can kiss those gorgeous granite countertops goodbye. As some wise person you know probably once said; it’s better to have it and not need it, than need it and not have it. Don’t risk it. 20% of your entire budget. Lock it down. Don’t touch it.
This mainly pertains to kitchen and bathroom remodels. If there is going to be a point in time when you will have to go without a kitchen or bathroom, you need to know before designating the money. Having to buy your food out, or resort to PB&Js for a few weeks isn’t just rough on your health (mental and physical) it is an added expense. Two people ordering delivery from any app in LA spends $40-$50 per meal on average. Factor in a little cushion for these types of situations.
Choose DIY’s Wisely
DIY is popular not just for its feelings of accomplishment, but because it can save you major money. If you’ve gotta ball on a budget, it’s more important to know where to cut corners than it is to simply cut them. Things like painting, replacing the faucet or light fixture can be done easily with your own two hands. But if there’s a job you’re not sure you can do well, hire a professional to do it right the first time. Otherwise you’ll be stuck paying double to fix your DIY mishaps.
Organization Is Key
This is perhaps our best piece of advice. As you’re mapping out your budget for the entire project, designating dollar amounts for each and every element, put it all down in a spreadsheet. At the very least, line it all out in an itemized list. Makes copies for yourself, your partner, your contractor, and anyone else that may need it for reference.
Balance it like a checkbook. If your floor option ends up being cheaper than what you sectioned off for it, you could apply it to a cabinet refacing or elsewhere. Check it every day. When a question or complication arises, consult it. The more organized and present you are in this habit the more prepared you’ll be to handle whatever comes your way.