How to Budget for a House Remodel Project
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Americans will spend $310 billion on house remodel projects this year, according to a recent Harvard study. This is an increase from prior years and a good indication that the economy will benefit in many ways from this home remodeling trend.
It’s no secret that remodeling homes can be expensive, and as many homeowners know, the ‘to do’ list never really ends. There are always new trends, new ideas and new chips and cracks to repair!
My First Big House remodel Project
Before we even moved into our home a few weeks ago, we spent $1,300 refinishing our wood floors. It’s not exactly something I wanted to spend right away, but I knew that while the house was empty and we had not moved in yet, it was the perfect time to tackle this kind of house remodel project.
Our house had a lot of mismatched wood floors. Some were an old orange-y type of hardwood and other parts had wide planked maple that was stained black. I wanted the house to feel cohesive so we stained it all black. It looks awesome and is a nice modern upgrade for my 1940’s bungalow.
If I’m being honest though, the $1,300 hurt to spend, especially because we had so many moving costs and other unexpected house expenses. Usually I save for a long time for big purchases in my high yield savings account, but this one was something we decided to do last minute. The reason is because I realized if I wanted it done in the future, we’d have to move all the furniture out and possibly our kids so we wouldn’t be around all the smells and chemicals that it takes to refinish floors. It was a “now or never” type of decision.
Budgeting for a house remodel project
Because I had to tighten my cash flow to get our floors refinished, I wanted to encourage others to actually budget and plan for a big purchase like this. It definitely feels better to save up for something over time and have the cash to pay for it. So, here’s how things really should be done when it comes to making a budget for a home remodeling job:
1. Research the Cost
We have a lot of smaller projects on our list like getting curtains and painting the kitchen, but a big-ticket item that we’ll have to save for is finishing our basement. This will involve getting new windows, refinishing the floor and putting up some sheetrock. If we decide to get fancy, we might put a half bath down there since our home only has one bathroom total. (I know future buyers with older kids might need/want a second bathroom.)
As part of this process, we’ve researched the cost of the materials and labor. We’ve thought about what we can do ourselves and what we should hire out. For example I might take a stab at painting a concrete basement floor but I’m definitely going to hire an electrician when we need one!
When it comes time to actually finish the basement, we will get quotes from several people and we’ll go with the person or company who we think would be the best fit for us. Doing research is important because it helps you to approximate the cost of a house remodel project so you can save ahead of time.
2. Save in a Separate Account
It’s too easy to use the money that you save in your regular savings account. When you want to do a big house remodel project, you need to send the money away to live in another spot. This way, you won’t be tempted to touch it when Christmas rolls around or when you’re dying to go to the Caribbean in the dead of Michigan winter (or maybe that’ll just be me.)
I use Smarty Pig and I have for years, but there are other high yield savings accounts or money market accounts like Discover Bank and American Express who are now beating their rates so I might switch. You can also sign up for Digit as they analyze your spending trends and put small amounts of money for you in a savings account as every little bit helps.
All that said, if you schedule an automatic withdrawal and send it to your house remodel fund every month, you’ll have enough money in there before you know it to complete your project.
3. Save More Than You Think
You have to be prepared for things to go wrong when it comes to big home renovations. It might sound negative, but it’s also wise. You’ll work hard to save your money and budget for your project. It’ll take time to make a plan, speak with contractors, get recommendations and more.
So because you’ll spend all that time and effort making it happen, go ahead and save about 20 percent more than you will think you need.
In the worst-case scenario you’ll have to dip into your extra savings. In the best-case scenario, you can roll that money into the budget for your next project…because you know you’re not done with your house yet!
What’s the biggest house remodel project you’ve ever done? Do you have any tips for someone who might be considering a remodel or big project in their home?
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