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Andrew and I have been in our home for about a year now. Turning our fixer-upper into a dream home has been a labor of love. But also, so worth it. Along the way, many of you asked how we budget for a home renovation project.
Most of the updates in our houses have been low-budget, DIY projects that can be accomplished without hiring help. A good example is our owner’s bedroom makeover. However, some projects are too complex to do yourself. We hope to do a major kitchen remodel in our current home. So, we’ve decided to budget and hire professionals.
In order to budget for a renovation project, you have to know your typical monthly spending patterns! How much income do you bring in? What are your basic expenses? What are your shopping habits? It takes a few months to get a good understanding of this. Feel awkward and insecure talking about money? That’s normal! Read this post about how I overcame my debt struggles and insecurities.
After a solid year of tracking our income, expenses, and spending habits, we have our monthly budget down to a science. We know exactly how much is left over at the end of the month to set aside for any projects or goals we are prioritizing. Previously, our goal was paying off credit card debt and student loans. Now that those are taken care of, the mission is to save for our kitchen renovation!
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There are three ways to go about budgeting for a renovation. One, set your budget based off of a timeline. Two, set your budget based off of what you want. Three, take out a loan that you can comfortably afford.
With option one, you might say, “I want our kitchen done by fall of 2022.” In this instance, add up all of the “extra” income you will have between now and the deadline. That’s your budget! Many companies and contractors will require a certain percentage down payment in order to schedule your remodel; so prepare ahead of time.
With option two, estimate exactly what you want done in your renovation (labor and materials), and then figure out how long it will take you to save that amount. Because our kitchen is fully functional, we are taking this route when saving for our remodel. I am so ready for the kitchen of my dreams, even if that means waiting an extra year or two until we can comfortably pay for the renovations in cash.
Finally, as always, there is a financing option. If you have a strong monthly income and a good credit score you can take out a loan to cover the costs of your renovations. Home equity loans and personal loans are popular choices. We have worked so hard to get out of debt, so we are avoiding this option at all costs!
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It’s easy to see beautiful renovations online and wonder how people can afford to completely transform their home. From personal experience, I can say it’s incredibly difficult! I have mostly stuck to low-cost, DIY projects because that is what fits my budget (paint is my best friend).
Now that our credit cards and my student loans are paid off, we have the bandwidth to save for the kitchen of our dreams, and I’m so excited for the day I will pay for it in cash. Even if it’s years down the line!