Home Court Advantage: Avoid the Oh-no's of Home Renovation

Tips for planning your budget so you don't break the bank

By Laura Meyer
Published: Dec 26, 2007

With my kids back in school, I can turn my attention to one of my other passions – my house. I like change. And since I have no desire to trade in my kids or my husband, remodeling my home is a great way to spice up life. My first concern is always the budget. Having been down this road many times before, I know there are certain things you must do so that you don’t have to explain why you suddenly converted the college savings account into an outdoor living room! Here are some budget basics:

Don’t push yourself to the brink: There’s a big difference between what you can spend and borrow and what you should spend or borrow. Before you empty your bank account or take on too much debt, think about your lifestyle. Ask yourself: Are you really going to be willing to forego vacations for a while? Are those expensive haircuts, weekly manicures and occasional shopping sprees necessities or luxuries? If you’re getting into a large project, consult with your accountant or other financial advisor.

Planning is key: Planning a budget for a renovation is usually done in stages. The only way to get a preliminary handle on the cost of your project is to get estimates from a contractor. The more information you can give a contractor (whether it’s working with an architect to come up with formal plans or giving a contractor your inspirations from all those pages you’ve been obsessively ripping out of design magazines), the more realistic the estimates will be. Once you have a preliminary handle on costs, you can then start assessing whether you can move forward with the work.

Understand the difference between cost estimates and bids: Here’s where a lot of people get into trouble. Understand that an estimate is just a rough approximation of costs based on rough plans or ideas. Estimates are not a commitment from a contractor to do the project for the estimated price. That will come in the form of a bid. Make sure you have the contractor clarify what he is giving you and make sure you get a few bids so you can compare contractor-to-contractor, taking into consideration reputation and references, experience and prices, as well as personality. In other words, the cheapest is not always the best.

Budget for the extras: This is essential. No matter how much you plan and no matter how accurate your estimates, there are often painful, expensive surprises that pop up once your project gets underway. For example, there will always be necessary repairs to plumbing pipes or electrical wires hidden behind the walls. How much should you budget for things like this? It really depends on the condition of your home. A general rule is the older your home and the poorer its condition, the more likely it is that you’ll run into problems. Have a frank conversation with your contractor about what to build into your budget for this. Also, don’t forget extra living expenses if you have to move out for a while or carry two homes (say, if you’re remodeling a new home and haven’t sold your old one yet.)

If you’re married or have a partner, make sure you’re on the same page. Agreeing on your budget (and any necessary changes to it as you get into the project) is key to living happily ever after the renovation!

Laura Meyer is a real estate expert and the author of Remodel This! A Woman’s Guide to Planning and Surviving the Madness of a Home Renovation. Laura is a sought-after expert in the field of home improvement, appearing as a frequent television and radio talk show guest.

Browse All Features >