How Do You Plan and Budget For Home Improvements?

[Staceyy]

I'm wondering how everyone plans and budgets for home improvements? Do you plan to do something every year or do you wait until things look really bad before updating? Do you do it yourself or hire contractors? Do you take out a home equity loan, borrow from your 401k, finance it elsewhere or save and pay cash? Do you have any hints or tips you'd like to share to make the job easier?

[Broken Arrow]

I just have to say this. Ahem.

Don't borrow from your 401k!

Thank you.

Home equity loans are typically the norm, though I'm personally not too excited about that. I guess it depends on what kind of home improvement you have in mind. If the upstairs plumbing is leaking through the downstairs ceiling, then yeah, that'd be OK. However, if it's because you want new cabinets and marble counter top, then I would think it's a bad idea.

Personally, saving up for it and "paying in cash" sounds like a dandy idea... if the ceiling isn't leaking.

[FrugalFish]

We did a full renovation on this house a few years ago. We did the work piecemeal, saving up and doing things as we could afford to with cash. We did almost all the labor ourselves, which saves a ton if you are motivated and talented enough. It took us 2 years to get through the whole job- the first six months were the most unlivable as we were still in cardboard boxes and living on concrete slab- after that it was like a livable house that needed improvements. We still do occasional jobs, but like before make sure we have the money first. It was definitely worth it to do it that way.

[Aleta]

frugalfish is right. It's always a better idea to save up rather than to get a loan. Of course, if your roof needs to be replaced and I mean needs to be replaced and you don't have the funds - that is different.

As far as budgeting goes, there are books on the market that will list the expected life of any item. You sort of have to allocate each month and budget a set amount for HOME MAINTENANCE. That is apart from home furnishings. Home furnishings is for smaller things like toasters, lamps, etc. I budget about $20. a month on items like that. You have to start somewhere to get a fixed amount each month. I try to set aside $1,000. a year knowing that I may have to spend $250. for paint or other project needed larger amounts of money.

[anonymous_saver]

I have yet to buy a house, but I will most likely buy a house before 2 years is up.

I plan on putting money aside each month, and then once a year I will gather that money and fix one room in my house. So, if I save $1,200 for one year, I'll fix up the bathroom (for one example).

For real emergencies (such as the roof caving in), I plan on having a good emergency fund in place for such emergencies before I buy a house.

Basically, I would try to do whatever I can to not take a loan out.

[MonkeyMama]

We bought a new home. I know it's not a guarantee of no problems. But it is a long time before we need to improve anything all the same.

We are saving around $2k/year for home improvements. I know we will need to paint the exterior in a few years and our wish list is to upgrade the bathroom (they did a crappy job).

We plan to pay cash for any improvements. We have the emergency fund in case something happens far earlier than we plan. I am sure we will also up our cash contribution to the house fund with time. We also have a wish list to add on a room - but we would not do so unless we could pay cash.

We will probably hire contractors. My parents always did everything themselves, but not particularly a good job. I'd rather pay more for a good job done right.

[Caoineag]

Well, we are planning on buying a fixer upper in the next year so this is definitely something we have thought about. Our goal is to save up and do projects as we can afford them. We also will have an emergency stash of a couple thousand prior to moving in since chances are with the type of homes we are looking at, an emergency repair will probably occur quickly. Mind you, that wouldn't buy a new roof, but that would be the point of a home inspection before buying.

We plan to do part of the labor to keep costs down. I do have experience remodeling so that does help. However, on truly complicated jobs, I always vote for professionals. Good example, we will definitely hire an electrician. I don't know how many times I have seen my father and grandfather (both carpenters and knowledgeable about electricity) zap themselves.

[Aleta]

Don't rely upon your seller's inspectors. Make sure that you get your own. Ask around for references. You want someone with alot of experience to do an inspection.

[disneysteve]

I totally agree that you should NEVER borrow from your 401K to pay for home improvements. That should be a very, very last resort option to handle a financial catastrophe. Not a source of funds for casual spending on luxuries.

As to how to pay, I think it partly depends on the magnitude of improvements you are talking about. When we replaced our roof, got a new central air conditioner, a new furnace, new appliances, etc., we just charged the purchase and paid the bill in full when it came out of savings. If we were to take on a project more costly than what we could cover from savings, I'd say a home equity loan would be the option of choice.

[Caoineag]

Originally Posted by Aleta

Don't rely upon your seller's inspectors. Make sure that you get your own. Ask around for references. You want someone with alot of experience to do an inspection.

Yeek, no. I didn't even know they had seller's inspectors. I knew about buyer agents hiring inspectors for you and that you should still get your own. After all, even your agent wants the deal to go through so they can make money.

The experience issue is part of the reason why I think we will end up hiring both a home inspector and an electrician for a run through. There are limits to what the home inspector can find and wiring is a big issue for my husband and I.

[Aleta]

Inspectors can see even problems with dishwashers and other items that along the way will add up in costs. They know what to look for and can save you big bucks or even could give you a reason to change your mind about the house you're considering to buy.

[cptacek]

I agree with BA...mostly. If the roof is leaking or the windows are broken, etc, then a HELOC is probably the right way to go.

If I was making improvements to make the house more comfortable for me to live in, then I would pay cash. No, actually, I would budget how much I could pay for it, do most of the work myself, buy the stuff on a Home Depot 0% interest for 12 months, and then MAKE SURE I didn't go over budget AND paid it off in 11 months 2 weeks.

I improved my house last year with new paint/texture in every room, carpet, vinyl tile, etc., with a lot of help from friends and family and did almost all of it my(our)self, so I could sell it. A $7000 investment at the time yielded about a $20,000 return. But the market has changed, so that might not work now. Anyway, I "financed" that with 0% interest from Home Depot, 0% interest from a carpet company, and savings...the emergency fund took a hit, that's for sure. After I sold the house, I paid off all I had financed, including replenishing the emergency fund. It worked for me at the time, but like I said, it might not work now.

[Aleta]

That's another thing that people have to look at in not over improving their property while the market is taking a hit. One of the situations my nephew got into was building a pool. When you go to sell a house today that you bought recently, your house might not be worth what you think it is worth. Therefore, if it is a need, that's a different story. If it's a want, I 'd say to go slow and make sure that you have the money.

[Ima saver]

Lucky for me, I always get new homes since my husband is a builder, so we have never had any major problems. But when we do fix something up, my husband always does the work himself and we just pay out of our emergency fund. That is what it is for.
My husband recently redid the bar area. He moved the noisy ice machine out to the garage and redid the cabinets to put in a wine cooler. ( we only drink boone's farm, so we are not very swanky)

[katwoman]

I'm a woman so I do hire contractors.

If I'm buying the materials I use the Home Depot card (with a 10% off coupon) and use their 12 month/0% financing offer. The contractor gets paid by check.

Bought those pretty white plantation shutters from HD during their sale (and used a 10% coupon on top of that). Total cost included materials and installation. Deferred the payment for 12 months/0% interest. Oh! Lifetime warranty on the shutters.

Had a floor to ceiling pantry cabinet installed in the kitchen through a cabinet distributor. Installation was tacked onto the cost. This was paid with a VISA credit card.

Had all the built in air conditioners replaced (5). Went through a HVAC firm for the purchase and installation. Used the VISA to pay for it all. This VISA extends the manu warranty by a year so these units are warrantied 6 years. Learned this lesson the hard way when one of the old units literally died days after its 5 year mark and I found out my mom wrote a check when she bought it.

When the hot water heater needed replacing we called a plumbing company for the purchase and installation. Paid by check. They wouldn't accept credit card payment. Won't ever do that again unless I can at least buy the water heater with a credit card.

The washing machine needed service so I called an appliance repair company. $120 for 10 minutes work. They only accepted cash or check.



My point is that I try to pay by credit card whenever I can. Then I do balance transfers back and forth between 2 cards that offer me the lowest rate on the money. Currently I owe 14k @ 1%. Once this offer is up I'll switch it over to the card that has usually offered me 2.99% for another specified time.

It's only a matter of time before the furnace needs to be replaced. I've already got a quote of 4k.

[Marcymox]

I think that you should always save cash to make the improvements. Too many people around here that I know took out home improvment loans to upgrade thier homes, and now they owe more on thier homes than they can sell them for. Now improvements to me, mean that your carpet is old and you want new. Not thingslike your roof isleaking or you are having problems with your septic system. Those fall under more of the category of emergency you know?

many people did things like upgrade thier kitchens or bathroom, carpets, floors, because these houses were built so cookie-cutter. Basic bare-bones house with fixtures that resemble cheap apartments. Bleh.

however, since I have no intention on spending the rest of my life in this house, I refuse to put anything expensive in it that I cannot take with me.
Sure, I will do everything to make sure it's clean, modern and maintained. This includes a few plants, a tree, new carpet, ect but I'm not going to remodel and add a room, I'm not going to replace the stair rails ( for 3700 bucks! ) and I'm not going to spend 2000.00 on flagstone walkways. I doubt I would get any of that money back on the sale of the house. I can just see myseff trying to jack up the cost of the house 2000.00 because it has a flagstone patio? nope. That's purely cosmetic.

Before we decide to sell, the kitchen cabinets will need to be replaced- they were the cheapest possible paper covered particle board that the builder put in and they are awful. They are grease stained and gross. The linoleum will have to be replaced. But I don't need to put in travertine or marble. Simple 79 cent 12x12 ceramic tile is sufficient.

anyway, I know I'm going off on a rant, but my belief is that you should always pay cash for the remodel, if that means saving for year- ok, or you if you can do it in steps- that's good too- like buying a new light flixture every payday or whatever. I would never reccomend to anyone to get a loan.

[PrincessPerky]

For roof leaking and the like, that is what an emergency fund is for (though if you haven't got it, borrow against the house)

For appliance repair..I use the 'extra' the money that would normally go to pay of the car, If I were debt free I would have a 'house fund' in my budget for such things. (frivolous or needed)

For little stuff (shelving or paint mostly) we use the 'slush fund' the money that is earmarked for 'wasting'.

But then we have a 'new built' house..nothing is really wrong with it. cept for ugly walls....

[Aleta]

I agree with MarcyMox on many things that were said. I have also known people that have remodeled a kitchen in hopes of making it more sellable, only to have the new owners gut out everything and remodel. As for kitchen cabinets, you can clean them and repaint. My dil bought a home that had less than desirable cabinets and they repainted them and they look great. The only items that might make sense are a new countertop if it is in need of replacing, a more modern light fixture and maybe a newer faucet and that's it. Oh, yes and painting.

I have the same issues as Marcymox in not wanting to stay here for too many more years and do not want to invest very much money in redecorating or adding new improvements. I kept an older couch that was practically brand new and just bought a couch cover in a neutral tone and added a lot of pillows, some curtain swags, an accent rug, and painted the walls. Most of the improvements will be items that I will take with me.

Most important is maintaining the home in good condition along with easy to maintain and attactive landscaping. If someone buys your house, they're going to want to make their own initial improvements. If I thought that I would really enjoy something i.e. a water fountain - I'd buy it for my own pleasure.

Definitely saving up for projects in the house is important as is having a home maintenance fund that you fund monthly for the larger repairs.

[Fizgig]

Originally Posted by katwoman

I'm a woman so I do hire contractors.

I ignored this for a few days but since I keep coming back to it, it's time to respond.

It's one thing if you just don't like doing the work and prefer to pay contractors, but the fact that you're a woman shouldn't play in. A lot of DIY tasks can seem daunting at first, but once you grab a few books and dive in, they're really very simple.

I'm a 30 year old single woman homeowner, and since I bought the place three years ago I've replaced the kitchen floor, power washed and restained the 800 sq. ft two story deck, replaced all of the electrical sockets, installed recessed lighting, replaced most of the baseboards and installed crown molding, and other things and I'm sure are slipping my mind. All by my little lonesome. Major electrical, plumbing, or structural work I'd of course hire out.

I'm probably reading too much into a simple statement, but I think many women would be surprised by their capabilities if they just gave it a shot.

[PrincessPerky]

Originally Posted by Fizgig

I ignored this for a few days but since I keep coming back to it, it's time to respond.

It's one thing if you just don't like doing the work and prefer to pay contractors, but the fact that you're a woman shouldn't play in. A lot of DIY tasks can seem daunting at first, but once you grab a few books and dive in, they're really very simple.

Thank you!

The statement bothered me too, but I didn't know how to respond politely.

Not that all women should have to be DIYers, but that gender should have no part in the decision to hire or learn.