Putting together a home renovation budget is not easy when you already struggle with financial issues. For instance, families that need to pay off their debt on time can encounter many obstacles until they are finally able to invest in a home remodel. Because of the situations that occur, you should learn how you can save money and plan a home renovation without accentuating your current debt even more. In order to do this, you need to start budgeting long before putting the renovation plan into practice. You will find some relevant information below, which should help you achieve your goals without any hassle.
How much should a home remodel cost?
Many people tend to overestimate the cost of a home remodel. This is why you should take your time and research the options you have. Estimating the costs of each change that you want to make is a part of the process, but it will be discussed later in this article. To understand how much a renovation normally costs, you have to take a look at the value of your entire property. The higher the value of the property, the pricier the renovation will be. In the majority of cases, people try not to spend more than 10% of the house’s value on a single-room renovation.
Spending more than 10% will lead to a disproportion between how much your home is worth and how much money you spend on it. Of course, making some basic changes will cost less than the estimated value, but it is important to know what to expect from a regular home remodel. Keep in mind that there are always unexpected expenses that you will need to face. It’s best to be prepared for any situation, and if you get to spend less money than you initially planned to, you can use it for other financial matters, such as paying off your debt.
Delaying the traditional milestones
One of the traditional milestones that people try to reach before they turn 30 is to buy a house. Yet in order to buy a house or renovation, most people have to obtain a loan for home improvement. Paying debt can take up to 20 years if the amount of money borrowed is bigger. Many families struggle with finances once they have to pay the debt. Moreover, people get personal loans, they accumulate credit card debt, store card debt and they also have to pay a council tax in most of the cases. Repaying all this money can lead to financial difficulties that keep families from achieving other traditional milestones. Thus, their goals are postponed until their financial situation gets better.
Luckily, there are methods which can help anyone deal with their finances better. One of these methods is consolidating debt. Instead of paying a monthly payment for each type of debt that you accumulated during the years, you can pay one single payment that is also lower by simply consolidating your debt. This can be done via an Individual Voluntary Arrangement, also known as IVA. IVAs help you pay your debt off in a shorter period of time so that you can get back on track and achieve the goals that you previously set. The IVA’s benefits are numerous, so it would be best to get informed about this option and select it if necessary. In case that the home renovation was the factor that kept you in place, consolidating debt and getting the money you need for it should clear your path. Next, you will learn how to create a complex home renovation budget that will keep you away from more debt. This is where your financial recovery process begins.
Creating the budget
First of all, decide how much money you can spend on a home renovation. This can be done by calculating your monthly available funds and setting aside around 15%. From this 15%, you should be able to cover the renovation expenses, as well as the unexpected expenses that may appear along the way. Your initial projections won’t be respected in 100% of the cases, which means you need to be prepared for these situations as well. Even though these sudden expenses may appear, you need to rest assured knowing that you set enough money aside. Next, you can start:
Prioritizing changes
Starting a home renovation without knowing exactly what you want to change is a mistake because you will end up spending more than you planned. It’s best to make a list of all the changes that are a priority at the moment. You should separate your wants from your needs, and deal with the latter ones first. To set your priorities straight, you need to ask yourself what compromises are you willing to make, what details are worthy of splurging on and what requirements you must absolutely tackle during this home renovation.
Estimating costs
After you decided exactly what changes you want to make, you need to estimate the costs for each. Even though these estimations might not be exact, it will help you save enough money each month. Keep in mind that there are separate costs for labor and materials. The choices you make in terms of fixtures and finishes can determine how affordable the home renovation will be. Put together the smallest details and estimate how much they will cost. It may seem like small items won’t matter considering the overall price of the home renovation, but the truth is they can add up to a serious amount of money at times. Take your time to make this list.
Research contractors
Finally, you will have to choose between different contractors. The contractor you work with can influence the final cost of the home renovation as well. You should request bids on the project from multiple contractors and analyze them carefully. Comparing the costs can only be done if you obtain bids from at least three contractors. Talk about any unforeseen expenses and see which contractor seems to be the most convenient. Don’t opt for the cheapest contractor either, unless it has perfect reviews from previous customers. The home renovation will be in vain if the final outcome is not high-quality.
