Monday, January 31, 2011

Holistic Budgeting

I never tire of repeating a concept of mine, that everyone knows a bargain at the grocery store because everyone visits one weekly for decades; not everyone recognizes a good deal when they purchase or renovate their home because most people don't get much practice at buying or renovating houses.  In unfamiliar territory, people are more susceptible to making rash choices, failing to foresee the consequences of even their most rational decisions, and being outright scammed.  Plus, if you pay too much for milk, or don't to notice that some eggs in the carton are already broken, or if you fall for the junk magazines and candy at the checkout aisle, what have you lost?  Twenty dollars and rolled eyes from your significant other.  Mistakes in a remodel project aren't so easily shrugged off.  Making a holistic budget before you think of starting a project -- and sticking strictly too it -- will help you get the most from your home and keep money-related stresses at bay. 

Now, let's be clear: I'm the last person to suggest that people should not invest in renovation projects, or that homeowners should not allow their vision of the project to evolve as the project progresses.  The first puts us out of business, and the second removes much of Jackson's and my joy (and strategic advantage over competitors) in our craft. 

But it is not at all in our best interest to sell clients more renovation than they can really afford, test their credit limits, or end a project with their expectations unmet.  We'd like to leave them with money left for curtain rods.  And a rose bush.  And the home maintenance they ought to invest in on a regular basis.

Thus, if you're considering a remodel project, I encourage you to think very carefully about all the things that make your house a home now, and include them in your vision of the finished remodel.  Then, when you speak with us and other contractors, don't tell us "my budget is $45," tell us:

"My budget is $45, less the costs of some landscaping, some updated furniture, towel rods, my bank's financing fees, some to invest in a professional designer's help, the amount I'll pay my accountant to find tax credits for this remodel, the additional restaurant meals I'll eat while you're tearing my house apart, and the amount I'm setting aside now for hiring a gutter cleaner at least once a year and buying HVAC filters on a regular basis." (Italics added to not-so-subtly emphasize a separate point.)

Thinking like this is a lot less fun than "well, I have $45 and the contractor said it'd cost $42.99, so I'm going to splurge on that crystal chandelier."  But it'll be worth it.  Plan well, plan ahead for ALL the costs of a remodel, and you'll be able to afford having us back for another project.