Figuring out how you’ll pay for a project is the most important step before you can start your renovations.
It doesn’t matter what you want to do. Whether it’s refreshing a living room, updating an old bathroom, or doing a roof-to-basement makeover, renovations can be expensive. You need to plan them carefully if you expect to protect your credit from the next swing of your sledgehammer. Check in with these tips to learn how.
Research Your Costs
A renovation can spiral out of control if you don’t accurately list your costs ahead of time. Without knowing what each part of the project will cost, it’s all too easy to spend your money on smaller details that don’t matter. This is a quick way of running out of cash before you complete your project.
Researching the price of materials, equipment, labour, and anything else involved with your reno comes with two major benefits.
- It helps you realize how much a reno likes yours usually costs, so you know how much you need to save up
- It gives you the opportunity to find cheaper alternatives when supplies and services end up costing more than you expect
The Importance of Patience
A whopping 9 out of 10 homeowners say they’re planning on financing their next reno with personal savings. This is a good sign for the state of their bank accounts, as this is one of the best ways to finance any big purchase.
Admittedly, it’s not always easy — especially if you want to take on large-scale plans. It may mean you have to put off renovations for a few years if you rely solely on savings.
Sit down with your household budget to see what you can do to accelerate your plans. You may be able to sock away more funds than you realize once you see how you’re spending your money.
Most people have bad spending habits that can syphon cash away from their goals. If you can spot your own bad habits and eliminate them, you’ll have more money to put towards your renovations.
Keep Calm in Emergencies
Plan as much as you want, some renovations have a life of their own. Accidents and unexpected costs can derail your plans by a little. Or by a lot.
Many home reno experts suggest tagging on an extra 10 percent or more to your costs just for these situations. This extra money can help you take on any snags that may delay your work.
But sometimes, you’ll face significant issues that demand a lot of money.
If your savings fall short, an online line of credit may be an option. An online line of credit acts as a safety net in an emergency, letting you take on necessary and urgent repairs.
It isn’t, however, an excuse to inflate your budget to take on cosmetic upgrades. Take some time to find out when a line of credit makes sense for your renovation.
Pay Your Bills
If you end up relying on an online line of credit, make sure you always pay your bills on time. Paying your bills is one of the biggest components of your credit score, so build your budget around these due dates.
Of course, there is more than one factor influencing your credit. There are five! To have the most positive impact on your history, you must address every factor carefully. This includes keeping a low balance on an online line of credit and limiting how often you apply for new accounts.
These habits, along with paying your bills on time, will protect your score, even if you end up having to borrow money for your project. Remember this before you start tearing down walls and ripping up tiles. Thinking about your budget before you take on a project will help you protect your credit.